by Dan Rafter
The pros who sell, develop and invest in commercial real estate love this industry. But they’re realistic; they understand that challenges come with building a successful career in this business.
What keeps commercial real estates in the business for decades? What are the biggest challenges that they face?
Midwest Real Estate News recently asked several CRE pros these two questions. Here is what they had to say about the ups and downs of the commercial real estate business. We’re expecting more answers from other CRE pros and will update this story as they come in.
What do you like most about working in the commercial real estate industry?
James Pape, senior vice president, Associated Bank, Chicago: Right now, one of my favorite things about my job is being able to structure loans that both help customers and protect the bank. It’s highly rewarding to see the final product once a loan is completed. For several years during the recession, lenders had to focus on working out loans already ‘on the books.’ But now the banking industry is out there lending money again, and it’s a great feeling to be working more closely with new customers.
RA Herrington, senior vice president with CBRE’s Global Corporate Services, St. Louis: Although there are several things I like about the industry, there are a couple at the top of my list. First, I have always enjoyed the constantly evolving nature of our business. Whether a result of advancement in technology or the overall globalization of commerce, businesses and their service providers have had to constantly reinvent themselves to address these changes. This can be a bit of a challenge, but keeps my job from ever being routine or boring.
Another thing I enjoy is the nature of our relationship with clients. Real estate adheres to all facets of any enterprise, including financial, operational and cultural. This leads to a relationship that is more consultative and may last for years as we help the client implement long-term strategic goals related to real estate. My goal is to become a trusted advisor.
Grant Mechlin, Sansone Group senior associate and tenant representation, St. Louis: What I like most about working in the industry is that there is an environment of winning. By that, I don’t mean a “winner-take-all” structure. Rather, there is an attitude of partnering with property owners and clients to create a “win/win” situation so that our owners and retail clients can be as successful as possible in today’s highly competitive environment.
Mark Kornfeld, Sansone Group senior associate for retail and new development, St. Louis: My favorite part about working in the commercial real estate industry is that each and every day is different. I enjoy trying to keep an appropriate balance between my listings, tenant representation work and development projects. I never know where the day will take me, and I can’t imagine it being any other way.
What are the biggest challenges of working in commercial real estate?
Herrington: Constant change, one of the things that keeps our industry interesting, is also one of the biggest challenges. Doing business continues to become more complex every day. This complexity is the result of legal, regulatory, accounting, M&A and globalization issues, just to mention a few. Combine that with the need to be agile and react quickly to ‘stay ahead of the competition,’ and you have identified the largest challenge facing organizations and their service providers.
Pape: Even as commercial real estate lending continues to recover, there are some significant challenges to working in this industry. We’re seeing considerable competition among banks pursuing the same projects and deals. Large-scale economic issues are also a factor, such as the anticipated increase in interest rates by the Federal Reserve. Additionally, regulatory changes including Basel III, HVCRE and Dodd-Frank have made the lending landscape more complex, and we expect this trend to continue moving forward.
Mechlin: As in other industries, one of the major challenges in commercial real estate today is balancing the use of technology with building personal relationships. While it is helpful to leverage the efficiencies of technology when locating retail spaces for clients or directing potential retailers to on-line property information, there has to be a discipline of doing this to make their experience better, not in replacing our personal understanding of what their needs truly are. We make a concerted effort to make sure the technology we use supports our relationships, rather than replaces the time and consideration that we put into the relationships.
Kornfeld: The biggest challenge in our market today is budgeting your time appropriately and staying organized. The market is as active as I have ever seen in my 10-year career. The only way to survive is to come into work each day with a written agenda or task list of things that need to be accomplished before the day is over.