At Closing: Emerging Signs of Optimism
By: Lawrence A. Pobuda, partner, Stewart Lawrence Group
In the last 18 months, we’ve seen dramatic change in the commercial real estate industry, and I expect 2010 will continue to be a year of transition. We all understand the cyclicality of the industry, yet the challenges we’ve recently faced have tested our resolve in ways we couldn’t imagine.
Undoubtedly, challenges still remain. Yet I believe we have weathered the eye of the storm and are moving to a safe harbor where we can begin to regain our footing. Signs of optimism are beginning to emerge, and I encourage you to consider these options for your business:
Pursue Opportunities with Demographic Tailwinds
Many of us are already pursuing opportunities well outside the bounds of office and industrial development, with mixed-use, retail and multi-family development. With significant demographic changes on the horizon, more new opportunities are emerging.
On January 1, 2011, as the baby boomers begin to celebrate their 65th birthdays, 10,000 people will turn 65 each day, and this will continue for the next 20 years. Medical office buildings, free standing ambulatory care centers, continuing care retirement communities and senior housing of all variations should experience strong demand.
Colleges and universities are dealing with outdated student housing and inadequate supply as college enrollment continues to grow. Private developers can fill this bill and replenish their stock. Most of our state and local governments face severe budget shortfalls – and many are turning to real estate to help them bridge their cash shortfalls with property sale/leasebacks to private real estate developers and investors.
Think creatively about new opportunities while maintaining your core strengths of office and industrial. Job growth remains essential to the health and long-term recovery of our office and industrial markets, yet there are other opportunities that enjoy the benefit of demographic tailwinds!
Support Diversity and Our Developing Leaders
Both the industry and NAIOP have made strides in diversifying by age, gender and race. NAIOP’s Developing Leaders program is key to these efforts, and it is essential that we continue to support and nurture a new generation of leaders through these turbulent times. This is critical for the long-term health of our industry as we work to become a reflection of our clients and the communities we serve.
Engage in Legislative Action
Financial challenges and political uncertainty have brought our economy to a near-standstill. We must continue to advocate at the national, state, provincial and local levels on the legislative issues that affect the welfare of our industry. Never has this been more important as the United States faces a massive federal deficit and state budget shortfalls. Today’s tax climate poses significant threats to our tenants and our industry. NAIOP’s legislative agenda will focus on credit availability, capital markets and tax reform that are supportive of the commercial real estate industry.
In closing, I recognize that we are all traveling this road at different speeds, and with different obstacles. Some of us have worked through the most immediate challenges at the property level, and others have yet to face the most difficult situations. Ultimately, we will all benefit when banks clear their balance sheets of toxic assets and begin lending, and federal regulators provide for efficient disposition of commercial properties – only then can real estate markets return to increased activity and long-term health.