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Collin Barr

Collin Barr, President – Southern & Western Divisions, Ryan Companies US, Inc

Michael Chukwueke

Michael Chukwueke, Principal, Asset Management, BentallGreenOak

The NAIOP Research Foundation asked a Foundation Governor, Collin Barr, President – Southern & Western Divisions, Ryan Companies US, Inc, and one of his mentees from the Visionaries program, Michael Chukwueke, Principal, Asset Management, BentallGreenOak, to answer questions about their approaches for handling the current economic climate and the value of the mentorship aspect of the Visionaries program.

The Visionaries program provides a select group of rising industry leaders, 40 years of age and under, with meaningful ways to engage with the Research Foundation and the governors. Participants have an unparalleled opportunity to learn from and network with senior professionals and governors and gain valuable career development and industry insights. Visionaries also play an important role in the Foundation’s research development process by sharing their perspectives and expertise and serving on committees.

How are the current rising interest rates impacting your business decisions?

Barr: Rising interest rates are definitely affecting both our development business and our corporate BTS-Lease business. The cost of a construction loan (interest rate) is a key variable for new development, and we are currently in an environment with both rising interest rates and rapidly rising construction costs, which together serve to have a negative effect on our expected returns for a given project. In short, this makes it harder to get deals done.

Chukwueke: Anecdotally, although the universe of overall buyers has decreased because there are fewer leveraged buyers, there are still a handful of unlevered buyers who are maintaining the current level of pricing. We’ve noticed a nominal movement in cap rates but have yet to determine if a direct correlation between interest rates and terminal cap rates exists. The movement in treasuries and the resulting change in spread has shifted the approach of our core accounts, which have been the beneficiary of accretive debt in the past, to pivot towards closing all-cash transactions. However, our overall strategy has remained unchanged, as we continue to seek best-in-class, core product in markets we believe will continue to outperform.

Collin, has your experience from the last time the economy faced widespread inflation (in the late 70s/80s) informed your strategy?

Barr: Not really. While I certainly remember the negative impact of rapidly increasing inflation in the 70s and 80s, I see this as a new and different economic cycle with a number of unique nuances (Ukraine war, low unemployment, supply chain constraints, etc.) and a more balanced supply/demand dynamic in the commercial real estate markets. This makes our markets less likely to experience dramatic overbuilding or an oversupply situation. For our company, the major strategy we use to address the economic cycles is to be as diversified as possible across a wider range of development categories and geographies.

Mike, how have your conversations about Collin’s past professional experiences helped prepare you for challenges you have/will face over the course of your career?

Chukwueke: Given the unprecedented times we are in, Collin's perspective of seeing opportunity through uncertainty is one that forces a recalibration of any adversity you believe you are facing. The advice that I have received simplifies the controllable elements of my perceived obstacles, creating a clearer, less daunting path towards achieving a more favorable outcome.

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