What Does The Future Hold For Commercial Real Estate?
The following article is written by Bruce H. Cohoon, Cranbrook's Vice President, Finance. Bruce has been at the core of many organizations ... leading both private and public companies from a financial perspective for more than 30 years.
There is no shortage of opinions when it comes to answering the question of what will happen in the commercial real estate sector over the next 12 to 18 months. Pundits have “informed opinions” and prognosticators have their projections. It doesn’t take Nostradamus to predict that our industry, as well as the rest of the known world, is in for a wild financial ride for the foreseeable future. I have been in the accounting / finance field for the better part of 30 years, and I am not sure whether or not I even understand what a billion dollars is, much less a bailout package in excess of a trillion dollars!
I would agree with conventional thinking that greed, stupidity and more greed played a large part in structuring our current financial slide. Additionally, somewhere along the way we became a society of consumers (spenders) rather than producers (investors). Spending leads to debt and an overabundance of debt leads to being broke. The problem with being broke is that usually Broke’s two twin brothers, Desperate and Stupid, come to visit as well. Broke, Desperate and Stupid, collectively, cannot make a sound financial decision and neither can a broke, desperate and naïve society.
What does this have to do with Cranbrook Realty Investment Fund, L.P. and Commercial Real Estate at large? Quite a bit! Commercial properties house the businesses and entrepreneurs that are currently re-tooling their thinking in an effort to deal with this crazy world in which we find ourselves. Property owners who desire to remain successful will need to step up to the plate and assist their customers during this re-tooling process. We need to offer solutions, not just space, if we want to keep our properties full and producing abundant cash.
In the top 4 management positions at Cranbrook, we are fortunate to have an accumulation of over 110 years of solid business experience. This business acumen spans a broad spectrum and includes expertise in planning, organizing, staffing, directing and controlling the many facets and functions of sales, marketing, financing, spending and reporting. Using our collective experience, we have outlined and implemented a number of programs to make it easier for our customers to concentrate more on the operation of their business and less on the place of their business. To this end, we have designed a short form lease to streamline the leasing process. We have offered marketing assistance to our customers. We have sped up the cycle time for tenant improvements. We have reduced the cost of operating our properties, which in turn, makes them more cost effective for our customers. We have developed internet based communications systems to both deliver and receive customer or broker information. We have, for 15 consecutive years, continued to develop property management teams that take excellent care of their customers.
These are but a few of the many ideas we have developed to thrive, not just survive, in the present day upheaval. We will be rolling out more marketing oriented, customer based, initiatives in the near future, so stay tuned. We are committed to learning, and then implementing solutions for both ourselves and our customers.
As Rudyard Kipling said so eloquently in his famous poem “If”,
“If you can keep your head when all about you are losing theirs,
and blaming it on you, If you can trust yourself when all men doubt you, but make allowance for their doubting too”
This “storm” will pass and the “seas” will calm much more quickly if we all “keep our heads”. Plan, don’t panic. Learn, don’t be lazy. Think, don’t tinker. Dream, don’t day dream. Work, don’t worry. Above all, protect your attitude. It is truly the only thing we control.