Berkadia team remains positive, embraces new norm in midwest

As members of Berkadia’s Mid-Markets Group, we have seen first-hand the effects of COVID-19 across apartment markets in the Midwest. We have been fortunate to experience far fewer confirmed cases and deaths than the larger coastal metro-areas; however, the effects of the pandemic on the Midwest’s economy have still been significant.

“Stay-at-home” orders have saved lives, but they have also stunted local economic growth—particularly as these policies have shuttered small and mid-sized businesses throughout the region. The commercial real estate market is facing new challenges, but opportunities exist for those who have confidence in the long-term strength of the post-coronavirus apartment market.

Multifamily Industry Impacted, Opportunities Remain

At the beginning of this year, we were very confident we could match, if not exceed, our transaction activity from 2019. But now any attempt to accurately predict what the remainder of 2020 might hold for either our team or our industry is difficult.

Overall, property types are performing roughly as we might anticipate. Industrial and multifamily have fared well so far, while leisure, hospitality, and retail are struggling. What we have seen so far with April collections has exceeded our expectations, but the multifamily industry’s ability to continue to collect rents into May and beyond will be imperative to the industry’s long-term success.

While we are maintaining optimism and thinking the bulk of the damage will be to this quarter’s numbers, we wouldn’t bet against those who believe this could carry well into Q3 or even beyond. We do see long-term positive indicators for multifamily and are hopeful for this downturn to be brief with momentum reestablishing next quarter.

While the current market may seem to be a no-go, transactions are still occurring. From an advisory standpoint, we are providing clients with real time information, asking questions, giving feedback, and offering words of encouragement to help them make the best decisions for their business and their partners.

Working In the New Normal

The shift to working from home has certainly been an adjustment, but a smooth process overall. We are not complaining about the occasional poolside conference call. But in all seriousness, it can be challenging to create new routines and work toward new daily goals. One definite upside? Communication with teams is even stronger than when we were all in the office.

Our Mid Markets Team—made up of investment sales, mortgage banking and servicing specialists throughout the Midwest—has become even more collaborative during this time. We are doing more to stay connected, keep a pulse on the market, and share valuable data real-time so that we can most effectively counsel our clients.

The time we used to spend commuting is now time we are spending virtually connecting with coworkers, clients, friends, and family. We are learning more about the people in our lives every day and it is comforting to know that we are all going through this together.

Where We Go Now

All-in-all we need to listen—sometimes without providing answers—and make peace with the fact that there are many factors we cannot control. We can take solace in knowing that this too shall pass.

We should also explore how to give back to the communities around us. Those of us who are fortunate enough to still have our jobs and our health simply cannot take it for granted. We can all find meaningful ways to help and we should act on them immediately. Soon enough, we’ll be back in the “norm,” but for now, it’s important to embrace the “new.”

LANE4 releases annual report: Equilibrium emerging for 2020 retail market

Each year, LANE4 releases up-to-date information regarding the retail real estate market throughout the Kansas City metro in their Kansas City Retail Report.

An excerpt from the report, written by LANE4's Michael Berenbom, VP - Investments, follows:

"Perhaps the most indicative trait of the Information Age is the ever-accelerating pace of change. Like so many industries, the retail world has been hit with a shockwave of Amazonian proportions, disrupting consumer behavior, economic policy, technology, and social norms.”

“However, when a pendulum swings dramatically in one direction, it eventually swings back in the direction from which it came, drawing itself slowly toward an equilibrium. The retail pendulum may never reach a perfect balance between where we were decades ago and the height of emerging technology, but there are noticeable signs of movement toward a new middle ground, a balance between traditional retail habits and modern conveniences."

READ LANE4's full 2020 Kansas City Retail Report HERE.

Insight: KC CRE pros use tech tools to improve outcomes

By Erik Dolan-Del Vecchio | Content Contributor

On the way to becoming an investment sales broker at CBRE, Holly Mills was a commercial appraiser for over a decade, which explains a lot.

Mills’ analytical background is integral to her approach to commercial property sales and leasing. Clients say her data-driven insights inform and equip them to understand the benefits of different alternatives, be it for an investment property to purchase, a corporate location to occupy or a space to lease.

State-of-the-art technology helps Mills, a CBRE vice president, collect, sift, sort and track voluminous amounts of data and information. She uses the firm’s proprietary commercial real estate relationship management software to track spaces, tenants, properties, owners, buyers and milestone dates of opportunities coming up… “things I need to track to make me more productive,” she says.

Mills also makes frequent use of mapping tools to help clients visualize data points. She tells the story of helping a physical therapy medical practice plan an expansion involving as many as 10 locations in three years. Mapping tools with demographic information overlaying locations and radius maps helped her provide points of comparison for the client to determine the locations that would be accretive to their market.

Accessing Information from Anywhere on the Fly

Bob Galamba, senior vice president of Colliers in Kansas City, agrees that technology propels his business every day, accelerating transactions and reducing friction along the way.

Galamba’s focus primarily is multifamily, including existing assets and land with a multifamily component.

He and his team track people and prospects in Apto, the leading commercial real estate software for brokers, and use Smartsheet collaboration software to share information and facilitate communication so everyone’s on the same wavelength and has the benefit of the intelligence. Historical data on people, and shared documents such as letters of intent, can be accessed from anywhere on the fly.

For deal management with clients, Galamba uses Real Capital Market’s Deal Rooms, in which he can maintain property marketing pieces, confidentiality agreements, offering memorandums and more.

 “As a property remains on the market or a deal progresses, you’re still updating financials each month and rent rolls, and able to share that information with buyers who have expressed interest. It also provides a reason to reach out and contact prospects, and a seamless way to keep all the [transaction] information updated and together.”

Notably, Apto and Real Capital Markets are software integration partners, which facilitates information sharing and reduces redundant data entry between the two services.

Blockchain and Predictive Analytics are Game-Changers for Real Estate

Laird Goldsborough is no stranger to information and technology either. Information is the chief currency of his business, which is determining the value of real estate and advising clients on all manner of real estate and investment decisions as senior managing director of the regional office of Valbridge Property Advisors.

Goldsborough relies on a variety of technology tools and services, including demographic information from CCIM’s Site to do Business. He sees technology as helping to make real estate information more transparent and properties faster to transact.

Goldsborough describes blockchain technology, fast evolving, as a game-changer for real estate. He calls blockchain “distributed ledger technology” that allows all participants in the chain (versus one person) to have access to information. With blockchain, Goldsborough says, everyone owns the information, which removes opacity and thus risk.

If information on real estate assets becomes more transparent, not only will sales happen faster, but more buyers will become attracted to the asset class, which would expand the market for investors.

The commercial real estate sales cycle is too long, Goldsborough says. If you want to accelerate the sales cycle, unmask the information, which would speed up and standardize the process of trading assets, akin to trading Apple shares in the stock market.

The other technology Goldsborough sees as on the verge of benefitting real estate professionals is predictive analytics, a form of artificial intelligence. 

“You have a huge pool of data on real estate and sales and markets — a lake with minnows and trout and sharks. If we allow a machine to go out and fish out what we need, we could make better predictions based on historic data and cycles,” he says.

The result: “As an appraiser I’ll be able to give you a value today and look back and with a much higher degree of accuracy suggest what the building may be worth three years from now.”