Everybody knows that such businesses as restaurants, boutique retailers and movie theaters were whacked by the pandemic. But I admit that I didn’t fully realize how commercial real estate brokers were similarly hurt.That became clear as I read through the nominations for this year’s Commercial Real Estate Awards, which the Business Journal presented on March 3. Several brokers described how deals fell apart when the pandemic hit last year and they had to get creative and be persistent to make them work, perhaps at a reduced price. In short, the dealmakers’ art came to the fore.
For example, Yair Haimoff, Andrew Ghassemi and Matt Sreden of Spectrum Commercial Real Estate described how they found a willing buyer for a 65,000 square foot Class-A office building in Valencia. But when the pandemic hit, the deal was immediately jeopardized. They wrote that “through almost daily conference calls” they were able to keep communication open, which allowed negotiations to continue and eventually they structured a deal, including a price reduction, that worked for everyone. The $15 million sale won a gold award for Best Office Sale, largely because of the persistence and creativity the brokers demonstrated.They weren’t alone. Several other brokers described similar pandemic-caused struggles. And, of course, we don’t know how many deals quietly were scuttled.
Actually, not all commercial brokers were hurt. Those who specialize in industrial and warehouse space may have enjoyed a great year in the pandemic. That’s because companies involved in ecommerce and some manufacturing such as food service may have seen a surge in business and needed more space. In the big picture, however, that activity is not enough to offset the decline in office and retail space, and inventory is low for industrial space.If you read the Commercial Real Estate Awards section in this issue, which honors high achieving brokers as well as the best Valley-area real estate projects of the year, you may be inspired by the accomplishments of those in the real estate world, many of whom successfully employed creativity and persistence to complete deals in a difficult year.• • • If you’re a baby boomer who still owns a big house, read the op-ed below if you want a bit of a scare.
The basic point – and this is a spoiler alert – is that the baby boomers are starting to turn 75 years old, and people sell their big family houses, on average, at age 78. So a big wave of boomer-owned houses is just about to start hitting the market. The writer, John Grace of Investor’s Advantage in Westlake Village, posits that a 50 percent plunge in home prices on the West Coast is at least possible.Maybe so. I’m a boomer and I’ve long believed that I wouldn’t want to be stuck with a four-bedroom home in the suburbs when I’m in my 70s. After all, the millennials coming up behind us boomers are not as numerous, and they don’t want houses in the ’burbs anyway.But wait one minute. Maybe not. In the last few years, it’s been reported that contrary to popular belief, millennials outnumber boomers. So, that implies that there may be a big pool of buyers coming up behind boomers.
What’s more, some have pointed out that the millennials’ supposed distaste for the suburbs has been overhyped. Joel Kotkin, for example, has written extensively that as they age, millennials have been increasingly populating the suburbs. They want some yard space, a two- or three-car garage, good neighborhoods for the kids – the same things most everyone else wants.
So, maybe boomers in their 70s will be able to sell their houses for a tidy sum, after all.
At least, I tell that to myself. And I can’t explain why, but I can’t shake the feeling that I still wouldn’t want to be stuck with a four-bedroom home in the suburbs when I’m in my 70s.
In Pandemic, Dealmakers Survived
