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The One Scary Truth about Commercial Real Estate in 2015

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As we have officially entered the last 60 days of 2014, we are preparing to both review our commercial real estate coaching client’s annual progress, as well as establish new initiatives for our client’s individual growth.

Generally, it is during this part of the year that I look back at the industry as a whole, revisit industry articles on market projections and information sources, such as Real Capital Analytics and others on market trends. I generally attend the various commercial real estate free “market update” webinars that most national CRE firms offer.

From all these inputs I have concluded one truth above and beyond anything else. And this one truth will impact every commercial real estate broker, commercial mortgage broker and property manager who serves our industry in 2015.

Before I get to the one scary truth, let’s start with the good news for 2015.

Interest rates should remain historically low. Yes, they have increased over the past 12 months, but put in proper perspective, interest rates are very attractive for investors in commercial real estate as well as business owners who elect to invest in their operations.

Capital is available. Direct lending, private lending and crowd funding will compete for investors’ attention. Don’t get me wrong, there are still more hurdles to get approved today than in the past, but there are also a myriad of financing alternatives.

The flight to quality will not only continue, but expand to secondary and tertiary markets. With all the capital available investors will continue to look outside primary markets. Simply, more attractive cap rates are available outside these normally targeted primary markets and investors, including foreign investors, are taking notice.

On the leasing side, new development will create more competition for the tenant’s business.  Landlord will need to become more aggressive to attract and retain tenants. Land prices will continue to rise – and development sites specifically will demand a premium.

All bodes well for those services the commercial real estate industry. All is good…or is it?

Here is the one scary truth about 2015.  It not only should be your best year ever; it HAS to be your best year ever.

Barring any economic, political or military knockout blows, 2015 will be a solid year for your personal production.  You should sell more buildings, lease more space, manage more properties and place more capital than you ever have during your career.  2015 must be your best year ever.

As we look to the horizon, we cannot say with the same level of confidence, the same will be true for 2016 – no one can know that. No one. 2016 is an election year, and there is too much uncertainty in such years. Historically, decision makers are cautious during such periods.

Face it. Whether you are 1 year in the business or 50 years, 2015 must be your best year ever.  So, here is the scary element of this truth. What are you going to do about it? What got you here, will not get you there.  What are you going to change to take advantage of this market opportunity?  What are you going to do differently?

You have the chance, if not the obligation, to make 2015 your best year ever. Chances are you won’t have this chance in 2016.

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