By HAYIM MIZRACHI – President | Principal | Broker – MDL Group (4 min read)
The two most asked questions I am answering with clients and friends about commercial real estate are “how is business in the COVID environment?” And “do you think prices for commercial real estate will go down?”
Every month at the MDL Group broker meeting we have a Water-Cooler segment. Our agents ask about, share, and explore the goings on in Las Vegas and the commercial real estate market. We talk about rumors, major projects or the most burning questions of the day.
Tuesday, August 4, 2020 MDL Group August Broker Meeting – the purpose of the Broker meeting is really to bring everyone together. The agenda is specific and intentional. We start with a Lucky Day Drawing giving away money. That sets the mood! To be entered you have to show up on time. If you’re not on time, you are not entered!
We then go into birthday celebrations for the month and the Brokerage Support Staff announces their selection for Rock Star of the month – this goes to the Broker who makes it easy for them to do their jobs. The Rock Star also gets money! Next comes announcements of the Top 5 Brokers for the month, followed by Top 5 Year-to-Date standings. It’s a very big deal. The Brokers next, present any new listings to the group and we talk about significant transactions. That all leads to the Water-Cooler segment!
This month we posed those two questions to the group. Below are the Takeaways from that discussion.
I also included perspective from a third question I have been pondering. What is the silver lining for the commercial real estate industry?
I hope these insights are useful in your own reflections as we go into August and ask:
- “Where am I towards my goals?”
- “What is working and not working in the current environment?”
- “What commitments do I need to double down to achieve the level of success that I expect of myself?”
Here are the Takeaways from the MDL Group August Broker Meeting!
How is business with all this COVID crap going on?
- This is the #1 question we get asked multiple times per day.
- For MDL Brokerage, revenue for March and April were 40% and 63% above average.
- May was a terrible month. There is no sugar-coating it. Might as well have just cancelled May.
- June revenue was back to average.
- July was 28% better than average.
- We are keeping a sharp eye on the rest of the year.
- We brought on 8 new listings in July, 34 new listings total since the closures in March.
- Some deals that were initially delayed by the closures are returning and closing. Just maybe in a different form than before.
- Activity from new inquiries (to buy or lease) are down year over year, but they are not totally absent.
- We talk about the importance of making the makeable deals right now.
- The most common sources of business that we are seeing are from previous clients and referrals.
- What’s working…? Connecting with clients and previous clients to see how we can be of service.
Will pricing go down in commercial real estate?
- This is the other question we answer multiple times a day.
- The answer is “it depends.” There are industries and businesses that are clearly winners from the pandemic.
- Once we address that caveat, generally the belief is that there is much pain that will need to work through the system.
- Some retail businesses are learning to adjust to reduced occupancy/operations.
- The unemployment rate was 18% in June, and the $600 additional unemployment benefit is sun setting.
- Evictions were lifted July 1. So far it has not been pandemonium and mayhem.
- Rent collections across our 1,600 + tenants are in the high 80%’s. Carol is working to get them in to the 90%’s.
- For Las Vegas there are realities to face.
- Casinos are posturing ‘not to lose money’ until things normalize with the pandemic.
- CES, a large technology trade-show that brings +/- 200k conventioneers to Vegas annually, announced it will hold the January convention digitally.
- The Golden Knights kicked the snot out of the Dallas Stars Monday 5 -3 with Carrier scoring a highlight reel worthy goal between his legs. His first Playoff goal to give the Knights the lead. However, the game was played in a stadium with no fans.
- The Raiders officially announced Monday they will play their opening season at the new Allegiant Stadium without fans.
- Brendan Leake shared this article featuring Jeremy Aguero’s keynote from Preview 2020 with additional insights.
- In short, basic supply and demand principles dictate there will be a softening of pricing and rents. Again, see caveat above.
What is the silver lining for the commercial real estate industry?
- This environment is not like the Global Great Recession where transactional opportunities ceased completely.
- There are transactional opportunities (a way to earn income) so long as there is movement.
- The way to get your slice of the pie and even seconds is:
- Show up
- Do not hide
- Do not retreat!
- Our clients need our advice and our positive/optimistic energy now more than in a boom time.
- They deserve our A-game.
- Let’s make sure we show up and give it to them!