Winter of our Real Estate Indecision

It is February 17th, and we are more than half way through the “Winter of our Real Estate Indecision”.  Two or three warmer days teased us earlier this month, only to hear that frigid conditions will be returning to Chicago this week.  However, we have learned that spring does return, and that is what motivates all of us to anticipate baseball, outdoor dining, golf and hot August nights.

Wow, does it not read like a page from the Wall Street Journal, or a current economic overview?  It appears that every piece of good economic news is “blasted” by five pieces sighting layoffs, public companies missing earnings expectations, or one more company filing for bankruptcy protection. 

However, we are seeing encouraging signs such as compromise on the passage of the government’s stimulus package, large tenants making commitments to existing projects in the central business district, and at least one company, Prologis, being reported to having received as many as eighty offers on pieces of the 33.23 million square feet of industrial space that they are marketing for sale nationwide.

I try to read only good news, be realistic of the challenges, but spend more of my time strategizing with colleagues on how best to continue to motivate my young professionals, add value to clients and celebrate successes, rather than dwell on the negativity.

Indecision is not an inherent trait that will last – business leaders have thankfully learned from the past that this is a very good time to reshape their workforce, identify talent, reduce expenditures, efficiently plan their space to be more cost effective, and recruit talent that has not been available in the last decade.

Real estate is still an asset that can be valued.  It has a determinable income stream that can be valued.  Once the future expectations for rent growth are clearly re-established then buildings will be priced accordingly, and product will test the marketplace.  Those values will be very different than prices paid in 2006 and early 2007 but new pricing with clear underwriting will start to bring about re-establishing confidence from debt sources to lend once again.

Bottom line, it is a great time to strategically plan, a great time to seize opportunity during this malaise of indecision, and in our industry a great time to add value to each of your clients in their real estate decision making process.