Without change, nothing grows. But unexpected, chaotic change in economic systems and business transactions causes uncertainty and lost opportunities. In uncertain times, people reach for touchstones, for information and for the guidance of experienced professionals in their own markets.
Seasoned, professional CCIM designees possess the knowledge, stability and expertise to help clients weather economic storms. Certified Commercial Investment Members are awarded designee status and their lapel pin upon completing a course of education and producing a portfolio of transactions to prove their experience.
The benefit for the new designee is expertise. The benefit for their clients is that an experienced CCIM has probably already weathered whatever storm the client is facing, even when that storm is a disrupted economy that’s been shut down.
The education CCIMs receive in earning their designations has been compared to an MBA that specifically targets commercial real estate.
“In hiring a CCIM you’re hiring folks that have invested in themselves, that are focused on a specific [commercial real estate] sector, specialize in exactly what they do, and are some of the best at doing it,” said Ryan Martin, MDL Group, CCIM President. CCIMs have access to knowledge and information the general public doesn’t.
Southern Nevada’s Commercial Real Estate Market
“We were doing very well in the market in all facets before COVID-19 arrived. Every indicator showed we were doing very, very well, whether unemployment, construction costs, availabilities in terms of vacancies and product. All signs were positive,” said Martin.
Everything came to a grinding halt in March. “Our Las Vegas market was in a stable position before the pandemic and, unlike the last recession, this one was artificial,” said Robin Civish, ROI Commercial Real Estate, CCIM past president, National Chapter board member. She expects the market will take time to recover, but closer to 12 months rather than the five years of the Great Recession.
“We have not overbuilt, and we have been adding to the diversity of our economic drivers with things like the Las Vegas Golden Knights and the Raiders stadium,” said Civish. “Both of those are new economic drivers we didn’t have during the last downturn.” As some of those industries that were shut down begin to reopen, the ramp up of those additional businesses should help drive the economy even further.
And, just because people were staying home doesn’t mean they’re not working, added Soozi Jones Walker, Commercial Executives Real Estate Services, CCIM past president and National Chapter board member. “There are lots of industries whose employees continued to work and those companies continue to use real estate.”
Moving forward, the real question becomes, how much real estate will companies need? Jones Walker speculated that businesses will increase the space between employees as offices reopen. “The big open concept office where everybody was working together and there were no individual desks, for a period of time, that concept may have to be adjusted.”
Regardless of how, the market is still changing, and CCIMs can help clients navigate.
Cathy Jones, Sun Commercial Real Estate, CCIM past president, works with her team in investment sales. They watched the market change overnight and investors start looking for deals but sellers aren’t ready to go down 20 to 30 percent. Investors aren’t settling for 5 to 10 percent and lenders are pulling back, being choosy about who the tenants are, requiring higher reserves and reluctant to do nonrecourse loans.
“CCIMs are not just brokers,” said Civish. “We’re commercial brokers. We’re also bankers and appraisers and property managers. The clients we work with are also varied and include property owners, developers, bankers, tenants and even other brokers. Basically, if you own commercial real estate, want to own commercial real estate, have a business or want to start a business, you’re probably our client.” During the shutdown CCIM clients benefitted from more than just information from CCIMs. For the first time, said Jones, the large commercial real estate associations came together to exchange information and help each other through the crisis.
“Those CCIM tools have become more valuable today than ever before,” she added.
Not all economic disruptions impact every industry. During the Great Recession, much of the healthcare industry kept hiring, even in Nevada which was the hardest hit state in the U.S. Throughout that crisis, Nevada mining continued unabated, and while hospitality was affected, people could still travel and eat out, and Nevada was still a drive-to destination.
With the stay home orders that came with the 2020 pandemic and the closing of non-essential business, nearly every industry was impacted, especially retail and restaurants. Businesses looking to buy, sell, lease or rent property were full of questions and concerns, as they would be in any economic downturn, only with COVID-19 there’s a twist. How to rate the viability of a business that can’t open?
“I specialize in retail and the majority of my business is leasing,” said Jennifer Ott, ROI Commercial Real Estate, CCIM immediate past president. “So for me, on the tenant representation side, a lot of my clients haven’t been able to open [their businesses]. When you can’t operate and you don’t know what parameters you’ll be able to operate under, it’s hard to continue expansion. A lot of them have just been sitting on hold and those that already had existing leases, they’re trying to figure out how they can work with their landlords so they can meet their obligations and continue to operate and be successful when they’re able to.”
It’s the same on the landlord’s side, where they’re trying to retain tenancies at the same time keeping up with their own obligations with lenders and maintaining their properties.
Ott provides her clients with information on changes in the market and uses CCIM tools and market information gleaned from networking with other CCIMs to help her clients get through the shutdown and understand the market. “It’s nice to have the data and experts to point to, and to be a source of information as we’re all trying to figure this out,” said Ott.
“A CCIM is somebody who is an expert in a field, and because we are experts in that field we can help our clients through transactions more smoothly, and we’re provided with additional education that’s timely,” said Civish. “There is opportunity even in times of crisis. CCIMs have the expertise to work with property owners and buyers on their best options in not only times of prosperity, but in times like recessions.”
Information is one of the key factors CCIMs use in working to secure the best possible transaction. “We live and breathe commercial real estate every day and we live and breathe in our market,” said Civish.
Because CCIM designees specialize and because they range from brokers to bankers, there’s a wealth of knowledge between members, from specialty to region.
“I’ve gotten great relationships out of my CCIM designation and wonderful education,” said Ott. “It’s nice to know I can pick up the phone and talk with other CCIMs anywhere in the country. I can call up somebody in Texas and ask what they’re seeing with a particular transaction or property type. Or I can talk to somebody in Reno I refer business to and get referrals back.”
The expertise CCIMs have in their own specialties gives them insight into the commercial real estate market, even when that market is volatile.
Keeping Pace with Technology
Not long before the pandemic shutdown, Ott’s team bought a drone. “We’ve been doing drone videos of the properties we handle, and YouTube videos of the interiors so we can do virtual tours,” Ott said. Interested parties who don’t want to visit properties in person or don’t have a way to travel to southern Nevada can still do a walk through.
“What we hear a lot from clients, especially out of southern California is, ‘On this transaction, I need somebody local,’” said Adam Gregory, CommCap, CCIM president-elect. “Often a CCIMs knowledge of their market helps them answer client questions. You might have two very similar properties very close together, but one is performing well and one is not.” The experienced local CCIM can zero in on the why behind the non-performing property.
The CCIMs knowledge makes the client’s decision easier. The CCIM Institute works with individual chapters to ensure each has the tools necessary for designee’s to work with their clients. During the shutdown, the Institute made certain every chapter had a Zoom account to keep clients and teams connected. The Institute’s portal software, Site to Do Business, keeps designees on the cutting edge of technology, providing chapters with social media and marketing training.
Ott’s team purchased a CRM – customer relationship management software – and learned to use it during the shutdown. The program helps the team track transactions and communicate more effectively.
Many professional CCIMs in Southern Nevada have already weathered an economic storm that seemed catastrophic at the time, but also gave today’s professionals the skills to guide their clients through the most recent downturn.
Not all CCIMs specialize in one sector. Adam Gregory is a mortgage broker. “We don’t concentrate on any one product type. We cover the spectrum, so working within CCIM and having the ability to reach out to retail specialists, office specialists, industrial specialists, that’s a big benefit to us.”
One important piece of information CCIMs can offer clients during an economic crisis is who’s paying their bills in a market sector and who isn’t. That data is available to CCIMs and from them, to their clients. That kind of information comes from networking, from market knowledge, and from the CCIM’s experience in their own market sector.
“Many of us have first-hand knowledge of the Great Recession, and I don’t think the change [this time] is going to be dynamic,” said Jones Walker.
She added, “People have short-term memories. A pandemic doesn’t go on forever. A pandemic has a beginning, a middle and an end. We have a virus that’s affected us and there’s been great efforts made so we won’t all get sick at the same time. Does that mean people won’t want to go to nightclubs again? That they won’t want to go out to dinner? I don’t think so. I firmly believe that in a shorter period of time than most would expect, things will go back to normal.”
When non-essential businesses shut down in March, restaurants and retailers lost about three months worth of business. Reopening will boost the economy and should start the economic recovery process. Meanwhile, CCIMs are guiding their clients in the market and looking at the shape of what may come.
“It’s going to be a great deal of change,” said Charlie Mack, Mack Realty, CCIM past president, who specializes in land. A lot of businesses that operate out of offices got used to their employees working from home. They may not be ready to jump back into having enough office space for the entire business, which could create a lesser demand for properties.
Mack added, “As far as retail’s concerned, we’ve seen more and more major companies declare bankruptcy, and retail was not on solid ground before COVID-19.”
Because retail has been struggling, many lenders tended toward experiential retailers, those whose customers came to them for the experience, like gyms, salons and restaurants.
“That blew up in our face,” explained Gregory. “Because those were the businesses that shut down.” However, that doesn’t mean retail transactions aren’t happening. Prior to COVID CommCap did a lot of retail and hospitality.
“We’re still getting it done,” Gregory said. “It’s even more important today to be able to reach out to fellow CCIMs who do concentrate in retail and can provide market data on which tenants are paying, and which aren’t. That’s a big focus from a lending standpoint, because even though it’s been offered to lenders, at the end of the day, forbearance isn’t forgiveness.”
The market sectors Mack expects to see grow are medical office and land. Because there’s no new land coming into Southern Nevada – “No one is making anymore land,” he explained – the value keeps going up. Mack also expects multi-family to do well, especially in any recession that follows the shutdown. People have to live somewhere and not everyone will be able to afford house payments.
“Education is what makes a CCIM a CCIM,” said Civish. “Education is a key component along with experience that qualifies you as a CCIM and the Institute continues to update the core courses for designation and is offering online versions of the course as well as in-class education.”
During the shutdown, the Institute offered existing CCIM designees the core classes as refresher courses for free. They also took the four required courses completely online for the first time.
The four classes that comprise the core curriculum for CCIM candidates are financial analysis, market analysis, user analysis, and decision analysis, each a four-day course, said Mack. “That’s another thing that’s changed with COVID-19. We haven’t had any live courses over the last few months. We always had online courses over the last several years, but now we have virtual classes through Zoom and we’re getting a tremendous amount of support from the market. The number of people taking the live courses were anywhere from 20 to 30 students because a lot of them had to travel and get hotel rooms. Virtual instructor-led courses are getting 40 to 60 students.”
Becoming a CCIM gives commercial real estate professionals the tools and education to improve their skills and become experts in their field and in their specialty. Earning the designation fosters learning and enhances skills and expertise.
“I’ve always felt comfortable recommending to somebody in commercial real estate to go through the CCIM program, because it’s very comprehensive. It deals with sales, it deals with leasing and it provides you with great fundamentals for being able to advise your clients,” said Jones.