During the so-called Great Recession there were a lot of strategic moves within the North Bay market. EOP let go of their huge holdings at the beginning and then we were all surprised when RNM sold their holdings to PB&J and Investcorp. Basin Street picked up most of the EOP properties and PB&J started aggressively marketing their properties. All kinds of broker incentives floated around, but the deals are not driven by the brokers. They are driven by the market, which is to say they are driven by psychology and emotion. Sit down and analyze spread sheets. Project cash flow scenarios. Make it a good deal on paper. But I’ve had more deals over the course of my career die because a principal doesn’t “feel” the deal is right than those which didn’t consummate due to logistics. It can be a no-brainer on paper, but it has to feel right in order to make it happen.
A case in point is a recent transaction I completed for a close to ten million dollar property. This is a property I’ve spent over twenty years working on. I listed the asset in March of 2013 for sale. Two days before the end of the year (and my sale listing) we signed a Letter of Intent with a purchaser. The purchaser and the seller had done a deal some fifteen years earlier, so they were known quantities to each other. I had presented previous LOI’s which were flat out rejected, yet this one stuck. The only reason it stuck, and this is a quote from the seller, was that “(He felt) good about the Buyer”. The deal had all the ups and downs of any large dollar transaction. Voices were raised. Promises were made. Back and forth it went. The problems were static, but emotions ran high. Economic trends were both valued and cursed in the same conversation. A broker cannot get involved in these emotional areas. Our job is to make it happen as directed by our client and to keep away from the murky waters of emotional highs and lows. We advise on the deal. We pay attention to the paper trail. We report our marketing efforts to our clients. We play Pocahontas when these emotions run high.
At the end of the day, the old cycles hold true. People start feeling better about the economy. People start feeling more secure about their endeavors. And properties start to lease and sell. Sometimes it is a slow process, but the curve can still be sharp.
As we round the corner midway through the first quarter of 2014 I find myself going from busy to busier. Everything from 200 SF office leases up to negotiation on 8-digit acquisitions is heating up. This brings about a new problem, or at least one I haven’t faced in quite a while: Inventory. Or a lack of it. Our retail specialist in the Petaluma office is having trouble finding space. I’m shoe-horning long dormant office spaces. Behind-the-closed-door deals are being struck. Inventory is dwindling. While office still has a long way to go, I’m going to focus my energy on picking up more office inventory. Why? Again, because the curve can be sharp. I’m also focusing energy on picking up industrial inventory, as that sector is almost non-existent in Petaluma and the surrounding areas.
Here we go (again)…