CRE Industry Veteran’s Advice during Pandemic: Leverage Relationships, Demonstrate Value, Look Ahead
“On the wall of my office I have a quote from Calvin Coolidge, ‘Nothing in this world takes the place of persistence,’” shared Michael J. Carr Sr., a broker at Coldwell Banker Commercial NRT in Southwest Florida. “It’s what makes my business go, and what makes anyone’s business go. You just have to keep plugging away.”
Persistence has defined his 40-year career in commercial real estate – he has endured numerous economic crises. After moving to Naples from Cincinnati in 1978, he first started a plumbing supplies business, but redirected his efforts, earning a real estate license in 1980. Michael then started a small brokerage in 1982, merging with a Coldwell Banker Commercial affiliate in 1991.
Despite the COVID-19 pandemic creating one of the most challenging real estate markets in recent history, Michael is still closing deals, selling a $5 million industrial property and a $2.9 million commercial property in early April, with more deals on the horizon. While the industry veteran says the pandemic is unlike anything he’s experienced, the same principles that allowed him to weather previous downturns are proving fruitful today.
Leverage Existing Relationships
“Every buyer is expecting a lower price. You have bottom feeders coming in, trying to buy listing at 40% or 50% off,” Michael said, describing the current state of the industry. “Most sellers are financially stable and are not going for that. The deals that are being done are coming through pre-existing relationships”
In times like this, Michael shared how the Coldwell Banker Commercial network is more important than ever in building meaningful client relationships.
“About eight years ago I got a call from a woman from a residential Coldwell Banker brokerage on the Florida’s East Coast,” Michael said. “Her brother owned a warehouse in Naples and needed a tenant. She didn’t want a referral fee, she just wanted to help him out. I found him one and he has remained a client ever since. I recently worked with him on two deals. It speaks to the power of the Coldwell Banker brand.”
While first-time buyers may lose confidence or are unable to close a deal amidst the current climate, Michael shared how seasoned clients are more likely to stay the course.
“One of the properties I just closed was sold to a group of doctor-investors,” stated Michael. “They were stable investors who had a vision and were not deterred by circumstance.”
Demonstrate Value Through Counsel
Building lasting relationships with clients often means providing guidance in times of hardship, even when this counsel may not immediately be rewarded with business opportunities. Michael talked about how forward-looking brokers are taking this time to strengthen bonds with clients, which will be remembered when economic conditions improve in the future.
“I give the same advice I gave in ’08: if you have a property with multiple tenants, do whatever it takes to keep them, even if you have to cut rent in half for the next year,” Michael said. “Don’t make a long-term lease at this rate but keep the tenant in there until their business returns. There aren’t going to be new tenants in this time, and something is better than nothing.”
This is an opportunity to “do right” when giving counsel to clients and provide authentic guidance, even when that means advising against putting their property on the market at this time.
“If someone is compelled to sell because of debt, I’ll tell them to do it now, or they will ride the market down,” Michael said. “However, if that is not their circumstance, I’ll tell them to hold on. We’ll do better for them when the market recovers.”
Consider the Big Picture
Economic crises are often initiated by short-termed, panicked decisions as much as they are routed in larger world events; millions of anxious Americans withdrawing their savings caused widespread bank closures that marked the Great Depression. In providing counsel to clients, Michael stresses considering the pressures that all parties are facing in this time and arriving at a medium that keep each other’s businesses afloat.
“Coming to a rent agreement with a tenant is good for all parties,” Michael shared. “It allows the owner to maintain some of their income, gives the tenant reprieve in a difficult time, and also benefits the community by allowing businesses that have often been fixtures for decades to survive.”