The next few months will be very important for how the commercial real estate market recovers. The worst of the COVID-19 outbreak seems to be behind us, and while investors and tenants are still cautious, there are signs of recovery.
James Marian, Adjunct Lecturer at the University of Arizona
We had the pleasure of talking to James Marian, adjunct lecturer in Real Estate Development at the College of Architecture, Planning and Landscape Architecture of the University of Arizona. He is also founding partner and designated broker of Tucson-based Chapman Lindsey Commercial Real Estate.
We asked him to share his insight on significant trends and challenges in the CRE market and the importance of online marketing in CRE. Read on for the full interview.
Q: Could you start by telling us a little bit about your background and why you chose a career in commercial real estate?
I graduated from the University of Arizona in 1979 and other than an initial three years as a pharmaceutical sales representative, I have been a commercial real estate broker in Tucson, Arizona. Early on I specialized in apartment properties. However, I transitioned into land sales, specializing in large land deals with both local and national homebuilders.
I love the commercial real estate business. It is always evolving and always challenging.
Q: Considering the COVID-19 outbreak, what are your thoughts on the CRE market in the US today in terms of trends and challenges?
It is still too early to say how the marketplace will be impacted. Here are a few thoughts from some industry leaders:
- Income properties, depending on the market segment and location, are expected to lose up to 10-40% of their value. The industrial market should be the least impacted, with retail and hospitality the most impacted. The value adjustment will come mainly from a loss of net operating income (NOI) and not an increase in capitalization rates.
- Increased demand in suburban locations and decreased demand in urban marketplaces, especially the most dense ones.
- Return to more conventional office layouts and less demand for cubicles and open space. One projection says office square footage per employee may go from the current 100 square feet per employee to nearly 200 square feet.
- Residential sales, although down a bit, remain surprisingly strong so far.
Q: What differentiates the commercial real estate market in Arizona from other major markets in the United States?
In a nutshell, growth. Arizona continues to attract new business. Our low-density footprint bodes well for our immediate future. And compared to most other marketplaces, our commercial real estate prices remain attractive.
Q: How have you seen the industry evolve in the past years you’ve been involved in it?
Technology has influenced the commercial real estate market more than anything else. It has changed marketing, market research, and client communications. That said, this is still a big “people” business. There simply is no replacement for face-to-face meetings to connect with clients and to earn their trust.
Q: Where do you see it going in the future?
More technology!
Q: Are there any lessons from the past few years that you would impart as an absolute must for those looking to get into the CRE industry?
Read, read, read, and attend local and national seminars to stay ahead of the change curve.
Q: What is your general assessment for the commercial real estate market in 2020? Have you spotted some interesting market trends, especially considering the current pandemic?
It’s too early to tell and discuss trends. We’ll see in six months!
Q: How has the evolution of online marketing impacted the commercial real estate industry?
Online marketing had a huge impact. Real estate brokers cannot survive without an online presence. Many thought online marketing would replace brokers. This has not happened and, in my opinion, will never happen. However, online marketing has increased market share for top producers who make efficient use of the web.
Q: Any other insights that you’d like to share?
I decided to head into commercial real estate in 1982 because I was bored with my job at the time. Thirty-eight years later, I am still not bored! No doubt this marketplace will continue to evolve, providing almost unlimited income opportunities for professionals who are willing to work hard and create value for their clients. And getting a Master of Real Estate Development, such as that offered on-campus and online by the University of Arizona, sure would help!
Interested in being interviewed for our Expert Insights series? Feel free to reach out to us at [email protected] or check out other articles from our series here.
