Earlier this week at UST’s Executive Insight Series, Senior Managing Director of CBRE, Whit Peyton, shared how CBRE has competitively structured services in the new marketplace and communicated local market insights.
With 30,000 employees worldwide, CBRE is a Fortune 500 firm and a global leader in commercial real estate. Through its global presence, the company has an intimate knowledge of virtually every major real estate market in the world. In his role, Peyton is responsible for managing the CBRE’s Minnesota operations, which are staffed by over 580 real estate professionals. His management duties include oversight of new business development, client relations, and related services.
In his presentation, Peyton reported impressive 2011 transactional figures. His offices completed just under 1,000 deals in 2011, with 1.56 billion in total consideration. Peyton explained to competitively compete in today’s marketplace, their organization has worked to differentiate itself through delivering more integrated and vertical services to their clients. Locally, their offices’ suite of services includes over a dozen areas of expertise, from asset management to project management to niche services (such as golf course services). Through offering an array of real estate service offerings (pictured below), CBRE works to position their clients’ investment properties to obtain maximum value while offering solutions “from main street to wall street”.
In the local market, Peyton reported consecutive quarters of positive absorption across all CRE market sectors. He reported the Industrial market has rebounded significantly since 2009 with over 1.5 mm square feet in positive absorption (6 consecutive quarters). He also noted due to the functional obsolescence of many industrial sites, there are over 15 industrial construction projects totaling over 1 million square feet coming to the local market. Regarding Retail, Peyton noted there has been a gradual recovery since 2009, and as the economy continues to improve, so will the retail industry. The retail market experienced 290,000 square feet of positive absorption (6 consecutive quarters) in 2011. For the local Office market, Peyton noted its recovery lagged industrial and retail with only 3 consecutive quarters of positive absorption. The office recovery is ‘slow and steady’ and the market remains in the tenant’s advantage. He communicated the local office market is attractive due to (1) Educated workforce, (2) English as first language, (3) trustworthy employees, and (4) Employee retention. (Note – If you are or know someone looking for a job of accounting, CBRE, just transferred a plethora of accounting positions here). Lastly, Peyton reported “Multi-family is as healthy as it ever been” noting vacancy rates remain around 2-3%, and very low cap rates around 5 and 6.
In the Q and A portion of the presentation, Peyton discussed inflation risk, opportunities in data centers, CRE loans coming due and new market challenges (such as offices producing more with less real estate).
In terms of investing in today’s market, Peyton encouraged, “if you buy good real estate, good real estate is good real estate and well managed it is still a wonderful way to create wealth,” he continued however, if the real estate is overleveraged, the “revisionary factor or shallow cash flows could kill you.”
CBRE began operations in the Minneapolis/St. Paul area in 1974. CBRE credits their success in the Minneapolis/St. Paul to the entire staff and senior leadership’s commitment to collaboration, transparency, ethics, education and true client focus. Peyton has over 34 years of real estate experience with CBRE, 19 of which have been in management. To learn more about Whit Peyton, Senior Managing Director of CBRE, check out his bio here.
The Real Estate Executive Insights Series is presented by the Opus College of Business MSRE program. This series invites speakers from the real estate industry to provide valuable information and discussion about hot topics and current trends. This is a free program and is open to the public.
Tuesday March 27, 2012
Development and property Management
Steve Wellington, Wellington Management