Trust Those Who Look Out For Their Client's Best Long Term Investment Interests
Marcus & Millichap Headquarters, Photo from CoStar
Commercial Real Estate investors facing the ever-changing 2021 market landscape are frequently relying on their brokers to give them information on market conditions. But investors should be wary to trust the “economic” view of companies who solely rely on commissions and market activity. Trust those who look out for their client's best long term investment interests rather than soundbites trying to "make a market" and generate commissions.
In this recent article from CoStar News, author Randyl Drummer interviews several large commercial brokerages. Explore the full article from CoStar below and decide for yourself…
By Randyl Drummer
CoStar News
May 7, 2021 | 8:46 A.M.
Marcus & Millichap said its retail real estate brokerage and financing business showed signs of improvement in the first few months of the year, a key indication that the hardest-hit part of the U.S. commercial property industry in the pandemic may be sharing in the increased investor optimism fueling more deals.
The Calabasas, California-based firm, which says it closed more retail property sales last year than its next five competitors combined, reported picking up steam in the first quarter after the disruption that caused many nonessential businesses to close under government orders during the health crisis.
Many retailers were slammed in the past year as restrictions in the pandemic kept customers out of stores and malls, accelerating the increasing use of online shopping. Major retailers filed for Chapter 11 bankruptcy protection as properties were closed.
Marcus and Millichap said improved investor sentiment so far this year and sales based on low interest rates and increased COVID-19 vaccines may increase real estate investor demand, particularly in the second half of 2021. It also cited an “uneven recovery among markets we operate in” while reporting first-quarter profit climbed to $15 million from $13.1 million.
Unlike full-service brokerages that also offer leasing and other services, Marcus & Millichap specializes in investment sales brokerage and financing of office, industrial, retail and other types of commercial properties.
“We have seen investor demand steadily rise in anticipation of a vaccine rollout, growing confidence in the economic recovery, still-low interest rates and ample liquidity,” according to Hessam Nadji, president and CEO. “Apartments and single-tenant net-lease, among the most stable sectors, are seeing pre-COVID pricing and investor demand in many markets.”
Total revenue fell 3.5% to $184 million as real estate brokerage commissions declined, which was partially offset by increased financing fees. The company said selling, general and administrative costs for the first quarter of 2021 slid 5.8% to $51.7 million, mainly because the company’s annual sales recognition event was canceled in the pandemic.
Cushman & Wakefield said late Thursday that deal activity is gradually picking up after more than a year of disruption in the pandemic, and it's anticipating an "uneven market rebound" as various property types recover at different rates as it looks forward to increasing demand through 2021.
Other brokerages, including CBRE, JLL, Colliers International and Newmark, reported earnings amid expectations for improvements in demand for the rest of 2021 as the industry rebuilds from the COVID-19 downturn. The firms provided optimistic assessments of the future as vaccine rollouts prompt companies to bring workers back to offices and the resumption of social activities and travel.