Park Development Executive Discusses Commercial Trends
The Orlando Medical News took a few minutes with Tiffany Zigo, commercial real estate agent and leasing manager for Park Development, to discuss commercial real estate trends affecting the healthcare industry in Central Florida.
How is the economic downturn affecting commercial real estate in Orlando?
Right now, as all commercial agents know, oh so well, commercial real estate seems to be mimicking the same trend as residential real estate. Add to it the banking mess and what we have are business owners and prospective tenants not moving forward on projects, therefore creating an intense buyers' market for all looking to purchase, lease, or build. This situation is resulting in an unhappy and uncomfortable market for owners and developers who are leasing and selling. They are being forced to move their prices down and tighten the belt to an uncomfortable and even at times painful level. What is ultimately happening is the consumer in the commercial world desires a lower than average leasing or purchase rate. That rate, although justified by the consumer, cannot be met by the developer/owner either because of the cost margin of the original purchase price or the substantial loss the company would take by agreeing to the low price margin.
In what areas do you see promise for experienced commercial agents?
What I'm seeing, what many are missing, are the grey areas that we need to tap into and get what the client and the developer/owner is looking for; this is just what we, the experienced commercial agents, are here for. Yes, for awhile we could blink and money would fall into our laps at an alarming rate. Now, however, in this market, sheep and goats will be divided! The agents that know what they are up against and how to help, for example, a doctor, salon, or restaurant with what they need, and the agents with the negotiating skills and the ability to translate so each side can benefit by meeting in the middle, will be able to make it through this sludge that we call real estate.
How important is commercial experience in the real estate industry?
There's no doubt in my mind that if you're involving yourself in the market at this time, you must have an experienced commercial agent, not a crossover agent who was in the residential market but when that took a dive moved over to the commercial arena. These two markets are so drastically different that without the correct knowledge and experience, there's no way a crossover agent will be able to help out anyone in the manner that will meet the needs demanded.
For example, even though purchase prices are lower, buying might not be the best option for the client. Depending on what their plans are, leasing may be a great way to maintain until things come together. Find out what their projected goals are to get a real understanding of a company's situation in order to tell whether or not future growth is a possibility. Listen to what is not only said but what they are not saying. Both sides need to be realistic and that is what an experienced agent can do. Your goal is to see where the market is and how it can benefit you.
What needs to be negotiated other than the financial bottom line?
There's so much that can be negotiated besides money or rent rates. A lessor may not be able to give tenant improvements for an already built out space, but will possibly negotiate on free rent for any upgrades done, or waive cam charges, maybe a monthly credit given for the term of the lease that will help you get a lower monthly payment even if the rent rate is higher than what would be preferred. Remember: you have not because you ask not. Be willing to accept or give short-term leases, which opens opportunity for the developer/owner and tenant. A short-term lease gives an "out" if the market goes down. And for the lessor, it gives an opportunity to fill a suite without having difficulties receiving a long- term loss. Short-term leasing could give both sides a long-term financial advantage. So do not be afraid of diving in the real estate world. Just make sure you have an experienced guide with you.
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