While the commercial real estate market may follow general trends at a national level, every regional and local market features unique conditions. To get an idea of how smaller markets differentiate themselves from larger ones, as well as the effect of the current pandemic on office leases, we interviewed Stephen Critchfield of Commercial One Brokers. Stephen’s experience in the Branson, Mo. commercial real estate (CRE) market spans over 35 years.
Q: Could you start by telling us a little bit about your background and why you chose a career in commercial real estate?
I started my career out of college over 35 years ago in the advertising agency business. I went to work later for one of my land development clients. A few years later, I started my own residential land development, construction and new home on site sales brokerage company. I gradually transitioned into commercial real estate brokerage exclusively when I relocated my family from Wichita, Kans. to Branson, Mo., some 25 years ago. I enjoy working with businesspeople and investors.
Q: Considering the COVID-19 outbreak, what are your thoughts on the CRE market in the US today in terms of trends and challenges?
The current market is nothing like we have ever seen before. If you have been in this business very long, you’ve lived through the natural ups and downs of the real estate market cycle. We have never seen the economy artificially shut down and stopped. Trends and challenges will all be different depending on your local market conditions.
Where your market was in the cycle before this all happened will play a major role in your future. For instance, were you beginning to see some increased vacancy levels while construction was still occurring or was your market still in a strong recovery? If your market was on the back end of the cycle, you will have a larger challenge going forward. Those in the recovery segments will probably bounce back sooner, although not near levels prior to the shutdown. My local market of Branson, Mo., was in the strong side of a recovery with a limited number of new projects being started and occupancy levels in the mid to upper 90 percent levels in all commercial market segments. Because we are a tourist destination, it is anticipated that our recovery will be initially tied to the “drive to” visitors who live within 400-500 miles of Branson to begin our comeback. So far, that appears to be the case and it is already happening.
Q: What differentiates the commercial real estate market in Missouri from other major markets in the United States?
Missouri is like many of the other Midwest markets, as we don’t have particularly high highs or low lows. Typically, the Missouri market trails the east and west coast commercial market trends by a year. I am not sure if there are many big differences in our larger city markets, such as St. Louis, Kansas City nor in midsized markets like Jefferson City, Columbia, Joplin and Springfield other than more affordable costs.
Q: How have you seen the industry evolve in the past years you’ve been involved in it?
The addition of technology in both the marketing, financing and administration of real estate transactions is the biggest change. The residential market has adapted faster than the commercial business, but commercial is gaining fast. With more market information available, it is even more important that commercial brokers specialize in specific segments of the market and their market area. Unfortunately, some investors, tenants and site selectors believe they can get all of the information they need on the web, when in reality only a local, knowledgeable broker can provide the in-depth information investors or tenants will need. This is particularly true for the smaller markets and tourist markets like Branson, Mo.
Q: Where do you see it going in the future?
More tenants and landlords will certainly have their legal counsel address situations like the Covid-19 pandemic in future leases. I’m sure those conversations will also occur with commercial insurance providers and commercial lenders as well. Everyone is going to wonder what’s going to happen if the sky really does fall down.
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?
Commercial markets don’t always go up. Many times, a broker who has received the right training, education and experience will be more successful during a difficult market than in one that is booming. There is typically less competition and a good broker sees more demand in such cases. Lenders, landlords and tenants will all be seeking the best, most professional property managers, leasing and tenant representatives, as well as investment counselors for the coming uncertain times. As is often the case, some will become very successful during these times if they can navigate through the negativity that will be all around them.
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?
Everyone will be more careful and guarded when making future decisions. I suspect that leasing and buying decisions will take longer and everyone will be preparing a plan B for all cases. Some tenants and investors will think that they can get a great deal on a property when they probably will not. Still, we as brokers are going to have to spend more time and provide more back-up for all decision makers going forward.
Q: How has the evolution of online marketing impacted the commercial real estate industry?
We must be more precise and complete with the information we provide online. Not everyone might understand what “Download Marketing Flyer and/or Offering Memorandum Here”. Also, more time is required to begin marketing a property as we have so many different sites that require information to be imputed. Even more time consuming is making small changes to a listing, as all sites must be constantly updated and revised. Everyone has a better system, but they are all different and we and our staff have to learn how to effectively navigate each. As a broker we can invest a lot of money each month as we spend $300 to $500 or more to join each new marketing platform that comes along.