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Doomsday Prepping

By: Steve Lewis

Insulate yourself with a strong team; make sure you and your clients have the best information available

With many economic experts predicting a recession in the coming months (at the time of this writing), SIORs are preparing themselves and their clients for yet another challenging period in the cyclical CRE industry. They bring to this challenge, in many cases, experience in one or more downturns during their careers. So, what are they doing in preparation for what many experts believe is inevitable?

“Even in a down market, there will still be transactions and the best agents in the market will get the lion’s share of the deals,” says Andy Westby, SIOR, president & managing broker at Goldmark Commercial Real Estate, Inc., Fargo, N.D. “I believe we have insulated our brokerage from recessions by building a Class-A team of high achievers.”

Along with building “a top-notch team,” Westby says his team has differentiated its brokerage by adding value to the entire process—from meeting a potential client to closing a transaction with them. “This constant focus on value-add has set us apart from the competition, and I believe will help us maintain a strong pipeline through a possible downturn—while other brokerages will likely suffer,” he asserts.  

“Gathering information through research and anecdotal feedback from the individuals that make up the CRE investment community is extremely valuable to help everyone make decisions moving forward.”

“As interest rates have risen, I have continued to look for opportunities for my investor clients where it makes sense and also tried to keep my clients in the loop on real-time market activity and data,” adds Landon Williams, SIOR, senior vice president, capital markets at Cushman & Wakefield/Commercial Advisors in Memphis, Tenn.

The current economic uncertainty, he adds, reminds him a little bit of March and April of 2020, in that information is extremely valuable. “Gathering information through research and anecdotal feedback from the individuals that make up the CRE investment community is extremely valuable to help everyone make decisions moving forward,” he notes.

Braxton Anthony, SIOR, principal with Rich Commercial Realty in Raleigh, N.C., says he frequently reads articles from SIOR publications, the The Wall Street Journal, his local business journal, GlobeSt.com., Southeast Real Estate Business, etc., “to absorb as much information as possible.” Recently, he adds, he has been forwarding articles to his clients “so that they can have the most real-time information at their disposal.”

When sending these articles, he sometimes includes personal thoughts and comments about how the article can relate from macro and micro real estate levels. “Information and data are key in today’s business environment, and is so readily available,” he summarizes.

“If things get slower, there should be time available to recruit and train new agents,” adds Bob Gibbons, SIOR, founder and broker at Real Estate Advisors & Tenant Advocates (REATA) in Plano, Texas.

“We are in the process of budgeting season and considering what we can do to limit costs, but also make investments when prices are more favorable during a recession,” shares Adam Kaduce, SIOR, senior vice president and managing director of R&R Realty, Des Moines, Iowa. Kaduce believes that in some ways office tenants will benefit from the downsizing that came as a result of giving employees more flexibility to work from home during the COVID-19 pandemic. “The smaller spaces will help employers reduce costs and be better positioned for changing headcounts, if it comes to that,” he shares.

Kaduce adds that he has been advising customers to balance their budget with concerns about culture, in order to retain top performers. “We are encouraging office clients to maintain a presence and ensure that it is a place where employees want to come to work,” he says. “They may downsize, but they are moving closer to employees, adding new design and furniture, and adding amenities to make it a collaborative and inviting place to work.”  

“Understanding where each market has been and where it is now is key to setting your clients up for success.”


Having survived, and even thrived, through earlier downturns, SIORs have learned much about the most effective strategies in preparing for the “next one.” “It is extremely important to not panic as downturns are not permanent,” Anthony asserts. “Slow down and think before making critical decisions. Unfortunately, with today’s technology, many people want to make or receive decisions as soon as possible.”

In order to be best prepared, Anthony advises clients to start internal discussions early and ensure they have an early handle on what the decision-making process for the organization looks like. “For example,” he explains, “if the best solution requires a quick decision, knowing who or what approvals are needed for decision-making early on will help streamline that process. For office, there is a lot of subleasing both on, or coming to, the market. Taking advantage of a sublease can avoid permitting and construction delays, construction costs, and FF&E expense.”

“As the investment market has been quieter than in recent times, take the opportunity to shore up existing assets in the portfolio,” Williams says. “Audit revenues and expenses to see if any efficiencies can be created. Refine the investment strategy and grow cash reserves to stay agile for when opportunities arise in the midst of a new interest rate environment. Be ready to play ball again as soon as the Fed signals that they are done raising rates.”

“Maintain flexibility and be action oriented,” says Kaduce. “Clients should keep an open line of communication with their broker and landlord. They can build flexibility in their lease with options, but make sure they know when and how to exercise those options. There may also be some very good opportunities for buyers or tenants to upgrade, and they should position themselves to make a quick decision to take advantage of the situation.”

“Real estate is a great hedge against inflation, so we are encouraging clients to be armed and ready when deals show up,” adds Kaduce. “Certain asset classes are going to move very quickly, so it is important for them to have their pump primed. On the landlord side, office clients will need to be aggressive with incentives and/or pricing to be competitive, while industrial landlords still seem to have the upper hand in most cases.”


And these SIORs have the track record to show that when it comes to advising clients, they know what they’re talking about. “We have helped numerous office-owner clients position their property from a pricing and incentive perspective that has helped them get on the short-list and fill their space faster than the market average,” says Westby. “We have also helped a number of industrial clients capitalize on the ever-rising prices we have seen the past 12-24 months in that market. Understanding where each market has been and where it is now is key to setting your clients up for success.”

Then again, not all downturns are the same, and some SIORs are approaching this one differently. “The current downturn doesn’t feel quite as bleak because the market is still flush with cash, and vacancy rates seem to be at historic lows outside of the office asset class,” Williams shares. “In the past, I have cut costs in preparation for a dry season. In this current downturn, I am in a hiring mode as well as investing in other resources to better help my clients through the downturn and after the activity has picked back up again.”

This, he says, is one of the lessons he has learned. “Stay positive. Look for opportunities. Once the Fed signals that they are done with interest rate hikes, then I suspect the CRE investment activity could really break loose. Prepare for the floodgates to open back up,” he advises.

“From an office space perspective and during this potential downturn, tenants are not fully utilizing their space,” says Anthony. “However, balance sheets currently appear to be strong/stable. During the last downturn, more tenants were utilizing their spaces, but balance sheets were much murkier.”

“Economic downturns usually result in higher unemployment and that affects office vacancy rates; more space comes available as tenants give up or give back space,” notes Kaduce. “This time, many of those downsizes have already happened in response to work from home. Office vacancy rates are elevated but may remain stable through the economic cycle.”

Accordingly, he adds, he has seen his most attractive listings get leased very quickly. “We are advising our landlord clients to continue their investment in buildings and spaces to ensure a high-quality inventory. When customers shop the market, we want to be the destination in their flight to quality,” he concludes.


Despite their strong track records, and the benefit of lessons learned in past downturns, SIORs can’t always count on clients accepting their advice at face value—especially during tough times when huge economic investments are at stake. How are SIORs prepared to handle those disagreements and avoid conflicts that could cause long-term harm to the relationship?

“It is extremely important to manage expectations with office clients on subleasing their space early in the process,” says Anthony. “Generally speaking, the average tenant does not understand the process and/or fees that are associated with subleasing space. With today’s office sublease inventory continuing to rise, brokers need to have candid conversations sooner rather than later to avoid an unhappy client.”

“Data is agnostic to gut feelings or presumptions, so I present data on which decisions can be based,” adds Williams. “I try to marry the client’s investment model to the current data and consult them accordingly. Ultimately, the client drives the ship, so I take my marching orders based on how the client wants to proceed.”

“We pride ourselves on having the best, most complete and current data on our market and we provide historical trends and real-time status to our clients every chance we get,” notes Westby. “Usually, the best indicator of the future is the past, and so we use our proprietary data to try to educate our clients and help predict what may happen next. If they fundamentally disagree, we will do our best to support them as best we can. It is possible to respectfully disagree but still maintain a solid working relationship.”  

“In this business you can’t control the outcome; however, if you know you did the right thing, you should be able to at least sleep at night.”

“I try to send as much real-time information and data as possible,” says Anthony. “Sometimes that information may come from a competitor, so that the client can see information from an unbiased source.”

Ultimately, he says, the client can absorb the information or choose not to. “If I can look at myself in the mirror and know that I have given my best in an ethical way, I’m under the mindset that whatever happens, happens,” he says. “In this business you can’t control the outcome; however, if you know you did the right thing, you should be able to at least sleep at night.”

“The consensus among our clients is that 2023 will look different for them and will likely be slower than 2022; the difference is in the degrees,” notes Kaduce. “But all our clients see opportunities, regardless of the economy, to grow their businesses in 2023. We are advisors to our clients based on our knowledge of their business. At the end of the day, they will take our advice and that of their banker, attorney, and other advisors and put it together to form their strategy. Our clients are experienced business leaders and have their own experience they bring to the situation.”

And if there is potential disagreement? “I like to conclude conversations with clients by letting them know we’ll be there to assist them regardless of the decision, and we’ll make data-dependent decisions given the facts on the ground,” says Kaduce.

In the end, he continues, shared experiences usually keep advisor and client on the same page. “Whether it was the Great Recession or COVID, the more downturns that I go through, the more I realize they are a normal part of the business cycle,” says Kaduce. “We see that from our most experienced clients. They recognize what they can and cannot control and will wait for the opportunities to arrive. From them, I learn patience. Let others pontificate; we just keep working your business, the opportunities for growth will arrive.”

Anthony agrees. “I entered the business in 2010 and was taught very early that ‘blocking and tackling’ is paramount in a successful real estate career—and is extremely important in downturns. While blocking and tackling in 2022 might look different than it did in 2010, I think staying focused on business development will help weather the storm. Prospects are more approachable when times are uncertain because they are looking for an advantage. My father also has told me that all things will work out in the long run by ‘just showing up for work every day.’ In 2023, I will continue to practice the fundamentals that I used at a very early stage in my career. Let’s go!”

Sponsored By SIOR Foundation
This article was sponsored by the SIOR Foundation - Promoting and sponsoring initiatives that educate, enhance, and expand the commercial real estate community. 
The SIOR Foundation is a 501(c)(3) not-forprofit organization. All contributions are tax deductible to the extent of the law.


Braxton Anthony, SIOR

Bob Gibbons, SIOR

Adam Kaduce, SIOR

Andy Westby, SIOR

Landon Williams, SIOR


Media Contact
Alexis Fermanis SIOR Director of Communications
Steve Lewis
Steve Lewis
Wordman Inc.

Steve Lewis is a freelance writer and president of Wordman, Inc. He can be contacted at wordmansteve@gmail.com.