5 minute read
Roundtable: Changing dynamics Lloyd Berger, President, Berger Commercial Realty
®oundtable:
Changing dynamics
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Segment leaders discuss their performance over the past year and the progress of key projects.
Lloyd Berger
President Berger Commercial Realty
How has Commercial Realty performed in the past year? Prior to COVID-19, from a real estate standpoint, everything was peaking. We had run out of quality space in most of our food groups. As the pandemic hit, we experienced three dry months but ever since we got past that hurdle, business has been booming. We are collecting well over 90% of our rents from our managed portfolio, which totals about 8.5 million square feet. We are increasing that average every month compared to the prior month.
Which asset class is spearheading demand? Industrial is taking the cake in terms of asset demand, but our class-B o ce has done surprisingly well. Due to the pandemic’s prevalent uncertainty, people are waiting to the last minute to make decisions. Class-B and smaller class-A are more a ordable and allow people to spend less time on elevators, which is key given the pandemic. All these factors have made this kind of asset more desirable to the few o ce tenants that are in the market.
How is your firm setting itself apart? We have always positioned ourselves as the alternative to the national firm, providing local market knowledge. Real estate is a local business at its core and we are much better positioned to cater to our clients’ needs and what they need from us as opposed to larger firms. That is how we have grown. We have 64 professionals in Berger Commercial Realty and our multifamily company, Andrews Avenue Residential, counts about 25 people. We are at a size that can provide good quality products to our clients but not so large that we cannot provide what they want on a more personal, case-by-case basis.
Daniel Chaberman
Co-Founder Grupo Eco (Atlantic Village)
What progress has been made on the development of Atlantic Village? We’ve finished phase two. Atlantic Village is a threephase lifestyle, mixed-use project with an emphasis on restaurants and food and beverage (F&B) on the ground floor, service retail tenants and entertainment tenants on the second floor, plus two o ce buildings. Our boutique o ce building was completed earlier this year as part of phase two. A corporate center will be constructed in phase three. For phase three, besides the restaurants on the ground floor, the idea is to introduce beauty concepts, to create a sort of wellness center, not with one operator but with multiple operators.
On top of that, we’ll have the corporate center, which is a class-A, 65,000-square-foot o ce space. In the back of it, we have a parking garage with three levels of parking.
What are the competitive advantages of Atlantic Village in the area? This is a very competitive market. But that being said, we are south of Fort Lauderdale and North of Aventura. We are in Hallandale, which is a centrally located city, a small city surrounded by wealthy cities with high income and demographics, such as Aventura, Sunny Isles Beach and Hollywood. We are five minutes from Aventura and Hollywood and 15 minutes away from Sunny Isles Beach. We are also very close to Fort Lauderdale, between a 20- and 25-minute drive. We are meticulous about the type of tenants that we want to bring onboard. We make sure that the tenants that we bring make sense not only for the development but also for the market itself.
PJ Charlton
What were some highlights for CenterPoint Properties in the South Florida region last year? We had a very active year, probably one of our more active years on the investment and development side of the company’s history. We’ve invested roughly a billion and a half dollars into acquisition and development across the top industrial markets in the United States. South Florida, including Broward County, is a very important market for us since it’s a Top 5 market in the country. It’s hard to buy even one or two buildings in a given year, so we were fortunate to get the opportunity to acquire 1.5 million square feet of new product in South Florida in 2020 by working to be in the right place at the right time. It was a busy year for us despite the pandemic and not being able to travel as easily as we used to. Our company has continued to operate e ciently and our tenants remain very active. The outlook for industrial is favorable and CenterPoint is looking to grow the company across all of our markets.
Will the boom in industrial real estate continue? I think it does feel like the demand side for industrial will continue to be robust for the next two, three or five years with e-commerce. It’s no secret that the pandemic accelerated e-commerce adoption. It was already growing very quickly, but the pandemic ramped that up even further. The projections that we see suggest that e-commerce will continue to grow about 12-13% a year and eventually reach 30% of retail sales in the next seven to 10 years. I think the demand side will stay robust here in the near to medium term, and that’s very exciting for industrial. What were some key highlights for Franklin Street in 2020? Despite the challenges of 2020, Franklin Street finished the year strong, surpassing $1 billion in transaction value for the second year in a row. Our firm benefits from being a full-service commercial real estate company with diversified business lines. So, although certain property sectors, such as retail, were impacted by COVID shutdowns, we were able to make up for it in other areas, such as industrial services and commercial insurance, where business is thriving.
Overall, interest in real estate remains quite strong. Lending has really driven our business to a point where prices have not gone down. The one telling sign for us in South Florida is the housing market. We were completely wrong in thinking the housing market was going to go by the wayside. Instead, people are putting their properties back in the market at higher prices. The commercial business, which is our bread and butter, trails that.
How do you expect the commercial real estate market to reshape, given the rise of e-commerce? We believe we’re going to see restaurants move to smaller footprints. There are lots of vacant 5,000-square-foot restaurants because you can’t fill a dining room anymore. A great example is Sweet Tomatoes. Rather than trying to reorganize, they just filed for bankruptcy and closed. A lot of companies filed for bankruptcy throughout this process. E ciencies and delivery of all items are going to get faster and better. If you’re going to stay in competition with the Amazons of the world, you’re going to have to be able to do that.
Greg Matus
Senior Vice President, Investment Sales Franklin Street
