Universal Commercial President, Darrell Cobbins, was quoted in an article recently in the Memphis Daily News discussing how smaller/emerging commercial real estate firms are navigating during these tough economic times.
Small Firms Find Footing In Competitive CRE Market
JEFF IRELAND
Darrell Cobbins got started in commercial real estate in June 2001, three months before the 9/11 terrorist attacks wreaked havoc on the economy.
And Cobbins started his own company, Universal Commercial Real Estate LLC, four years ago, coincidentally right before another downturn in the economy.
As the owner of a small real estate firm, he learned how to battle larger, nationally known competitors in a depressed market.
“What it taught me then is that you sort of have to bear down and find some of your traditional bread-and-butter-type deals, but also what I call alternative or non-traditional real estate deals,” he said.
Cobbins, whose company recently helped a nonprofit organization with a land deal, said he is always on the lookout for deals that larger firms may ignore.
“For the company, you have to think about getting some of the corporate and midsize deals, but some of them you’re no going to get,” said Cobbins, whose firm recently completed a deal with FedEx. “I think you have to approach it a little bit differently. There’s overhead and expense for large companies that smaller ones don’t have. I think in times like these it’s a good thing that we have the ability to be flexible and creative, which may be harder for a larger company.”
Cobbins is hardly the city’s only sole CRE practitioner dealing with the challenges of competing against the big boys.
Sam Zalowitz is the president and owner of Zalowitz Commercial Realty in Memphis.
Like most everybody else in the real estate game, his company has taken some financial hits the last few years.
With an increased unemployment rate, office space value has dropped. Retail centers are leasing less space and looking for rent reductions.
Smaller companies like Zalowitz Commercial are affected more dramatically financially than larger national firms when there’s less money coming in.
“I noticed a change late last year,” Zalowitz said. “There are a number of shopping centers, once they revert to an institutional owner, the institutional owners are going with larger firms instead of individual brokers because of contracts on a national or regional basis, which automatically terminates some listings on shopping centers that we’ve had.”
Zalowitz said he gets by thanks to referrals coming from clients he has worked with for years, but it isn’t easy.
He works with larger firms on some deals, but still believes there’s value in tenants and landlords utilizing what small firms bring to the table.
“The national company agents aren’t as knowledgeable,” Zalowitz said. “When it comes to leases on behalf of the landlord, they’re more anxious to just make the deal than to make it right for both the tenant and the landlord long term. They’re into numbers. They’re not into people.”
Rent reductions, Zalowitz said, can be particularly damaging to a small firm.
“It impacts you financially as much as it does the landlords because, while the national firms want to get a cash out commission, individual brokers, and I may be a dying breed, take a lot of their commission over time.”
Collierville-based Hart Properties Group LLC is another example of a small firm trying to compete against larger firms in a depressed market.
Sherri Beutelschies, president of Hart Properties, said the majority of her clients are small-business people.
“And small-business people are still being affected by the down economy,” Beutelschies said. “They’re not seeing the growth that large corporate America is starting to see and talk about.”
While things are nowhere near what they used to be, she has seen some signs of improvement. The last six months or so, she said, she has received more inquiries from potential clients.
Hart Properties manages approximately 1 million square feet of property and has been in business since 1998.
“I’m optimistic that it’s going to get better,” Beutelschies said. “But I think when it gets better it’s going to look different than it did before. We’ll have to get used to what the new good is, if you know what I mean.”
She said her company has been forced to change its business plan and marketing strategies to deal with what clients’ new expectations are.
“Those who are adjusting are surviving,” she said. “Those who aren’t are going away.”
Cobbins said he believes that although times are tough for the little guys, there are deals to be made.
“It may not be the household-name transaction,” he said, “but there are still people out there who need real estate expertise and assistance.”
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