‘This Too Shall Pass’: NAI Global President And CEO On The Trends Brokers Should Be Watching Now

In the midst of high interest rates, collapsing banks and overall market turbulence, commercial real estate professionals have found themselves swimming in a sea of uncertainty.

CRE brokers, in particular, are feeling the rising waters as office markets struggle to recover from the impact of the pandemic and the real estate lending environment tightens. NAI Global President and CEO Jay Olshonsky is a more than 40-year veteran of the industry and no stranger to difficult economic times. His advice to the NAI Global network of more than 300 independently owned brokerage offices worldwide: This too shall pass. 

“Nothing lasts forever in commercial real estate,” Olshonsky said. “It will be rough, there will be some casualties and some pain, but fundamentally, our economy is sound.” 

Olshonsky said he understands that some brokers newer to the industry, and even some with 10 years of experience under their belts, may have never worked in this type of turbulent market. For them, he recommended developing a strong contingency plan and said they should prepare to work harder while the markets stay flat. Bisnow sat down with him to learn more about what brokers are seeing right now, what their major concerns are and how NAI Global is working to support them. 

Bisnow: Amid all the current market uncertainty, what are some key trends brokers should be watching? 

Olshonsky: Historically, commercial real estate follows jobs. When there is job growth, there have generally been healthy real estate markets, while rising unemployment leads to difficult markets. So one of the key trends that I watch is the number of companies that are either announcing reductions or closing plants, regardless of the industry. 

That being said, there has been job growth in certain industries right now including hospitality and entertainment, so some sectors are holding up better than others are. However, with the rise of work-from-home, service jobs in offices are being eliminated, and other industries are still feeling the impact of the changes that have come since the pandemic. The key is to keep an eye on the job market and how it is performing to have a sense of where real estate may be headed.

Bisnow: As you speak with brokers from around the country, what are their top concerns right now? 

Olshonsky: The major concern brokers have right now is that the market has been fairly flat, and brokers only make money when there is a lot of activity and the market is going up and down. The current market is being impacted by rising interest rates, which have slowed capital markets and leasing activity, and the work-from-home phenomenon hitting office spaces. This is what I’m hearing from brokers not only locally, but in Europe as well. 

This reminds me of 1998, when the Russian ruble devalued, causing a seizing of the credit markets, which is something we are seeing with banks right now. What happened then, similarly to now, is the uncertainty led to a flat CRE market with little refinancing, leasing or renewal activity. That is the major concern of brokers right now because when there are no transactions, they don’t make money. 

Bisnow: What advice do you have for brokers who are earlier in their careers and have not experienced a market like this? 

Olshonsky: The reality is that there are some brokers and firms that will not make it through this. Some brokers have savings to help carry them through a flat market, but others don’t, and those are the ones who will struggle. My advice to them is to work harder, spend more time with owners and users. You need to do a lot of paying it forward, giving advice even if you’re not making any money, since that could lead to business in the future. 

I also recommend that brokers stay close to lenders. Unfortunately, there will be buildings that will go back to the lenders in one form or another or the special servicers. Giving them advice is going to be very important as properties change hands. 

The key is to be realistic. It’s not 12 or 18 months ago, and the market is not reverting back to those days any time soon. You need to make the changes on behalf of your owners quickly and accept deals that may be at lower rates than you’ve ever seen, because this market will continue to go down from an owner’s point of view. Now from a user's point of view, there will be some tremendous opportunities to lock into longer-term deals at lower rates. So it depends on what side of the business you operate in. 

Again, this too shall pass. I heard an economist recently say that you just need to stay alive till 2024 or 2025, and as long as you have the ability to tread water till then, the economy will stabilize and you will start making money again. 

Bisnow: How is NAI Global supporting brokers during this time? 

Olshonsky: We work with our brokers through all times, good and bad. The most important thing we do is attend all industry events and create a forum for our brokers to attend with us so they can talk to more owners, lenders and users of real estate. We also train brokers and bring in experts who have lived through cycles like this to help train them. 

We are also fortunate that our company doesn't have to cut services, like some of our competitors, because our financial situation is different. We don’t borrow, so rising interest rates are not really impacting us. Thanks to this, we are able to deliver all of the services we always have and we are constantly looking for new ones to support our brokers. 

This article was produced in collaboration between Studio B and NAI Global. Bisnow news staff was not involved in the production of this content.

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