2020 Was A Career-Defining Year For Brokers, Not A Money-Making One

After a year of tumult, commercial real estate brokers that have managed to stay the course are examining just what this period of economic uncertainty has meant for their businesses — and how they can continue to make hay even if the sun doesn't come out for months more.

It hasn’t been an easy year for those who live by transactions, by any measure. The coronavirus threw an icy blanket over deal flow for much of 2020 as uncertainty reigned. In New York City, the jewel in the nation’s commercial real estate crown, investment sale volume last year was 66% below the 10-year average, while office availability now sits at a record of 15%.

Early on in the crisis, players predicted something of a “cleansing” of the industry, with less established brokers forced to find other work as deals dried up. But these days, spirits are higher, capital markets have begun to loosen up and companies are starting to make decisions about their long-term office plans. Plus, amid the economic pain, some sectors of the industry, like life sciences and industrial, have a rosy outlook, providing a path forward.

“When the pandemic first hit, we had a conversation with my team and we said, ‘We know that people are scared and we know that it feels like the end of the world, but it's not. New York will come back,'” said CBRE Vice Chairman Ben Friedland, who co-heads a team of 10 who advise private equity firms, hedge funds and venture capital on their real estate strategies.

“We said while many people are just going to say ‘we are just taking this time off,’ we made sure our team’s attitude was the opposite … 2020 and 2021 was not a great money-making year for brokers, but it will be a defining moment for brokers’ careers.”

In his 20 years in the business, he said, he has never seen more companies desperate for information and he and his team stepped into handholding mode for their clients, which kept them busier than ever. As companies they represent have become more active, the team has begun picking up more deals.

In all, the team closed around 35 deals last year, Friedland said, less than half of an ordinary year, when that figure would be closer to 80. For early career brokers, he admitted, it has been an extra tough situation.

“It has benefited the mid-age group of brokers who had already hit their stride and saw this as an opportunity to add significant value and strengthen relationships,” he said. “We have a team, so we're there to help each other. We have long-term aligned interests."

For Aaliyah Haqq, a vice president at Dominus Commercial in Dallas, the pandemic saw multiple deals killed off totally. Though she has been working for decades, she’s relatively new to commercial real estate, having been in the business for three years.

Some of her peers moved in with their parents to bring down their overhead, others got part-time jobs to supplement income or dug into savings. Some real estate brokers she knows were able to get funds from the federal government’s Paycheck Protection Program, which had money set aside for independent contractors.

“A lot of my clients just put things on hold,” Haqq said, adding that within a week of the crisis, a land deal for an oil and gas client completely disappeared, and is unlikely to be resurrected any time this year.

Ultimately, Haqq got into the industry with a long-term goal of using commercial real estate to ease the housing crisis. So, while working through the pandemic, she focused on learning and developing relationships. Because of the reduced deal flow, she did some paid leadership development work on the side. 

“There were so many webinars and so much information, I was focused on really being a curator of content to my clients,” she said. “The big benefit of Covid was all the networking. I have new clients that I have got through virtual networking and joining the different groups … I have a client that we are putting in an offer today [on a property], and I met them through a virtual networking event.”

Brandon Polakoff, an Avison Young senior director in New York City, said he has been able to originate and close seven investment sales in the city since the pandemic started.

He made a conscious decision to stay in the city, even as thousands were fleeing when New York became the global epicenter of the virus. He said that call has paid dividends time and time again.

“Most people left," he said. "My thought was … it would be an advantage to stay, and be one of those people who did stay and kind of just power through it. If people want to work remotely, all the power to them … [but] when sellers call you for a valuation, I say, ‘no problem, I’ll be there in 20 minutes.'

“My wife, who is working remotely, she’s asking me pretty consistently, ‘Can we go and spend two weeks in Carolina?’ and my response is: In investment sales, you can't do it remotely if you want to do it properly.”

After a painful few quarters, the pace of New York City commercial property sales picked up in the last three months of 2020 as sellers started dropping their prices. Multifamily and mixed-use sales total reached $512M, a 35% increase from the third quarter, but the average price per SF sank 15% from the previous year.

“Things take a lot more time, and a lot more effort and more creativity [today]," Meridian Investment Sales Senior Executive Managing Director Helen Hwang said.

She said this year is shaping up to be a strong one, with lots of interest from both domestic and international players. But the nature of that interest has shifted.

“Sales is about half [of our business now] and the other half is between JV equity workout and note sales," she said. "In an ordinary time, our business is 99% sales or acquisitions.”

Industry players interviewed for the story pointed to the fact that, unlike previous downturns, there is still significant capital available. Others noted that the success of the vaccine rollout so far, even as some epidemiologists stress cases could still spike across the country, has meant many employers are beginning to plan their return to the office and closely analyze their space needs.

“Back in the spring, nobody knew anything and we were all terrified, and we are now more optimistic,” Savills Senior Managing Director Wendy Feldman Block said. “I feel fortunate I am on the tenant side, not the landlord side, we are seeing historic type of deals being done … The concessions and abatements are at record levels.”

She said she is being hired on more and more projects, and she believes a new focus on health and wellness in the built environment is going to mean her expertise is going to be more sought after than ever before.

“We have been through something catastrophic. So many people have lost their lives and their jobs, I don’t want to sound frothy at the mouth and that things are so wonderful," Feldman Block said. "But I do feel there is lots of opportunity personally and professionally in how we look at things.”