BD&C: What is happening with your corporate portfolio? Are there any strong commercial markets right now?
Samuel S. Unger: Most U.S. markets are still soft. There is some perceived bottoming in some very local submarkets in San Francisco, San Jose, and certain New York City submarkets. Downtown Seattle is tightening. Other markets have limited inventory in given classes of buildings, so there is better control over those segments. I am also surprised by how tight some of the smaller Canadian cities are. Researching the brokerage house reports looking for consensus is still helpful, as are ongoing discussions with trusted brokers. We always try to stay ahead of the requirement by trying to understand forward momentum in given markets. It’s also important to note that markets can be quite local, varying by view and size of requirement, so generalities need to be closely tempered by the requirement you are presenting to the market.
BD+C: Where is the best place to invest in real estate right now?
SU: There has been competition for trophy assets in commercial real estate, and a fair amount of money chasing discounted retail assets, according to what I hear. Unfortunately, real estate assets are very difficult to dispose of in weak markets, as too many have discovered to their chagrin. Diversification still rules.
‘Try to understand forward momentum in given markets’
BD+C: When is the commercial real estate market going to rebound?
SU: When you see three or four quarters of positive white collar job growth, you might be tempted to get out of your foxhole. But a critical caution is the fact that all markets and submarkets are local, and impacted by the movement of major companies or particular industry segments.
BD+C: In regard to commercial properties, are owners upgrading or reconstructing these properties? How long does it take for an owner to see a return on their investment after upgrading or reconstructing a property? How is this impacting their portfolio?
SU: This is a thesis question. It all depends on an owner’s portfolio, competitive pressure, leverage, and access to capital. We’ve seen a number of owners of Class A property begin to do reasonable upgrades to comply with the lower tiers of LEED certification because they believe they need this to remain competitive in the market, and we welcome that.
BD+C: Is it more advantageous to construct a new building, or upgrade an existing structure?
SU: I stress that we as an organization are not owners of buildings for reasons specific to the Ernst & Young partnership. We have a very competent advisory services business that assists owners with questions like this. As with any complex question, it all depends on the specific market and the arbitrage available in making a conversion.
BD+C: Are there particular mistakes or errors that you see BD+C readers making in regard to commercial real estate?
SU: If you are talking ownership, the first law is that real estate is volatile and illiquid, and keeps absorbing capital. The second law is to remember the first.
BD+C: How can BD+C readers—architects, MEP engineers, and contractors—work more effectively with a firm like Ernst & Young and other CoreNet members?
SU: We encourage contact with design professionals and contractors. We mandate that members of our real estate group get involved with national and local organizations, and we’re not shy about it. I encourage professionals to get involved with CoreNet. It’s important to realize that the organization encourages mutual long-term benefit—no quick sells, no heavy marketing, but a great opportunity to let people understand both the type of individual you are and something of your business over time. The people of CoreNet are also a tremendous resource, with literally hundreds of years of collective experience in the allied professions.
BD+C: What do architecture, engineering, and construction firms continually do wrong in their dealings with organizations that are CoreNet members? What mistakes do you see them making? What advice would you have for AEC firms to work more effectively?
SU: Great question, and another thesis topic. Approach CoreNet members as a long-term investment. Share experiences and understand the pressures and questions of your potential clients. Don’t talk consultant speak—if asked, talk solutions. Otherwise, grab a beer and share war stories.
BD+C: What is the most important thing you can take away from your involvement with CoreNet on both a personal and professional level?
SU: CoreNet has been a tremendously valuable resource for me. I have established friendships and had the opportunity to go beyond professional relationships with a number of our members. I have also realized that many of the issues I faced, both personally and professionally, are shared problems, with shared solutions. On a professional level, deeper discussion of the issues we face as an organization, and the similarities to the issues faced by my colleagues in CoreNet, help generate more thoughtful solutions. The opportunity to review strategies and tactics for these issues is valuable, as is the review of resources available through service providers, contractors, and suppliers. BD+C
Related Stories
Senior Living Design | Feb 15, 2023
Passive House affordable senior housing project opens in Boston
Work on Phase Three C of The Anne M. Lynch Homes at Old Colony, a 55-apartment midrise building in Boston that stands out for its use of Passive House design principles, was recently completed. Designed by The Architectural Team (TAT), the four-story structure was informed throughout by Passive House principles and standards.
Designers | Feb 13, 2023
Hoffmann Architects + Engineers Establishes Diversity Advancement Scholarship Fund
Hoffmann Architects + Engineers, a design firm specializing in the rehabilitation of building exteriors, contributed $25,000 to fund the Hoffmann Diversity Advancement Scholarship, administered through the Connecticut Architecture Foundation. The fund provides scholarships for students from underrepresented racial or ethnic groups who are seeking degrees in architecture or engineering.
Office Buildings | Feb 12, 2023
Smyrna Ready Mix’s new office HQ mimics the patterns in the company’s onsite stone quarry
Designed by EOA Architects to showcase various concrete processes and applications, Smyrna Ready Mix's new office headquarters features vertical layering that mimics the patterns in the company’s stone quarry, located on the opposite end of the campus site. The building’s glass and concrete bands are meant to mirror the quarry’s natural contours and striations.
Multifamily Housing | Feb 11, 2023
8 Gold and Platinum multifamily projects from the NAHB's BALA Awards
This year's top BALA multifamily winners showcase leading design trends, judged by eight industry professionals from across the country.
Multifamily Housing | Feb 10, 2023
Dallas to get a 19-story, 351-unit residential high-rise
In Dallas, work has begun on a new multifamily high-rise called The Oliver. The 19-story, 351-unit apartment building will be located within The Central, a 27-acre mixed-use development near the Knox/Henderson neighborhood north of downtown Dallas.
Sustainability | Feb 9, 2023
New guide for planning, designing, and operating onsite water reuse systems
The Pacific Institute, a global nonpartisan water think tank, has released guidance for developers to plan, design, and operate onsite water reuse systems. The Guide for Developing Onsite Water Systems to Support Regional Water Resilience advances circular, localized approaches to managing water that reduce a site’s water footprint, improve its resilience to water shortage or other disruptions, and provide benefits for local communities and regional water systems.
Office Buildings | Feb 9, 2023
Post-Covid Manhattan office market rebound gaining momentum
Office workers in Manhattan continue to return to their workplaces in sufficient numbers for many of their employers to maintain or expand their footprint in the city, according to a survey of more than 140 major Manhattan office employers conducted in January by The Partnership for New York City.
Giants 400 | Feb 9, 2023
New Giants 400 download: Get the complete at-a-glance 2022 Giants 400 rankings in Excel
See how your architecture, engineering, or construction firm stacks up against the nation's AEC Giants. For more than 45 years, the editors of Building Design+Construction have surveyed the largest AEC firms in the U.S./Canada to create the annual Giants 400 report. This year, a record 519 firms participated in the Giants 400 report. The final report includes 137 rankings across 25 building sectors and specialty categories.
University Buildings | Feb 8, 2023
STEM-focused Kettering University opens Stantec-designed Learning Commons
In Flint, Mich., Kettering University opened its new $63 million Learning Commons, designed by Stantec. The new facility will support collaboration, ideation, and digital technology for the STEM-focused higher learning institution.
Sustainability | Feb 8, 2023
A wind energy system—without the blades—can be placed on commercial building rooftops
Aeromine Technologies’ bladeless system captures and amplifies a building’s airflow like airfoils on a race car.