There's no doubt that the situation is bleak. I've even heard readers describe the current economic climate and its impact on the real estate market as a train wreck. Tight credit policies, decreasing market value, and tenants defaulting on rent are big concerns. The economic downtown and its effects on the industry have caused development projects to stall, operating budgets to be slashed, maintenance to be deferred (at the risk of system failure), and companies to begin layoffs. In all this gloom and doom, it can be difficult to find a silver lining.
Not surprisingly, though, facilities professionals have taken proactive measures, and are lobbying for strong changes that could have lasting, long-term benefits. The New York Times reported at the end of the December that Herndon, VA-based NAIOP-the Commercial Real Estate Development Association, in conjunction with the Washington, D.C.-based Real Estate Roundtable, is pushing for changes to tax rules that would make it easier to restructure loans.
Companies and institutions have already positioned themselves to make reductions and contain expense. They're considering alternative energy, investigating the ROI of energy-efficient equipment, and exploring how conservation can improve the bottom line. Reducing energy as a means to cut operating costs is better for the environment and can serve as a catalyst for permanent load shedding.
There's a renewed importance being placed on customer service, too. In its Economic Downturn: Cost Saving Opportunities Increasing Cash Flow whitepaper, Santa Ana, CA-based Grubb & Ellis Co. identifies creative ways to help lower property operating expenses, as well as advice on tenant improvement and leasing programs. According to the whitepaper: "Managers need to make sure that tenants are important and that their opinion matters in maintenance issues and the general appearance of the property. Tenants need to be spoken to often."
These steps are more than a coping mechanism. And, despite the fact that they're the consequence of a recession, the positive impact they'll have on the industry is bound to last long after an economic recovery.
