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Finding Opportunities in a Bear Market



by Neil A. Dolgin

With the recent news headlines about the bear market that arrived on Wall Street, I’ve been asked a lot recently about opportunities to be found in commercial real estate. There are some changes in the marketplace that I’m seeing as well as trends to monitor.

Rentals – We’re having more discussions with clients about rentals and fewer discussions about sales. The issue of rising rental rates is on the minds of investors and business owners. We will see how the marketplace treats rental prices so owners can maintain an acceptable financial return. 

We may see some owners taking their properties off the sale market and converting them to rentals. In my last post, I mentioned that we’re seeing more sub-leasing and property conversions into smaller units as larger tenants seek to reduce their footprint and owners try to maximize opportunities for smaller units. Even Amazon is subleasing warehouse space; we’re seeing other logistics-type buildings where companies have subleased portions of it. 

While the marketplace remains active, the Wall Street Journal reported this month that Innovo Property Group backed out of an agreement to buy an office tower in Manhattan after surging interest rates made it harder to find a mortgage.  

After closing the deals, John McNellis, principal at real estate developer McNellis Partners, lost buyers for two buildings because of rising interest rates. He wrote in Wolf Street that the primary causes were “rising interest rates, inflation and economic uncertainty.”

Kalmon Dolgin Affiliates has experienced fast-moving markets like this before. We’ve been around 118 years through four generations and can guide investors and investor groups on how to approach commercial real estate in this marketplace.

Tenants – Some ways that tenants can weather a challenging market is to look at ways to cut corners. It’s a way to mitigate rising operating costs. During the pandemic, we worked closely with our tenants to help ensure their survival and success, and as they got back on their feet.

I wrote last year that our client, Amy’s Bread – the nationally renowned bakery and bread retailer whose KDA-owned headquarters are located in Long Island City – has actually experienced a resurgence since the pandemic, part of which founder and president Amy Scherber attributes to an adjustment in rent we gave them during the height of the pandemic. 

Retail –  We want to see New York City office workers return to the office at least to the extent of pre-pandemic levels so pedestrian traffic will continue to increase. Retail renters will be looking at affordable spaces. Tenants may also choose to downsize and take a smaller amount of square footage in order to be able to offset rising costs. 

We are aware that the cost of insurance, increases in real estate taxes, rising interest rates, operating cost increases, rising costs of employment and cost of living increases are affecting the bottom line – for everyone in commercial real estate. 

Owners – As an owner, we are always looking to drive revenue from our own buildings through improved efficiency and operations. There are ways to drive greater efficiency from building operations, ways to create better, safer spaces and sound methods to drive down operating costs. That’s where KND Management can help. We work with some of the nation’s largest institutional owners, passive investors and owners of single properties. Our state of the art property management software and full-time supervisory staff, which is on call 24 hours per day, allows us to anticipate problems, recognize opportunities, and implement efficient, trouble-free operations to maximize the “bottom line.”

Younger real estate professionals have never experienced this type of market.  CNN Business noted recently that this is new territory for most Gen Zers who enjoyed government support during the pandemic and saw their investments rise in value until this year when their stocks began the slide into a bear market. 

Despite the challenges, this is a market that my brother Kal and I have seen before as we have been working here for 47+ years each. While we both foresee a potentially challenging situation over the next year or so, we remain optimistic.

If you’re a building owner or lessor and looking for guidance on opportunities and what lies ahead, feel free to drop me a line

Neil A. Dolgin is co-president of Kalmon Dolgin Affiliates. Founded in 1904, Kalmon Dolgin Affiliates (KDA) has grown into one of the New York metropolitan region’s leading commercial and industrial real estate firms. Kalmon Dolgin Affiliates specialize in all aspects of real estate services for developing, managing, selling, leasing and marketing commercial and industrial property. KDA’s highly-trained professional brokers offer clients a practical, street-wise approach to commercial and industrial real estate brokerage, leasing and sales, supported by the latest in real estate marketing, management and research technology.


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