Given a choice, Carl D. Panattoni would prefer four 50,000-sf deals over one 200,000-sf deal. "Not everyone is able to get into the mainstream of the corporate business," says Panattoni, chief executive officer of his own development company. "The more profitable side of the business is the smaller, local players."

Meanwhile, Panattoni adds, Corporate America continues to consolidate, though that does not spell gloom for all brokers, he believes. "This national consolidation is creating opportunities underneath that hasn't been accessed adequately. Consolidation is a threat to the brokerage community and development community because the more it occurs, the less Corporate America needs us."

Meanwhile, those smaller clients can outgrow their current leased spaces, and may be inclined to become owners. "Where I see brokers making a lot of money is walking that tenant through 10 years of growth," Panattoni says.

In the short term, that could mean turning tenants into owners.

"I think one of the big opportunities as a result of the low interest rates is we're seeing sales for users and developers of buildings for sale," notes AMB Property Corp. executive vice president Bruce H. Freedman.

Not every building owner can take advantage of the current low interest rates because of their balance sheets, cautions First Industrial Real Estate president and chief executive officer Michael Brennan. "You can take advantage of low interest rates if you can refinance," he says. "I think the real benefits of low interest rates have worked through the system. There are many companies that can't refinance and take advantage of them."

Companies continue to strive to improve earnings and cut costs, though.

"If I were a real estate broker, I'd be asking, 'How can we help Corporate America be more efficient?," Brennan says.

Know the company inside and out, brokers were told. "Be street smart and come up with creative deals," advises Dan DiLoreto, director of real estate services for Bausch & Lomb.

Meanwhile, REITs such as locally-based First Industrial and San Francisco-based AMB Property are resorting to lease buyouts to improve their funds from operations. The opportunity comes from the spread between the lease rate signed at the market high points not long ago and current bottom, Freedman explains.

Increased vacancy rates in most markets is not stopping new product from being built. "We see an opportunity in our build-to-suit business growing significantly," adds Rockefeller Group Development Corp. senior vice president Leslie E. Smith. "We've seen a lot of build-to-suits activity in the markets we're in."

Instant Insights /

Don't Forget 'Smaller Players,' Brokers Told

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