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If you’re keeping a scorecard of record deals, chalk the recent sale-leaseback of Preferred Freezer’s 12 properties on the industrial column. The deal, being billed among the largest net-leased portfolio transactions this year, was inspired by the refrigeration-warehouse firm’s desire to raise capital for growth and executed by a brokerage team led by Steve Regenstreff of Marcus & Millichap Real Estate Investment Brokerage Co. In a recent conversation, Marcus president and CEO Harvey E. Green shared some insights into the trend driving this record deal. He also stepped back to look at the broader market and the direction we can expect in the investment climate for coming months.

GlobeSt.com: One thing caught me, especially, about the Preferred Freezer deal. Namely, that more users aren’t jumping on the sale-leaseback bandwagon; it seems such a no-brainer. What’s your take on the trend?

Green: You’ll remember that we saw a lot of it in the late ’80s. One reason why more owner/occupiers aren’t doing it this time around is because of the availability of debt. It provides a real alternative to the sale-leaseback, which is used for cash-infusions to operate and expand business. It’s interesting to note how many businesses don’t like owning real estate because it’s seen as contrary to their cash flow requirements.

GlobeSt.com: So the implication is that once the availability of debt changes, sale-leaseback activity will rise even more.

Green: Once debt reaches a certain level, a lot of companies will continue their expansion by selling real estate assets. We’ve seen General Motors do it, Chrysler, IBM.

GlobeSt.com: So the trend is here and growing.

Green: We’ll see more sale-leaseback opportunities coming to market as debt continues to move up. Now if Greenspan does what we all expect him to do and rates go up another 75 to 100 basis points, you’ll see even more people looking at sale-leasebacks. Remember, they’re getting 100% as opposed to the 60% and 70% they’re getting in the debt market.

GlobeSt.com: How does the larger investment market shape up going into 2006?

Green: We’ll continue to see a strong investment market through 2005 and at least the first half of 2006. To slow the sector down, we’d have to see a 150- to 200-basis-point spread in interest rates as well as some unforeseen impact on the global or national economy that we simply can’t anticipate. Short of something like that, we’ll continue to see a robust commercial real estate market. The amount of capital flowing in and the desirability for real estate is as strong as I’ve ever seen it.

GlobeSt.com: Where do you direct investors looking for alternatives within the real estate playing field?

Green: Well the mid-rise to smaller office markets are a real opportunity. We’re seeing a lot of the office markets coming alive again.

GlobeSt.com: Fundamentals have changed that much?

Green: Lease-ups have been gaining momentum, and people are looking at office investments again. Even with the shadow-space issue in a number of markets, if I was investing today, I would be looking at the mid-rise and smaller office sectors.GlobeSt.com: But not in Chicago, right?

Green: : I like Chicagoland. It’s emerging both in its apartment market–the rents are beginning to move–and retail, which is extremely strong. So it’s one of the apartment markets I would look at. Elsewhere, I think the Greater New York marketplace, especially the mixed-use product, apartment over retail, is very strong. The retail market in New Jersey is also very strong and the overall office market on a national basis is very strong. But the industrial market, if you can get your hands on those assets, is the darling of the industry.

GlobeSt.com: Are you saying that office is about where hotels were a few months ago on the comeback trail, good ground-floor investments?

Green: Yes, the office market is just getting positioned on a national basis, and I would be looking at investing in that sector if I were putting capital in the market today.

GlobeSt.com: The M&A mill is churning these days with mergers and rumors of mergers. How is that impacting the brokerage business?

Green: Brokerage is an individual-delivery system. The clients interact and create a trust with individuals, and there is still room for someone who delivers good service with credibility. I’m not one who thinks there will be just two brokerage companies in the next 10 years and nobody else. But I think that technology as well as the trend toward consolidation has changed the platform somewhat, and we’re seeing a lot more emphasis on brokerage teams. In fact, we’re seeing more of our own agents participating on a team basis.

GlobeSt.com: What are you as a company doing to support them?

Green: I have two client bases: the agents and their clients, so I’m serving two groups. Clients are looking for a more customized information flow that impacts their business strategies, and the broker needs a lot more local information. Ten years ago, if you had a market study of Los Angeles, that was adequate. Now you also need a study of Sherman Oaks. So we’re focusing more on expanding research and drilling down further into the marketplace to provide all kinds of information–infrastructure, job growth and on and on to allow them to make good decisions. Because when it’s all said and done it’s all about future value and growing rents.

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