Opportunities abound, even as new construction lags
Though the current recession is slowly improving, we still have a long way to go. Shuttered businesses, lost jobs, empty buildings and retail spaces make it clear that Clark County's real estate and construction industries are surviving not just a recession, but a depression. According to some market experts, commercial real estate is not expected to stabilize until 2012, with new commercial construction lagging until at least 2014.
Riding the "easy money" tail of the biggest real estate boom in Clark County history created a seller's market at every level, driving costs to a point where the market could do nothing but collapse. Government fees rose, permit times expanded, banks made ill advised loans based on unrealistic appraisals to investors who had done little or no due diligence. During the height of the boom, real estate agents, contractors, subcontractors and tradesmen in the industry experienced decreased efficiency while costs continued to increase – and worse, the industry kept segmenting as managers focused on their specialty with little interest or accountability beyond their part of the deal.
The economic recession hit the "reset button" on Clark County's real estate development industry. Productivity is up; costs are down. Lessons have been learned and hopefully not forgotten by the next generation of business leaders.
These are exciting times to learn, develop innovative customer solutions and prepare for the next market cycle.
This market reset means real estate is again a solid investment for small business. And though conventional financing remains tough, equity requirements are being eased with help from the U.S. Small Business Administration, which boasts new leadership and a renewed mission to fund small business expansion.
Investors are cautiously emerging. Long-term strategy now requires knowing all of the options. One solution is to integrate the entire investment real estate cycle from acquisition through disposition. In a recent case, a feasibility study was completed for a small manufacturer that wanted the advantage of an owned facility. The options: purchase existing, purchase and remodel to suit, do either with the investment multiplier of purchasing with a solid tenant already occupying part of the space, purchase land, entitle, design and build new.
Understanding the options and able to confidently make the best decision, the client secured SBA approval and is looking to purchase a partially-occupied facility, creating a great investment and new business for the industry.
Merrill has been in the industry for 33 years as a commercial builder in Clark County. He is currently a LEED AP and a licensed real estate agent associated with the Phillips Group.
