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Bob Brehmer

Bob Brehmer is managing partner of Cleveland-based commercial real estate brokerage NAI Daus. He recently spoke with Midwest Real Estate News about the challenges that he and his firm face in today’s tough commercial real estate market. He also offered his thoughts on how commercial brokers can best make it through this challenging time.
Midwest Real Estate News: I’ll start with the really general question: How is the commercial real estate market performing in Cleveland?
Bob Brehmer: It is relatively flat. There are transactions getting completed. A major office lease was announced in Cleveland on July 14. One of the law firms, Calfee, Halter & Griswold, just signed a 20-year lease and will be moving into the East Ohio Gas Co. building. The firm is moving from the KeyBank Center.  So things are still happening. There is some development downtown that will create some relocation business.  In the suburbs, depending on which one, there is a very modest deal velocity going on. But deals are still getting done. We are seeing a lot of renewal transactions, people staying in place and doing short-term renewals.
MWREN: Despite all the problems in the commercial real estate market, then, it seems as if you are seeing some positive signs.
Brehmer: We’ve decided at our firm to be beneficiaries of change. We can wallow in the bad economic times, but that won’t do us any good. The tough part is that some of our clients are going through some very tough times. You do what you can to try to help them. The real estate business is changing, ever changing. You have to adapt to these changes.
MWREN: You’ve seen quite a few down markets, right?
Brehmer: This is my 28th year in the business, so I have seen a lot of different markets. Earlier in my career, in the ‘80s when things went bad, I didn’t have much of a practice in place. I just had to keep working, no matter what the economy was doing, to build my business. This is the environment that some of our younger associates are in today. They didn’t have the fat years. Some of the younger people with less experience today are doing better than some thought they would. They are doing the basics, and they’re doing them every day. They are cold calling.  They are managing their territory. They are meeting with clients. They have to do that to build a practice.
MWREN: How was this most recent recession different from the other ones you’ve worked through?
Brehmer:  I’ve been through recessions that are region or product-type recessions. There might be too much office space. A big manufacturer might leave an area. This one, though, has been deeper and more than likely will be longer than the ones we’ve experienced in the past.
MWREN: What are you and NAI Daus doing to get through this tough time?
Brehmer: We either work our plan or someone else’s pan. We are sticking to our knitting. We had done a lot of anticipating in the fat years. We didn’t spend our money. This is a Midwest thing. We were pretty good stewards of our resources. We actually invested our profits in the company’s infrastructure, technology and in training people. We didn’t buy sports cars and sailboats. We kept money in the company. That allows us to have a cushion. Even though some of this isn’t fun, the level of stress isn’t as great. We have also expanded our services. We’ve expanded our management company. We provide a broader range of services than we have in the past.
MWREN: Are there any particular commercial sectors that are doing better than the others in Cleveland?
Brehmer:  We started as an industrial boutique. We are well-rooted in the industrial side of the business. Industrial is holding up. Deals are taking longer to complete, and rental rates are flat. But industrial has not been brutal. The area’s medical institutional market is doing very well. The hospitals in our area are all in expansion mode. New construction medically related in Northeast Ohio  is performing well.
MWREN: Earlier you mentioned that Cleveland and its suburbs are seeing a lot of renewal business. Why is that? Is it because of the economy or is this something that Cleveland would have seen anyway?
Brehmer: They may have done it anyway because there are not a lot of new choices for them. But sometimes you do get people moving from building A to building B. There is a flight to quality of people who are moving. In down markets, tenants can find a good economic deal on higher quality space. If you are in a B-plus building you can go to an A building for a similar rate. People do that. That happens a lot in downtown Cleveland. The A buildings have firmed up. The same has happened in the suburban office market.

Tags | Cleveland, industrial, NAI Daus, Office, Ohio

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