By Laurie Burstein
Commerce Magazine recently spoke with Peter Krombach, senior managing director, and Patty Nooney, managing director, of CB Richard Ellis at their offices located at 8235 Forsyth in Clayton. Both natives of St. Louis, Nooney and Krombach have spent their entire careers in commercial real estate and have known each other and worked together on and off since 1986. They shared their thoughts on the commercial real estate industry including current trends, whatÕs ahead, and what they like about doing business in St. Louis.
As one of the second largest commercial real estate companies in St. Louis, CB Richard Ellis (CBRE) counts Boeing, Bank of America, Solutia, Express Scripts, and Tyco/Covidien, among its largest clients. The St. Louis office is part of CBRE, the largest commercial brokerage firm in the world and an S&P 500 company headquartered in Los Angeles with more than 300 offices worldwide.
The St. Louis office of CBRE has 150 employees. Services include brokerage, investment properties, property management, project management, corporate services, research, marketing and valuation/appraisal.
What is the general state of the commercial real estate industry in St. Louis right now?
Peter Krombach: The St. Louis commercial real estate market has a tendency to lag behind other parts of the country and we donÕt have the highs and lows, which can work to our advantage when times are tough in other markets.
Some of the slowdowns in the retail sector have had an overall effect on the commercial market, and as brokers, we are working to fill some of the empty space in the market with quality tenants.
How is the residential slowdown affecting the commercial real estate market?
Patty Nooney: Right now we are glad to be on the commercial side considering current market conditions! People have a tendency to lump all real estate together so there is concern they may not understand that commercial real estate isnÕt necessarily driven by the same factors as residential.
However, there are some aspects that carry over, especially on the lending side and how it affects the investment market. Lenders are taking a harder look at real estate loans. This has an effect on the office market. Not so much with Class A space, but it's harder for clients to finance Class B space.
Peter Krombach: Relative to St. Louis, places like Chicago, Dallas and Atlanta are feeling it a lot worse than we are.
Patty Nooney: It's the good news/bad news for St. Louis. We don't have the big upswings when times are good or the big crash when times aren't so good.
We have always been fairly steady.
What other trends are we
seeing here?
Peter Krombach: One thing in our favor is that St. Louis is not too overbuilt like some other markets. When you are in times like this it's a plus, although it makes it more difficult for us as brokers in that we donÕt have as much to show our clients.
Patty Nooney: Another trend we have been seeing for quite awhile, both in St. Louis and across the country, is the merging of commercial real estate firms.
Can you give some examples of some current projects CBRE is involved in?
Peter Krombach: We are the brokers for a new office project at Highway 40 and Maryville Center being developed by Lester Miller and we also did the land acquisition for the new Montgomery Bank project in Clayton. So there is activity going on with new projects, but just not as much.
Please talk about the role of
the broker. How do you help your clients?
Peter Krombach: We provide a whole range of services from the brokerage operation to management of buildings. Right now we manage 8.5 million square feet of building space. The role of the broker is that of an educator. We have to educate our clients and help them with the decision process, which could be a relocation or expansion. What we want to do is help our clients make the best decision.
Patty Nooney: Brokers today serve one of two rolesÑeither they represent a building so they work with the owner of the building trying to lease or dispose of the building, or they represent a tenant. The broker today acts as much more of a trusted advisor and we really get to know about each client's business. We have the knowledge of real estate, but we also have to understand their business. We analyze the client's current and future space needs and work up-front with architects to make sure the space will work for the client.
Peter Krombach: But we really are more than brokers. Our services also include leasing, valuation and appraisal. We have the capabilities to do project management where we can oversee construction of a building as well.
How has the commercial real estate business changed in
St. Louis?
Peter Krombach: Today we are using a very sophisticated marketing approach. The old way was to put up a sign and have a flyer. Now we can do so much more using technology.
Patty Nooney: Our marketing approach is really electronic now. While you still have a sign, we set up a website for every property we represent. On the website are floor plans, information about the neighborhood and much more. The design also must be very creative. There's a focus on having all the information readily available for potential tenants or buyers.
Peter Krombach: The other part of the marketing is that we are marketing on a global basis now. We can tap into our network of offices around the world, which clients can expect to take advantage of.
Please talk about the trend of the "green movement." Are your clients interested in this?
Patty Nooney: Yes, we are definitely seeing people paying more attention to the green initiative and sustainability. Whether itÕs new construction or existing buildings, clients are very interested. We help guide our clients on which buildings are energy efficient.
In fact, we just received our second Energy Star certification from the Environmental Protection Agency (EPA) for The Plaza in Clayton, a building we manage. This is a very prestigious award and the Plaza in Clayton is one of only two
office buildings in Missouri that has this
rating. It really demonstrates our commitment to the environment, while also lowering energy costs. Commercial buildings that earn the Energy Star use an average of 35 percent less energy and also release 35 percent less carbon dioxide.
Peter Krombach: In our national meeting last year, the green movement was the real focus. We had 3,500 people there along with 500 clients. One of the most interesting things about the green movement is that there are huge savings. It's certainly something we discuss in detail with clients who are interested in going green.
Patty Nooney: Our managers are involved in green initiatives on a day-to-day basis. Owners of properties are asking what they can do to make a building more energy efficient. At CBRE we are benchmarking all of our properties and we have a checklist for operations that each of our engineers fill out on our buildings.
What is it like doing business in St. Louis as a commercial broker?
Peter Krombach: The best part about doing business here is that in most cases you either know or can get to know the top
decision makers.
Patty Nooney: It is a good place to do business, because our clients are glad they are doing business with a local company that has access to national resources.
What's ahead? Any future
predictions?
Peter Krombach: I think we have so many positive things happening here in St. Louis like the redevelopment of our downtown area including the residential aspect. As all these good things happen, it just makes it better for the commercial industry.
Also what's happening on the Metro East side is extremely positive. For example, we are involved in the Gateway Commerce Center at 255 and 270, which is a nine million-square-foot industrial/distribution project. This allows us to compete with other cities where we couldn't before.
Patty Nooney: CBRE also has activity in Shiloh and O'Fallon, Ill. If you go to the West, we are in O'Fallon, Mo. We are expanding our reach and will continue to do so in
the future.
In wrapping up, are you positive about where your industry is now and where it's going?
Peter Krombach: There is reason to be positive. We have Monday morning meetings where we go over all of our projects and I am amazed at how much activity there is.
Patty Nooney: Things are still moving, but there is some caution. I think we will continue to have steady growth.
Peter Krombach: We are cautiously optimistic. You can't put your head in the sand, and we know there is a slowdown, but it's not been to a harmful degree. We have had a lot of out-of-town investors come into town, which has given us a boost. St. Louis
is in the center of things and we are well
situated. We have good things happening here.
|
