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Understanding Macroeconomic and Microeconomic Variables Will Make You a Better Broker

10/08/2014
Strategic Retail Group, retail trends blog, broker tips

The amount of conflicting news in the media regarding today’s economy is astounding. Questions you might want to be asking yourself are: What macroeconomic data is real and accurate and can help you become a better broker? What local/regional leading indicators can you look for to help you be a better broker? What does it all mean?       

By way of example, some important macro stats that can only help you better advise and sell your clients: 

- The Dow Jones is at an all-time high:  +/- 17,000.

- The billionaire count worldwide is at an all-time high:  1,645, up 219 from the 2013 total of 1,426 {nearly 15%} and well over double from the 2009 total of 793. 

- Mortgage rates over the last three years are the lowest in history, with 2013 marking the lowest ever.

- Unemployment is on the decline and has been steadily declining since 2009.

- Inflation is below the 35-year average, in spite of things feeling more expensive.

- Consumer confidence is currently at 92.4, which is the highest measure in 7 years.

- Apartment vacancy rates, despite rising 10 bp, are at a ridiculously low 4.2%.  Rents are rising and apartment development is occurring at an incredible velocity in our market right now. 

If you aren’t reading the local news and trade journals, you might want to start. If you aren’t current on your capital markets fundamentals and your economic indicators, you should be.  But most importantly, look no further than your neighborhood for an authentic and much more relevant vantage point on what’s happening in your world, so that you can give your clients the best and most meaningful real estate advice. Global and national statistics and data can be manipulated and misrepresented, and can therefore be misguiding.  As a real estate professional – especially commercial – we need to advise our clients on the market overall, but most importantly, on our local market. Top brokers synthesize and process this information and draw meaningful conclusions to help their clients discern what the future may hold. Are there new apartment, office, mixed use or other commercial developments in your neighborhood or subject trade area? Are retail spaces being absorbed and are rental rates on the rise? Aside from QSR tenants, are other retail categories expanding?  Are new users entering the market? Is new retail space being developed and if so, where and what kind of product?

Your institutional clients will draw their own conclusions {Wall Street has drawn them already}, but will rely on you for local “boots on the ground” market intelligence to help them make good real estate choices. Your local/regional/private clients will behave similarly, though they’ll rely on you more heavily to help them navigate the rough waters.  Don’t take this fiduciary lightly. Understand the overall market, the local market, and the data to help sell your clients and get them comfortable. Use your neighborhood and what you see on a daily basis to support or rebut the global and national statistics and what you see in the media as it relates to your backyard and your market. Understanding the overall marketplace needs to be three dimensional and spherical. Clients need a local expert that can help them understand the macro economy, the micro economy and have trade area intel to draw conclusions and ultimately help them make good real estate decisions.  

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By: James DeCremer

Senior Vice President, Strategic Retail Group   

More From Strategic Retail Group:

Qualifying Commercial Tenants (Part 1)

Quick Service Restaurants continue to lead retail absorption

The Shrinking Big Box Store

Why Brick & Mortar Retail is Not Dead…

Power Centers Leading the Retail Comeback

 

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