Quite frankly, I am extremely tired of hearing about all of the gloom n’ doom in the commercial real estate industry. Suffice to say, while the residential market has certainly had its’ share of challenges, I believe the commercial market is poised for the most exciting and profitable era any licensed commercial real estate professional alive today has ever seen. In fact, for one market niche, which spans across all commercial product sectors, the outlook is better than it has ever been, and it is going to stay that way well into 2029!
Can you say Boom, as in Baby Boomer? While they don’t officially start to retire until 2011 (less than three years away), practically speaking they have been retiring for the past several years. And the Boom retirement years are just around the corner; the demand for the commercial real estate sales and leasing services, required to accommodate the changing lifestyles of these retirees in this niche market, is simply poised to explode. Consider that more than 75 million Baby Boomers will reach retirement age between 2011 and 2029. That’s 18 plus years of record breaking demand by this market niche, on the real estate services industry, in virtually every product sector, and in virtually every discipline.
The largest retirement party this country, and this economy, has ever seen, and any of us alive to day will ever see, is about to begin. It will kick-off the exchange and transfer of billions and billions of dollars of investment real estate from one set of investors to the next. It will deliver the payment of millions and millions of commission and fee dollars into the economy passing through the hands of licensed real estate and real estate service industry professionals.
Millions of private real estate investors will retire out of the economy. Hundreds of thousands of real estate professionals will retire out of the industry, both on the real estate services sector side, as well as within the corporate, institutional and general services sectors. This will provide tremendous opportunities for savvy real estate professionals remaining in the industry to carve out new relationships; with the new group of private investors; as well as with the newly promoted senior level management and with the crop of existing entry-level staff moving up in the ranks.
Aging private investors will look to sell highly appreciated assets in virtually every asset class in literally every state in the country. Investors remaining in the industry will look to bolster their position in investment real estate, the now widely accepted “fourth” asset class, to diversify their investment portfolio, for a variety of reasons.
Shrewd real estate agents and brokers will seize the opportunity to complete 1031 exchanges on behalf of their clients who reinvest in passive “like-kind” real estate, providing tax-deferral benefits to their clients, and earning commissions on both the original sale, and the reinvestment of the sale proceeds. Long considered to be a complicated and laborious task, 1031 exchanges are actually extremely simple transactions, and with the advent of numerous qualifying exchange vehicles, and better educated real estate service professionals, can now be completed in a relatively short period of time
Some investors reaching retirement age will continue to hold their investments, or “transfer” their properties within the family, to less seasoned or completely inexperienced real estate “owners”. These situations will provide further opportunity for seasoned agents and brokers to provide third party leasing services
Certainly, for those knowledgeable licensed real estate professionals who are prepared to service the Baby boomer niche, these are truly exciting times with tremendous potential. The coming demographic shift in this country will drive fortunes in real estate wealth transfer, and provide agents and brokers the opportunity to make high six and even seven figure annual incomes through substantial transaction fee volume. So bone-up on the Baby boomer demographic; do your research, identify your suspects, qualify your prospects; pitch your services; and start closing transactions. In short, put on your best party hat, grab a handful of balloons and the loudest noisemaker you can find, and join in the party, before all the cake and ice cream is gone!
© 2008 HCI Newsletter
David Stuart publishes “High Commission Income”, an E-Newsletter dedicated to The Top Producing Real Estate Professional. Get his FREE Special Report, “The Perfect Storm Of The Century” at highcommissionincome.com
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