May 30, 2023

May 30, 2023 08:00 AM Marc Nassif, senior managing director at BBG Inc., could have wound up in a very different position had he not joined a company softball team more than 20 years ago after graduating from Albion College. He wound up playing with a slew of National City Corp.'s commercial real estate group members and, by the time the summer was over, he was working exclusively on those types of deals. Fast forward to today and Nassif, a father of three, is one of the leading commercial real estate appraisers in the region, working in downtown Detroit and across the country. What are you seeing in terms of trends, given what the Fed has been doing the last year or so with interest rates? There is a lot of equity on the sidelines waiting to see what's going to happen right now. You've got encumbered deals on floating rates that are under stress and people searching for opportunities to get out of those or get some debt relief. You've got a slowdown in leasing, which is a carryover from the pandemic and remote work. There is also new uncertainty due to interest rates and the economy, and reluctance to sign long-term deals right now. There are a lot of people who, unless they have a specific reason to be making a move, are sitting on the sidelines. If there are a lot of people on the sidelines, what needs to be done to nudge them out and into the playing field? Is it just stabilizing rates? Other factors? That's a very big piece of it. Life (insurance) companies are still very busy and very active (in lending). People are trying to go that route if the metrics of their deals work, in terms of stabilization and cash flow and the life cycle of the deal. Unfortunately, not everyone can do that. If there was more certainty in interest rates, people would be more prone to move forward. If there was more certainty in back to work, people would be moving forward more. Downtown Detroit is a great example of that. If you look at daytime occupancy now vs. three years ago, you're still only at about 50%. So if you're doing a retail deal, if you're doing the Apple store that everybody's talking about, what are actually the numbers of people down there on a daily basis? People just don't seem to be coming back. Is there anything that can be done to get more butts in seats in the offices? Some of the larger tech companies have signaled they want their people back in. I think that's the start of it. There have to be some large players who remove the optionality. I think a lot of the Gen Z and younger people coming out of school are now expecting to work remotely and expect it to be a day-to-day option they have, and that's a challenge. Somebody has to come out and say, "No, you're back in the office." It has to be somebody big enough to set a trend, and I think a lot of larger companies are waiting for that. Where do you see commercial values heading? It depends on the asset type, and I think the people who are still seeking large numbers, it goes back to that uncertainty. If you're of the mindset that rates are going to come back down and things are going to heat back up, and you're just going to sit on this big number for another six to nine months because you don't want to let the market know what you'll accept, that's one viewpoint. If you have people who have office deals, those are challenged. Multifamily, there is still money out there. Industrial, you can certainly still make it work. Retail is tough. If I recall right, your career can be traced back to a softball team, right? I was working at National City Bank in 2001 right after school and I joined the bank softball team, which happened to be me, one other credit analyst, and the entire investment real estate group. Prior to that, I was only working on C&I (commercial and industrial banking) deals, and by the end of the summer, I was only working on the real estate group stuff. It was the first exposure I'd ever had in my life to investment real estate. Shortly thereafter, I realized I didn't want to stay in banking and people in that group helped me get my first job in appraisal. If I hadn't joined that softball team, who knows what I'd be doing right now?