What Could Possibly Go Wrong In Commercial Real Estate

[00:00:00] This week's listener of the week is you. That's right. Now the reason why I'm giving everybody the participation trophy of listener of the week this week is because you might hear some squawking in the background. Now my Viral Lifetime Partner Bird Cheerio is in the room a couple doors down and you might hear some squawking.

So I gave you and all your friends Listener of the Week to say thank you for listening and I'm sorry if you hear my bird in the background. But if you leave us a 5 star review below, you might be next week's Listener of the Week. Week. Week. Now, a gentleman by the name of Elon Musk, you might have heard of him.

But... a social media platform. And upon buying the platform, he also [00:01:00] purchased the leases that were in place for the office buildings for this social media platform, Twitter, now known as X.

Very shortly after buying the platform, He decided that he wasn't going to pay rent at all of the office spaces that he had leased. Which is truly mind blowing for a number of reasons. But primary reason that it is so mind blowing is because a lease... Regardless of a sale of a business or property is still a legal obligation, whether, uh, if you buy the business or if you buy the property.

So, we saw, um, insane media about Elon. He's getting eviction notices and he's getting sued by all these landlords across the country. [00:02:00] And I know Elon is a really polarizing figure. A lot of people hate him. A lot of people love him. This is not about any agenda for or against Elon Musk, but rather I want to talk about what happens when someone Bails on a lease, right?

So this episode is what could possibly go wrong in commercial real estate in 2024. Now, what if work from home really does take down commercial real estate? All these office buildings that line our downtowns. All these landlords who are living off of your rent. The world is over. But, and, and don't get me wrong, the mainstream media want you to think this, right?

The more that they can keep you unaware as to [00:03:00] what's actually going on, the more they can continue to line their pockets, stuff their pockets, and do the same thing for their buddies. So, when we fall into these notions, Oh, commercial real estate's dying because of work from home. Just look at Elon Musk, who bailed on his whole lease.

It's really important to understand that, yes, um, people are getting sued over the Elon Musk leases. Bunch of brokers were paid commissions that they might be required to give back, right? There's gonna be a lot of drama surrounding that and what Elon did, whether or not you like him, is not right ethically Because he made a commitment and now he doesn't want to follow through on it But the media wants you to think that that is um, that the Elon Musk buying Twitter is a proper representation of the commercial real estate industry, right?

If he's getting evicted, everybody else must be getting evicted [00:04:00] and the industry must be collapsing. And what people don't realize is that there are facets of commercial real estate, significant industries that are doing better than ever. And some you might, you might recognize restaurants doing better than ever.

Gyms doing better than ever. Venues. Doing better than ever. I mean, then you go into warehousing. Warehouses are sold out in, in my market for the next two years. These properties, because of e commerce, because of, uh, new industries, logistics, supply chain, there are industries that are flourishing. While, yes, There are office buildings that are going.

The reality with these office buildings is that they had an inflated value. So [00:05:00] now the value will deflate. And hopefully, whoever owns these assets doesn't have too much leverage to lose it all. And some will lose. And that's why we mitigate our leverage. But that's a topic for a different podcast. Anyway, so.

Now we have restaurants performing better than ever, warehouses performing better than ever, and then office buildings suffering. The general public thinks it's all going down. And why? Because of fear. You fear what you don't know. You fear what you haven't achieved. And, and that's human nature. But the cost of letting that fear dictate your actions is taking the glass ceiling and putting it right above your head.

Now, some people are okay with that. Some [00:06:00] folks aren't motivated by money. Some folks aren't motivated by power or travel or financial freedom. And those are generally folks who are not listening to this podcast.

My fear is complacency, that you hear it, In the media or that you see it on Twitter and you think to yourself, Oh, Elon is bailing. Everyone's bailing. CNN said it's falling. I, I can't work in commercial real estate. I can't buy commercial real estate.

But educated folks like yourself are looking around you and going, Holy smokes. You're right. We're not in our offices. We're going to restaurants. We're going to, oh my gosh, there's all these new bar concepts. [00:07:00] There is a bar that's a shooting range here in Golden, Colorado. Now they have bars where you can take your dog and you can get your dog groomed while you're at the bar.

You can board your dog. At the bar, it's unbelievable the new emerging uses that people like you and I actually are consuming more than goods, right? They say millennials like to consume experiences over tangible items. But

the reality is that you know yourself and your consumption and your city better than anybody. And you really need to listen to your intuition and what it says. you understand the best way to navigate your commercial real estate career and your relationship with commercial real estate, right? You don't have to be a broker.[00:08:00] 

You don't have to be an investor. You might just want to be a property manager. You might want to be a leasing agent, a lot of ways to skin the cat in this industry. However, I dare you to look around, A, at what type of real estate you're consuming. Right? Do, do you like to go to the movies? Do you like to go to visit your grandparents who are maybe at a senior living facility?

Do you like to go shopping? Maybe you don't like to go shopping. Well, where are your goods and services coming from? Get to know your industrial areas in your town and the way that they support the industry and economy of your town. There's so much more than just these office buildings. There's so much more than the headline drama that [00:09:00] Elon Musk's, you know, plants in the media, right?

Look at how the world is changing and how it relates to real estate and then navigate accordingly. Why did I bring up senior living? Well, because we don't have enough senior living in this country and it's going to be a huge issue when it comes to real estate and the labor force in the next 10, 20, 30 years, right?

Our parents and grandparents are living longer than ever. We don't have the infrastructure or support. So maybe, maybe you start learning about senior living. Maybe you want to specialize. In, in these new industries that weren't, uh, topical, right? Being an office broker used to be the coolest thing. It's not the coolest thing anymore.

To some people it is. [00:10:00] So, I suppose, I shouldn't yuck any yums. I know some really cool office brokers. But! I'm not jealous of them. And as a buyer, I'm looking around going, okay, what do people use? What do people consume? And I'm going to tell you a secret. I think the automotive industry is fascinating and the real estate that it supports.

Why? We all use our cars. I mean, maybe you live in a city that's supported by a public transport system that makes sense. I do not. Denver public transportation is a joke. Nobody uses it. So there's all these automotive uses, right? Mechanic shops. Paintless dent repair. Just car sales in general, automotive is such a necessary product type, even in real estate, and people will pay more for it.

I could [00:11:00] talk about automotive real estate all day. I won't bore you, but it's really important to look at you and say to yourself, what do I use? What do I not use? What do my friends use? What do my family use? How is this going to apply to real estate? Right? What, what is going out? Right? Like, what, what are?

You know, like, uh, all the warehouses used, uh, were originally made for print shops. I'm not joking. I just got a call from, as we speak, a gentleman with an automotive use who's trying to rent out my warehouse who I cannot have with an automotive use is, oh, is calling right now. Oh my gosh. Whoever is editing my YouTube, please blur, blur out that phone number.

Thank you. Anyway,

you are smarter than the absolute mania the media feeds you. [00:12:00] Trust your intuition. Trust your own knowledge and market research. Ask. Ask yourself what could possibly go wrong in commercial real estate in 2024? Now, if you have any questions, I would love for you to DM me on Instagram at Aviva Real Estate.

If you wanna learn more about about commercial real estate, head over to uh, the show notes where you'll see my free guide, how to get started in commercial real estate, and next week on commercial real estate secrets. We have a very fun episode. The craziest stuff renters have ever left behind. That is the season finale next week on episode, excuse me, season three of Commercial Real Estate Secrets.

We'll see you then.