Effects of the COVID-19 pandemic continue to be felt among most industries, including the commercial real estate sector, which is now adjusting to a new norm. Rising interest rates, work environment changes, construction costs and more continue to impact the foreseeable future. Fortunately for local professionals who are navigating new unknowns every day, the Commercial Real Estate (CRE) Summit offers an opportunity to network, gain educational tools and receive an inside look at what’s to come for the industry. This year’s conference, slated for August 26 at 7:30 a.m., will be held at CHI Health Center Omaha and guests can register at www.attendcresummit.com/2022/begin.
Founded in 1990, the CRE Summit was originally intended to help solve a problem that was plaguing the industry — a recession. At the first conference, roughly 350 commercial real estate professionals filled a lecture hall at Creighton Law School to discuss the current economy and offer solutions and insight to one another. Founder and Chairman of the CRE Summit Jerry Slusky, partner at Smith Slusky Law, said the event was so well received that attendees asked for an annual meeting. Now in its 33rd year, the annual conference has upheld its mission of providing a unique learning experience for industry leaders, including those who work in law, banking, architecture, engineering, insurance and more.
Since its inception, the conference has nearly tripled its average attendance. This year, the event has already received a record-breaking pre-registration of 450.
“What this is saying to us is that people are interested because there’s a need for this,” Slusky said. “They want to know what’s going on and what’s changed each year.”
The Changing World
Fittingly, the theme for this year’s CRE Summit is “The Changing (Changed?) World of Commercial Real Estate,” which directly references recent changes that the industry has seen in the past couple of years. While each session has a unique focus depending on its panelists, the underlying theme is always present.
The program begins with a macro picture of what’s happening with economics, followed by a session centered on the topic of a hybrid workforce.
“There’s been a lot of discussion about what is happening in offices right now and how to get people back into the office and what that will look like,” said Chris Mensinger, summit co-chair and senior vice president of Colliers International – Omaha. “We have a lineup of experts who talk to us about what’s happening in companies.
“People have been through a traumatic experience the past couple of years depending on where they worked, how they worked and what was going on at home while they worked. From an architectural side, we brought in a neat panel of designers who discuss how some really traditional companies have redesigned spaces to accommodate this new hybrid work environment where people aren’t always at their desk. They talk about how they’ve adapted and how companies can make the workplace work for everyone.”
Other topics covered throughout the day include rising interest rates, high construction costs, retail, construction contracts and leases, labor shortages, and supply chain issues, among other timely subjects.
The closing session, which was organized by the CRE Summit’s executive planning committee, features the presidents of many influential commercial real estate companies in Omaha. These leaders will provide a look into the future and discuss how they’re investing.
According to Slusky, this is the single most important summit since the Great Recession.
“During 2008 to 2012, things slowed way down, transactions were not taking place, lenders were not lending, and builders were not building,” Slusky said. “We worked our way out of it and 2013 to 2021 were prosperous years.
“Now, we’re facing this recession, which started in late 2021 and is seeming to gain speed as we speak. By the time we get to the summit, we are going to know a lot more about what these changes are and how things have changed. We’ve put together the pieces for our attendees to help them work better, work smarter and work with more educational tools to work themselves out of this problem that we’re going to be in for a while.”
As interest rates rise across the nation, principal and interest payments are also increasing. In the housing market, this means the number of Americans who can afford to own a home is decreasing. Slusky said the commercial real estate industry is being impacted in the same fashion.
“Most of these deals were made when the interest rate was 3.5% to 4% and now it’s 5% to 6%,” Slusky said. “And that changes things. The rents and the construction costs will no longer offset each other to give a return on investment to developers so it’s slowing things down and causing a big impact.”
Even as the commercial real estate industry faces uncertainties ahead, Mensinger said the local market is still in a very good place.
“At Colliers, we’ve witnessed one of the best starts to our year,” Mensinger said. “While interest rates are a huge concern and price of construction is another big concern, a lot of capital is still out there.
“Omaha has always been a more conservative market as far as how we build and generally people have tenants before they’re building. That has continued in our current environment. So, certainly everyone’s concerned that deals may take longer, and some may have trouble being funded, but there’s still a lot of velocity as far as things that are happening in Omaha, and we are seeing a lot of groups moving forward. We will likely see a little slow down or at least some length added to deals closing while people reevaluate the structure of deals and where the dollars come from and how those are spent.”
Advantage of Attending
In these changing times, the CRE Summit remains a resource for the community. Aside from educational value, the conference provides a space for likeminded individuals to network and share their passion for the industry.
“The best part of the event is definitely the people and the energy,” Mensinger said. “The CRE Summit brings such a huge, diverse group of people together in one place. It might be the one time you actually see them face-to-face throughout the year. It’s an opportunity to be among a crowd of people who are all invested in the success of the commercial real estate world with goals to push it forward.”