Commercial activity picks up for many businesses during holiday seasonDate posted: 11/19/15 12:00:00 AM
Retail shopping tends to explode during the holiday season, but there are other industries that slow in the final months of the fourth quarter. The residential real estate market, for example, is typically sluggish during the holiday season as families travel or put a move on hold while their children are midway through the school year.
One real estate sector that seems to avoid the pitfalls of the holiday season is the commercial industry. Many small business owners in the commercial market actually see a rise in production, according to Jim Spain, a Colliers International regional managing director.
"I think the popular impression is that brokerage slows down at the end of the year and people say nothing happens, or not a lot happens, between Thanksgiving and New Year's, but December is traditionally our strongest month for revenue, and that occurs in brokerage when sales transactions occur," Spain told The San Diego Daily Transcript. "We typically have good Decembers. December, many years, is our best month of the year."
Last December alone was a great month for Spain and his company, though the commercial sector was able to take advantage of the capital gains tax increase. The increase, which went up 15 to 20 percent in 2013, sent his clients scrambling to beat the rising taxes. There isn't such an incentive to spur activity this holiday season, but Spain still thinks it's going to be a solid month.
"I don't think we're going to see that again necessarily because that particular factor is not at play, but it's going to be a good month," Spain said.
In Denver, for example, commercial real estate is slated to vastly improve during the holidays due to low interest rates and a market flush with liquidity.
"This is a great thing that is happening in Denver's real estate market, and the investment banks are starting to catch on," said Roberta Hutchings, broker and owner of CO MainStreet Properties.
Incentives for brokers
Like a quota at the end of the month, many commercial real estate brokers also have a yearly quota, which puts pressure on them to complete deals before the new year.
"Whatever they close in December goes to their annual earnings for this year, and annual earnings determine various things for them - it might determine where they end up for brokerage standings within the office, which is a matter of prestige, and brokers care about that very much," Spain said. "Brokers are usually trying to get as much done deal-wise before the end of the year as possible for their own benefit, but also because they have a job to do for their clients."
Knowing how to categorize your commercial business
According to Darcy Miramontes, an executive vice president with Jones Lang LaSalle, commercial real estate companies must differentiate between new business acquisition and existing business, especially during the holiday season.
Miramontes said that existing business usually speeds up at the end of the year while attracting new business slows down during the waning months of the year.
"I think traditionally there has been a slowdown during the last quarter of the year," Miramontes told The Daily Transcript. "It happens annually, typically in terms of getting new business underway, though we have traditionally been busy at the end of year with closings. So I would say new business activity slows down, but closings almost pick up pace, since some people have fourth quarter deadlines."
Colton Sudberry, the CEO of Sudberry Properties, told the Daily Transcript that his business does slow some during the holiday season, but much of that has to do with his clients taking time off.
"We'll take time to reflect back on how we did as a company, and do some more of the kind of housecleaning stuff versus more of the deal work," he said.
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