2 min read November 2022 — Invest: spoke with Jeffrey Hipschman, senior managing director of CBRE, about the challenges and opportunities that the firm has experienced in New Jersey over the past few years, the implementation of new technologies and how market fluctuations are affecting its business and the local economy.
What have been the main highlights and achievements for CBRE in New Jersey over the past year?
Over the past three years, New Jersey companies have experienced unprecedented changes and challenges. The pandemic was one of these challenges as CBRE and so many of our clients focused full attention on the safety and wellbeing of employees. As many of our clients rely on us for property management and transaction advisory, we needed to continue to service our clients while also ensuring the health of our colleagues and client employees. Our people were paramount in providing our clients with service delivery, while also helping them with their internal safety programs throughout the pandemic. We were honored to have played such a vital role with our clients. As the pandemic continued, we provided guidance on occupancy safety and eventually return-to-office strategies. And we continue to advise occupiers and owners on approaches to attract employees back to the office. This return to the office challenge is different for every company and requires careful and strategic approaches that match the culture and goals of each organization. This has led to many occupiers focusing on higher quality office space, resulting in a “flight to quality” trend throughout the market. Occupiers remain focused on quality workspace to provide the best experience for their employees.
What challenges has CBRE faced in New Jersey and how have they been addressed?
We’ve been very sensitive to the needs of our employees and have learned a lot about how our people like to work. Also, we have learned how well the technology enables remote work and can help improve aspects of our efficiency. CBRE committed to major investments leading up to and through the pandemic and the resulting technologies have enabled our professionals to deliver continually improving efficiency, services and advisory to our clients.
Are you providing flex solutions for your clients?
Yes, CBRE is an investor in Industrious, a co-working office provider. As a flexible office investor and operator, we have additional perspective on how co-working office solutions can provide both short-term and long-term flexible benefits for office occupiers. Having this direct experience provides us with additional perspectives that we can share with our clients.
While on the topic of perspective, part of CBRE’s technology investment includes several easy-to-use tools that provide occupiers with the ability to determine the ideal office size and layout — including our Spacer and Floored solutions. We also utilize technology to help automate the entire transaction process, providing authorized parties real time access to all transaction documents, further enhancing efficiency, especially for clients with remote decision makers.
In terms of your talent retention, what practices have you been instituting?
We have a mix of both advisory and support professionals, and CBRE continually provides professional development and advancement opportunities across our organization. This is another area where technology has enabled our professionals to learn and collaborate to both grow their careers within the company and foster collaboration and mentorship across the organization. As a performance driven organization, we constantly partner with our professionals to ensure our clients receive the full depth and breadth of our individual expertise as well as the broader CBRE platform.
Has the labor shortage affected your operations in any way?
The average tenure at CBRE in New Jersey is well over 15 years. We’ve been very fortunate to provide our professionals with consistent development, tools and capabilities that enable their market leading performance and service delivery. As a result, our professionals stay with us long term, which further advances our performance.
Where does stress mostly manifest in your operations?
Currently, there is significant stress in the capital markets components of our industry. Both buyers and sellers of commercial real estate have taken a step back from market transactions as interest rates continue to escalate, putting further pressure on purchase underwriting. With uncertainty prevalent in the market, many investors are waiting on the sidelines for markets to settle and stabilize. While this has caused stress within our capital markets activities, it is not specific to CBRE, as the broader capital markets experience market-wide stress.
What are the notable challenges in this market?
Office occupiers remain focused on high-quality office space to help attract workers back to the office. This has resulted in a broader flight-to-quality across NJ office leasing markets. As we continue to experience an oversupply of legacy office product, industrial markets are experiencing the opposite, an undersupply of quality product. Record warehouse demand, while softer in the current quarter, continues to drive markets throughout NJ as new supply struggles to keep pace with demand. Adding to this challenge is the lack of land for new development, and more recent municipal push-back on industrial development.
What is the general responsibility of the real estate industry regarding workforce housing and community development?
The commercial real estate industry as a whole has a responsibility to advance our communities by developing cost effective housing, engaging workspaces and efficient warehousing in order for families and businesses to grow in our state. With New Jersey’s legacy infrastructure, and high levels of residential density, this needs to be done in a smart, energy efficient, and community minded manner. This is a responsibility that many in our industry take very seriously.
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