Today's forecast: Clouds giving way to eventual clearing in the upstate region

There seems to be no shortage of economic "doom and gloom" in the media today. You only need to pick up a newspaper or tune in to the evening news for proof of this phenomenon. Figuratively speaking, storm clouds in the form of rising fuel prices, a weakening dollar, cautious lenders, falling residential values, and corporate downsizing are directly overhead. With these conditions garnering daily headlines, many of us in our profession are being asked questions like "so how is the economy affecting your commercial market" or "are things selling in today's market?" Many people feel that real estate professionals are a good barometer for what's going on in the business world, and I agree with that assertion. As real estate professionals, many of us have seen these conditions in some form or variation previously (although I am willing to bet that $4 a gallon gasoline is a new experience for almost all of us). Arguably the aforementioned has taken its toll on commercial real estate markets, and while no one has ever accused me of being a Pollyanna, some of the above-mentioned conditions are not entirely without benefit in the world of the commercial real estate specialist. Just a few months ago CBRE/Albany sold a 50,000 s/f manufacturing building to a European based manufacturer. During the pre-closing walkthrough inspection of the property, the president of the company was asked "what factors lead you to select Albany as a manufacturing location?" The president cited several factors which lead to his decision. First he indicated that he searched out properties in Illinois, Pennsylvania, and several other states in addition to NYS. He cited the fact that several of his best customers are located within a two hour drive of Albany. As such, he felt that with rising fuel costs, it would be prudent to be located as close as possible to his best customer base. The second reason he cited was the weak dollar. As this article goes to print, a euro will cost you about $1.56. For the sake of comparison that same euro could be purchased for about 86 cents in 2002. So while the front pages of the local newspapers were talking about the falling value of the U.S. dollar and running photos of gas station attendants changing prices on gas pumps, it was these very conditions that drove a global manufacturer to invest in commercial property in Albany. As you would expect, this buyer is not alone in his actions. We have met with, and worked with, several other investors from abroad who are looking to take advantage of the strength of their currency as compared to the dollar. The sliding housing market is also making the news. We hear all too frequently about the difficulty some individuals are facing as they seek out the "American Dream" and attempt to qualify for a mortgage to achieve that means to an end. Not long ago an article in U.S. News and World Reports stated that new mortgages are now harder to obtain than at any other time within the past 17 years, which is the period of time that the Federal Reserve has been surveying senior loan officers in an attempt to track this indicator. While this may be depressing news to the new home buyer or the buyer with a lack-luster credit rating, there are more than a few apartment complex owners who are finding a silver lining in this cloud. During these cycles of residential downturns, the residential rental market typically picks up momentum. This is a repeating and somewhat predictable pattern giving rise to the following conditions; the demand for apartment units increases, increased demand drives up the price of the apartment unit, the net operating income of the complex increases, as does the value of the property. The foregoing are a few examples of the manner in which real estate professionals can attempt to maximize on what is typically viewed as less than ideal economic conditions. The good news about the real estate brokerage business is the same as the bad news; it is a cyclical business. With changing economic times, and the challenges that those times bring with them, we need to re-think the manner in which we approach projects and service our clients. The answers for today's challenges may not be the same answers that we utilized yesterday. Along the way, remember, eventually it always stops raining. Dan Simpson, CCIM, is an associate broker at CBRE/Albany, Albany, N.Y.