Like residential real estate, commercial real estate has felt the impact and increased challenges brought on by COVID-19. Yet, as Gary Keller writes, “Every shift leaves an opening. A reason to stay in the market. Every problem eventually presents a solution. A way to help someone when they need it most.”
Rob Stepp, of the Santa Monica market center, embodies this philosophy to the core.
“Rob and his team have showcased a deep and consistent commitment to finding win-win solutions for their clients. They exhibit curiosity, creativity, and a willingness to grow in every aspect of their business,” shares Operating Principal Rick Cunningham.
Alicia Shepherd, KW Commercial Director, echoes Cunningham’s sentiments.
“We are extremely proud of Rob and grateful to be in business with talent of his magnitude. The growth and momentum we can enact together is truly exciting.”
Succeeding With a Long-Term Mindset
Stepp, CEO and founder of Stepp Commercial in Los Angeles, California, launched his career in commercial real estate 16 years ago selling two four-unit properties in the greater Long Beach area. After spending time at other brokerages, he decided to take his growing desire to create more opportunities for himself and founded Stepp Commercial in 2013. Fast forward to today and Stepp’s team has enjoyed consistent growth and success year over year. Over the past 12 months, the team of 14 has executed nearly 1,400 apartment unit sales and 1031 exchanges totaling over $346 million.
In addition to “helping clients achieve financial freedom by growing passive income,” Stepp believes the core of his success is rooted in the application of a long-term mindset in all aspects of the business.
He observes, “Not only do we think about the transaction at hand, we think about how to better position the client in the long-run. We tend to work with the same vetted lenders, title companies, and other vendors so that we can build mutually beneficial relationships and maintain a smooth escrow process.
“We also utilize this approach with our employment practices – taking time to hire the right people and invest in their careers and well-being – so that we have an extremely low rate of turnover with our agents and staff. Finally, we spend the time, effort, and dollars on high-quality marketing, because not only does that help us sell properties for our clients, it helps us sell ourselves.”
Since California issued their stay-at-home order, Stepp’s team has been working diligently to be of service to one another and blended patience, care, and creativity to serve their clients. He shares three elements that have been crucial to the team’s success:
- Broad information-gathering: We reach out to as many entities as possible that we have relationships with across the commercial real estate spectrum – not just investors, but lenders, property managers, developers, local government officials, vendors, etc. – to ensure we are gathering the most accurate, knowledgeable, and vetted information across the board that we can provide to our clients.
- A proactive approach: We are proactive in addressing what is important to the seller and buyer while managing expectations and vetting lenders, third-party vendors, and agents. We typically provide quite a bit of hand-holding throughout any transaction, but we have taken this to the next level to ensure we are ahead of any potential challenges that may arise during this unpredictable time.
- Creative financing: We actively explore creative financing options to address the hesitancy in the capital markets.
What Does the Future Hold?
“As a result of COVID-19, there will undoubtedly be shifts across different sectors of commercial real estate,” Stepp observes. “However, a number of shifts were already in motion – they have just been accelerated because of the pandemic.”
Stepp forecasts that:
- The retail sector will continue to experience the largest decline. A report by UBS forecasts that the U.S. retail industry will lose between 11% and 17% of total store count by 2025, primarily due to movement toward e-commerce which has been accelerated by the pandemic.
- The office sector presents the biggest unknown. According to REIS, in Q1 2020 the vacancy rate for office space climbed to 17% and net absorption fell by 2.7 million square feet.
Additionally, a survey by Gartner in April shows that 74% of CFOs intend to permanently shift at least 5% of previously on-site employees to remote working. A full 22% of respondents expected more than 20% of their staff to permanently work remotely even after the end of the coronavirus. Using the data from this study, CoStar Advisory Service projected that demand losses in the office market from such actions “would range between 5% and 11%.” It noted that vacancies could rise from 50%-100%.
Stepp believes that the future of office is highly dependent on the development of a COVID-19 vaccine and technological advancements to ensure the health and safety of employees in the workplace.
As far as Stepp Commercial’s future, Stepp says, “We will continue to do what we have always done, which is to provide accurate and knowledgeable information and advice to our clients that results in strong, long-term relationships built on trust.”