The end of the year is a time for family, food and celebration for many, but some local commercial real estate agents say it can also be a busy time for their industry.
“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,” said Jim Spain, regional managing director of Colliers International. “We typically have good Decembers. December, many years, is our best month of the year.”
Darcy Miramontes, executive vice president of Jones Lang LaSalle, said it’s important to distinguish between new business acquisition, which she said slows during the holiday season, and existing business, which sees a boost at the end of the year.
“I think traditionally there has been a slowdown during the last quarter of the year,” she said. “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.”
Spain said that last December was a particularly strong month due to the capital gains tax increase in 2013 from 15 to 20 percent, with clients rushing to beat the raise. He said while Colliers isn’t expecting quite as phenomenal a month, they’re not expecting any holiday decreases.
“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,” he said.
Colton Sudberry, CEO of Sudberry Properties, said with many clients and partners taking time off during the holiday season, he typically sees a slight slowdown on the deal-making end of things, but that this is an opportunity for him to also take time off, as well as do some goal-setting to prepare for the year ahead.
“I think there is a little slowdown in our industry, unless you’ve got a big closing before the end of the year -- that’s when it comes to transactional work,” Sudberry said. “As far as new developments, it seems like most of our tenants and consultants do take some time off, so it’s a good time for me to take a little break as well. I also take this time to clean out my office, purge it to get ready for the new year, and we’ll set goals and objectives for the following year. 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.”
Back on the transactions side, Spain said there are incentives, in addition to commission, for brokers to complete these closings before the end of the year, which may affect why they don’t see the declines typical of new business during this timeframe.
“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.”
In short, San Diego’s commercial real estate sector isn’t experiencing or prepared for any major downturn as the year comes to a close.
“As for that proposition that commercial real estate slows down a lot during December, I’d argue that, while there is some truth in that, for the most part it’s kind of a myth,” Spain said.