JONATHAN DEVIN | Special to The Daily News
Reading the recovery of the commercial real estate market in the last year has been like picking a horse at the races with largely unknown odds, but Mack Browder is putting his money on an old favorite to pull through in the end.
"The industrial market in Memphis has continued to improve," said Browder, an affiliate broker with Crye-Leike commercial division. "They just announced the lease of about an 800,000 square foot building down on Lamar called the Summit Distribution Center #2. "There's a continuing uptick in activity of people wanting more space," Browder said. "We're feeling real good about the industrial market being in balance here in town."
The expansion lease by Technicolor created about 150 jobs, something market analysts in any major city would be glad to hear, and may indicate that existing commercial properties are learning to function with lowered property values.
Browder, a native of Munford, Tenn., graduated from high school in Osceola, Ark., in the same class with Harold Crye, co-founder of Crye-Leike. He went to Arkansas State University at Jonesboro, Ark., on a full football scholarship and emerged with a accounting degree and a CPA certificate.
Browder worked in public accounting for 35 years before becoming a real estate broker, something that came in handy in many of his business transactions. In the late 1980s he got involved in overseeing business mergers and acquisitions, whose negotiations often involved large pieces of real estate.
"Mergers and acquisitions in this market is typically where a person 65 to 75 years old comes to you and says I've got a business over here and my children don't want to go into it, so I need to get all I can for it because this is 90 percent of my estate, it's my retirement," said Browder. "In representing them, you go out and find buyers for them and keep everything confidential until closing."
In one deal involving a furniture company in northern Mississippi, Browder lost a substantial fee because of a licensing issue with his real estate broker. Then he decided to do the real estate work himself.
"(Crye and I) were teenage friends and I was the accountant for his young company for years," said Browder. "Over the years we stayed in contact and when the opportunity came about there wasn't much debate about where I'd go."
Browder avoided the residential side of the business from the start owing to the emotional nature of decisions surrounding the sale of a home.
Commercial real estate has several major divisions - multi-family, retail, office, industrial and manufacturing and land for development.
Multi-family properties struggled the least as more and more homeowners sought rentals after foreclosures and job losses.
Land suffered the most with developers unable to sell their inventory.
"There's blood in the streets for developers right now," said Browder.
Retail and industrial real estate, while hit hard, seem to be making slow, steady recoveries though.
Browder pointed to the closing of big box appliance giant Circuit City, which left massive buildings, some anchoring strip malls, vacant.
"The fear was that the space would go unoccupied for an extended period of time," said Browder. "Well, over the last 90 days to six months, indications have been that more retailers are taking up that space, so retail is coming into balance."
On the industrial side, the shock of major companies streamlining their businesses has started to wear off, and the leaner operations often rebrand with new products, which create the need for facilities and employees.
That kind of recovery may come slower than the high-profit, high-risk bubbles of the last decade, but is more likely to last.
"We're probably at what most people feel is close to the bottom of the commercial real estate market," said Dan Whipple, president/managing broker for Crye-Leike Commercial, who has worked with Browder for 10 years.
"The capitalization rates in the investment markets are about the highest number we've seen in 10 years, maybe longer. Most of the information I read by commentators around the country seem to indicate that this quarter or next quarter is very likely the bottom of the commercial market."
Whipple said that Browder's finance and accounting background is a resource not many brokers have.
"His background gives him a great insight into the business and contracts," said Whipple. "It's very unusual to find a real estate broker who also has a CPA background."
Last year, Browder was honored by the Memphis Area Association of Realtors with a Pinnacle Award for top sales in the industrial sector.
Browder Bets on Market Recovery - Reported By: The Memphis Daily News
June 16, 2010