GlobeSt.com: Why are you expanding and opening new offices right now?

Indvik: It seems to be the time when many of the brokers evaluate the firms they're with and the value they're receiving for the contributions they're giving. We're on our 30th anniversary, and we've now grown to over 600 agents and 38 offices. If you look at our growth, a large percentage of our openings have come in the downturn, or the cycles that create the downturn. In the early 90s, we added 10 offices in five years, and again in the early 00s we added another nine offices in four to five years.

GlobeSt.com: In deciding where to open these offices is it more driven by people than geography?

Indvik: It's both. A year ago we retained Phil Royster to head up our strategic growth initiative. He was with Grubb & Ellis and headed up their affiliate program. When they let him go, we reached out to him and said: "You've done what we want to do. Identify the best agents out there, explain to them the structure and see if we can't explain to them the opportunity." With that, we've got a person in place who is also proactive attacking the markets we want to be in. We look for the right professionals and have identified the MSAs. Right now we're in 11 of the top 25, and 13 of the top 50, and we certainly think we can be in all 50 of those. Within each of those MSAs we think we can have multiple offices. When you really do the math we could easily be in 200 or 300 offices as we expand here, and there's no reason why we can't take this to bordering countries, like Canada and Mexico. And we could eventually go to Europe and Asia. It's a very easy program to understand and incorporate. We don't see any limits.

GlobeSt.com: How much of a focus is the distressed-asset market for the firm right now?

Indvik: We do have a certain number of agents who have focused on the financial institutions, and they do it in a number of ways. They have direct relationships with those agencies as a result of having worked with them for years. Obviously, there are tools and resources out there to identify the properties that have notices of default, and we have focused teams that reach out to those trustee owners and speak to the services we have. What makes us effective at that is that we're big believers in the submarkets. In the Inland Empire we have seven offices. Our next closest competitor, I believe, has three. What we're able to do is be in the submarkets closer to the product and asset in question, and there's a big value add with that because you're much more likely to understand its nuances.

Not only do we have the information, we have the experienced agent that is a decision maker who can sit there with the lender. We also have a presence in markets that may be particularly vulnerable where our competitors may not. We offer the potential of a superior solution to our competitors. The ultimate solution to any asset is being sure that it is occupied. It needs a user and sponsors who have capital to make sure that the capital structure of that asset is balanced between debt and equity. The real challenge is getting those elements to come together.

GlobeSt.com: Are the deals you're seeing out there mostly smaller transactions?

Indvik: Most of the deals that we've seen are basically challenged because of over leverage on the asset and then the sponsors don't have the balance sheets to be able to service the debt. Those are the first things you have to identify. They run the gamut, from the largest assets out there, whether it's multifamily or retail, which are the two most identifiable, along with hospitality. But a lot of them are much smaller. The transactional volume is down dramatically by every statistic. That's just a reflection of everybody trying to identify where the real value is going to stabilize.

It also reflects the underlying rental income, from retail to the daily rates it takes to occupy a hotel. And what is it going to take, in terms of return, to attract both debt and equity? Right now there's many more sellers out there than there are buyers, and it's going to take the buyers feeling the values and returns are sufficient, that they can borrow the money they need to borrow and can get returns on their equity. We're starting to see more signs of an understanding and acceptance of that. With each day that passes, we're getting to the point where the bid and ask are starting to come together. And there is good liquidity out there, so when people feel better about the economy, we'll see the transactional volume increase.

GlobeSt.com: Is there a sector where you're seeing the most transactions taking place?

Indvik: It seems like the first market that's come back is multifamily. It started down sooner. The values are starting to attract both the debt and the equity. And the availability of financing from Fannie Mae programs has allowed there to be a source of consistent debt that's fairly attractive in returns. The valuation issues are starting to compel, and you're starting to see that in the transactional volume. Where there is a compelling argument for replacement cost, you're seeing people attracted to that, and they can run the whole gamut, from hospitality to retail to office, and you've seen some fairly large transactions with that. You see certain industries that are starting to identify the needs of the marketplace and are growing accordingly. We are starting to see the beginnings of a turnaround in those asset types. That should continue to manifest itself as the economy picks up.

GlobeSt.com: What is the toughest sector to do business in?

Indvik: A lot of it depends on the submarket. Here in Southern California, one of the most challenged is probably office simply because of the impact of the financial markets. We're heavily residential based, so when you look at who are the occupiers of that space, they're financial firms, home-building firms, escrow, and you've seen a tremendous contraction.

And then there's retail, with the consumer having to get their balance sheet in place. It probably starts with the non-anchored strip centers. And the farther away from the heavy population bases where the residential markets have been hit the hardest, there aren't the bodies or the rooftops that are needed to support commercial activity in the shopping centers.

GlobeSt.com: What is your take on potential industry help from the federal government?

Indvik: I see it, unfortunately, like most of the rest of us do. It certainly seems like the Treasury, as well as Congress and the President want to support what it takes to get the economy stabilized and hopefully provide sufficient liquidity and stimulus to generate economic growth. I think there's a willingness there, but the question is: Will the policies be effective? At some level I'm sure they will be, but we'll have to wait and see how effective. They've thrown a tremendous amount of stimulus into the marketplace, and the Fed can't be much more accommodating than they are now with the interest rates. They're certainly trying to pull every trigger they have to turn the economy. Real estate will be one of the direct beneficiaries.

GlobeSt.com: So what is the biggest challenge as a hurdle to recovery?

Indvik: Probably just time, everybody's mindset as to what the de-leveraging process will require in the valuation of assets and the growth of aggregate demand. Until we get the balance between the demand side and the underlying value on the supply side to use the economics where we start to see growth again, those will be the challenges. It's that intersection of supply and demand that ultimately is going to be needed to get us to the next step. But it will happen. This has been my fifth downturn, and we always come out of them and come out of them strong.