SAN DIEGO—While the San Diego market fundamentals combined with “lots of capital and cheap debt” make the market ripe for transactional brokerage, the practice actually paints a negative picture of brokers, Marcus & Millichap's sales manager Colby Haugness tells GlobeSt.com. As we reported last month, Haugness has rejoined the firm as sales manager of the San Diego office. We spoke with him exclusively about trends in the San Diego investment-sales market.
GlobeSt.com: What do you hope to accomplish in our new role with Marcus & Millichap?
Haugness: First, I want to say that I am very excited to be Marcus & Millichap in sales management. In 1999, I started brokerage with M&M in Seattle, and it was there that I was taught the core principles which have followed me throughout my career. Returning to the firm was a very natural thing for me to do. My belief is that every day and every conversation with a client is its own learning experience. The business of brokerage takes time and hard work. My role as sales manager is to support and help every agent build a long-term advisory role with owners.
GlobeSt.com: What trends are you noticing in the investment-sales market, particularly in San Diego?
Haugness: Lots of capital plus cheap debt plus beautiful San Diego have created an atmosphere in which offers are being submitted on off-market properties. This process skips the complete brokerage process, thus creating a “transactional brokerage market.” This approach creates a market in which the representation process is being overlooked, and this causes issues of underpricing and unreliable underwriting; thus, a high percentage of deals will roll out of escrow. In the end, transactional brokerage paints a negative picture of the brokerage community. My advice is to make sure to get a professional opinion and seek good advice before you go to market.
GlobeSt.com: Is the investor profile for San Diego properties changing? If so, how?
Haugness: As the Baby-Boom generation moves into the retirement cycle of their lives, they are trading into passive investments. Who is buying the Baby-Boomer investments? The next investor coming up in the Millennial generation of 18- to 34-year-olds: the future active investors. This generation of 80 million is five million larger than the Baby-Boom generation of 75 million. The definition of this new investor is one who makes “quick decisions” because of their ability to access information through technology. Marcus & Millichap is focusing our resources to stay ahead of the curve on “real estate tech.”
GlobeSt.com: What else should our readers know about investment sales?
Haugness: What is attractive about investment sales is most investments provide a monthly cash return that the investor can spend. Overall, investment sales are providing investors a way to put one's money in an asset that can earn a strong return compared to other investments. The old standard of 8% return on real estate may not be the standard in today's market. Looking at treasury bonds, stocks or savings rates, the returns and ability to grow your real estate investment are still built on a good foundation and fundamentals. The investor cannot continue to sit on the sidelines waiting for old returns. In the investment world, time is as valuable as money, and once time is lost it cannot be regained.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
