Why Local Governments Are Partnering With Brokers

Local governments are increasingly partnering with the private sector to capitalize on new real estate opportunities. Ken Krasnow, vice chairman of institutional investor services for the Florida market at Colliers, has worked closely with city governments for years and says that city governments are increasingly turning to brokers for guidance on real estate projects.

Population growth, job growth and corporate relocations in emerging markets, like Florida, are fueling the trend. “These trends have been like rocket fuel to these municipalities. Now, they have opportunities to capitalize on some of the macro trends, and they are able to look at new projects,” Krasnow tells GlobeSt.com.

More than two decades ago, corporate America similarly started to partner with industry experts, and today it is commonplace. Krasnow anticipates the same trajectory with cities. “While corporations were in the real estate business, they weren’t really effective in the real estate business,” he says. “They started the process of outsourcing and finding strategic partners to effectively manage their real estate portfolio. This is a function of leveraging the private sector to effectuate change in their communities.”

While the trend is gaining momentum, Krasnow admits that it has been a long time coming. “It has been a slow process. People see other cities or counties having a measure of success, and they look into how they can capitalize on that as well. It is a growing trend, and I think that we are at the beginning stages,” says Krasnow, noting that the trend isn’t limited to governments but also any entity that operates within the public realm, from municipalities to universities and hospital systems.

Krasnow has been working closely with the City of Ft. Lauderdale for the last six years, but recently has fielded inquires from other city and county governments across Florida and in other states. He has advised on projects like the Port Orange Riverwalk District, a waterfront development. According to Krasnow, these cities are most frequently looking for a broad-based market campaign. “RFP process only gets a limited audience. When they partner with a team like Colliers, they get a broad based and comprehensive marketing program,” says Krasnow. “All of the sudden, there are more eyeballs and interest paying attention to these projects.”

In addition to brokerage services, Krasnow says that there is a lot of education that happens to understand the potential of a site—as well as understand what isn’t possible. “Sometimes an elected official or the municipality has a vision for a project that does not necessarily line up with the market realities,” he adds. “There is a complete mismatch of realistic expectations and unrealistic expectations, and it is one reason why a lot of projects aren’t fully realized. We spend a lot of time working with the city to make sure that we understand their vision and bring the market reality to the city so that expectations are managed at the front end.”