Though considered one of the markets hardest hit by the real estate downturn, Arizona is also expected to offer the greatest opportunity in the coming years for those willing to adapt and learn.
These five young professionals, found in all sectors of the industry, are eager to meet the challenges and opportunities at hand. Whether you are a seasoned veteran or a young person just graduating from your MRED program, there is something to be learned from these individuals who are pushing boundaries and ultimately shaping the future of the real estate industry in Arizona.
Ladd Keith
Age 30
Tucson
Planner/owner,
Urbano, land planning and consulting firm
How did the changing economy affect planning consulting in Arizona?
Arizona was at the center of the housing boom, and for those of us who started our careers in the boom, this was our first time in a down cycle. Like many other land development and planning consultants, I was laid off after the crash. I knew no one in a position to hire, so the following week I filed the papers and opened my own firm to continue consulting. Planning now is much slower and more competitive and has required looking for opportunities in unexpected places.
Where have you looked for unexpected opportunities?
In the boom, I worked mainly on master-planned communities. Projects are much smaller today, and I’ve had success in diversifying, doing projects like siting solar fields and crafting public policy. I was also invited to teach at the University of Arizona’s School of Landscape Architecture and Planning, which was something I had never considered before. I really enjoy it, and it has led to me being adjunct faculty. I’m currently developing a new course on sustainable urbanism.
Peter Spier
Age 34
Scottsdale
President, Spier & Company, investment
and advisory firm
Why did you decide to start your own company?
Prior to the economic downturn, I was responsible for all medical office and life science development and acquisition activities at a leading regional real estate company. This experience taught me the real estate skills necessary to resolve a number of real estate–related issues. I was ready to test my skills in an economic environment that provided me a low opportunity cost.
Do you have any advice for other Young Leaders—or anyone—thinking about starting his or her own business? Specialize in one particular area within an industry. If you become the definitive expert, you will be able to capitalize on opportunities others do not recognize. There will also be less competition, which makes it easier for you to succeed.
Why are you a member of the Urban Land Institute?
I became a member when I moved to Arizona and began a career in the real estate business. ULI immediately provided me with exceptional educational programming and access to smart people throughout the industry. I learned that if I am able to use one piece of information gained via ULI per year and apply that information to my business, the membership is worthwhile. It sounds cheesy, but I simply can’t afford not to be a member.
Rick McLain
Age 30
Tucson
Architect/Partner, Repp Inc. Design + Construction, architecture firm
What changes have you made in your business in light of the shifting economy?
In 2009, we looked to capitalize on the down market. With strong financial performance from 2008, lower interest rates and construction costs, we bought an existing 4,500-square-foot [420-sq-m] building and committed to a major renovation. The modifications included taking necessary steps to create a sustainable project, with the long-term plan to obtain LEED [Leadership in Energy and Environmental Design] certification. The transformation of the building has led directly to several new contracts. We know that as the economy continues to recover from the downturn, we are well-positioned for business growth in lieu of just merely surviving.
What lessons have you learned from the downturn?
The recession has allowed us an opportunity to position ourselves as experts and leaders in our industry. Additionally, this crisis has shown us the value and importance of an ongoing commitment to cultivating long-term, professional relationships with clients, consultants, and community members. Importantly for us, it has clarified that our business model is effective, even in lean times. A unique and well-crafted product combined with transparent, ethical business practices has served us well both in an up market and during this recession.
How has design evolved with the new economy?
Clients are looking for their projects to be smaller, simpler, and more sustainable. This represents a fundamental shift in values from oversized, poorly performing spaces to smaller spaces with higher levels of quality both in terms of aesthetics and performance. Clients are becoming savvier and are recognizing that architects and the design process are critical for projects to perform well and provide the maximum return on their investment.
Caroline A. Pricher
Age 30
Phoenix
Associate,
Greenberg Traurig LLP, law firm
How has real estate law changed with the downturn in the economy?
The real estate community’s interpretation and implementation of the law has shifted to a much more detailed and technical approach, especially as it relates to the purchasing and financing of projects.
Recently, my colleagues and I have seen lenders under pressure at the federal level to not only demonstrate adequate capitalization, but to also carefully review borrowers’ loan covenants to identify any instances of default, monetary or otherwise, whereby the lender will need to collect on guarantees of the borrower or underlying parent companies.
Conversely, borrowers experiencing difficulty complying with certain loan obligations may seek to invalidate the loan agreement or guaranty based on a technical formality, such as improper notary blocks or failure of a spouse to sign a personal guaranty (thereby making it unenforceable against community property assets). This has resulted in an increase in lender requests for legal opinions regarding enforceability of the loan documents.
For new projects, financing is particularly difficult to obtain, as lenders are seeking additional collateral from borrowers as well as documented evidence of a borrower’s ability to perform. In addition, lenders have moved away from financing models that assumed the value of the real estate collateral will always go up, and are instead conducting extensive due diligence investigations and underwriting deals with the clear understanding that they may actually take title to the project in the event of a default.
Do you have any advice for young professionals interested in working in the industry?
My advice would be to stay positive, remain engaged, and continue to focus on the proven long-term growth potential in the industry. The recession’s aftermath has presented the real estate community with a valuable opportunity to examine the mistakes that were made, learn how to adjust its performance with those lessons in mind, and, hopefully, apply that knowledge in the future. Currently, there are tremendous real estate opportunities for those individuals and companies that have the skill to identify viable deals and projects and the money to finance them. Ultimately, this era of the “new normal” promises to be a challenging and rewarding time for those willing to dedicate themselves to real estate development.
Carson Miel
Age 28
Tucson
Vice President,
Dove Mountain, development company
As a builder, how have you adapted your business strategies to adapt to current economic challenges?
We pared down our staff but kept the all-star performers on board and focused on delivering a unique buying experience to customers. We have two designers who can handle an enormous variety of challenges and customizations. For example, customers will often come in with photographs of architectural or interior elements they like, and we figure out how to incorporate those into the homes we are building for them. Offering a more customized product has helped us compete against other builders and the resale market.
At the beginning of this year, we introduced three new floor plans between 1,700 and 2,300 square feet [160 and 215 sq m] in response to the demand shift we have seen to smaller homes. Although we are building smaller, we still use top-of-the-line materials, appliances, and finishes, so the difference in size has not changed the build quality. The new plans have been successful; we have four under contract in the first ten days of 2011.
