GVA boss says he didn’t see the slow-down coming

gvadvantisThe man who bought GVA Advantis last year didn’t foresee such a severe recession — one that has hammered the sort of real estate transactions that drive profits at commercial brokerages.

With surprisingly frank quotes in a great Washington Business Journal article, Jeff Neal said that transaction volume is down from 60 to 90 percent from the market peak in 2006 and 2007. It’s a must-read for anyone in commercial real estate.

GVA has an office in Richmond with around 24 employees. The company is based in D.C.

“With fewer tenants looking to move — much less expand — the lease deals that did happen were for less space, shorter terms, lower rents and smaller commission rates, Neal said. “A typical 15,000-square-foot client, rather than signing a new 10-year lease to expand to 20,000 square feet, would instead sign a two-year renewal on its current lease, oftentimes handing back unused space.”

Said Neal, “In 2007, we’d get $100,000 from that deal, and we’d use it to pay secretaries, keep the lights on, hold the holiday party.”

Last week GVA closed branches in Newport News and Northern Virginia. A handful of brokers from the Norfolk office left for greener pastures. But in Richmond, so far, all the brokers are staying put.

gvadvantisThe man who bought GVA Advantis last year didn’t foresee such a severe recession — one that has hammered the sort of real estate transactions that drive profits at commercial brokerages.

With surprisingly frank quotes in a great Washington Business Journal article, Jeff Neal said that transaction volume is down from 60 to 90 percent from the market peak in 2006 and 2007. It’s a must-read for anyone in commercial real estate.

GVA has an office in Richmond with around 24 employees. The company is based in D.C.

“With fewer tenants looking to move — much less expand — the lease deals that did happen were for less space, shorter terms, lower rents and smaller commission rates, Neal said. “A typical 15,000-square-foot client, rather than signing a new 10-year lease to expand to 20,000 square feet, would instead sign a two-year renewal on its current lease, oftentimes handing back unused space.”

Said Neal, “In 2007, we’d get $100,000 from that deal, and we’d use it to pay secretaries, keep the lights on, hold the holiday party.”

Last week GVA closed branches in Newport News and Northern Virginia. A handful of brokers from the Norfolk office left for greener pastures. But in Richmond, so far, all the brokers are staying put.

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