Navigating the Commercial Real Estate Landscape: Reflections on Economic Cycles and Strategies for 2024

Even the most experienced Commercial Real Estate professionals never truly know how a downturn will occur, but we know one thing, it will happen. 

My career with Dallas-based Bradford (23 yrs) and its former parent, Vantage Cos. (19 yrs) has spanned over 40 years with solely two business cards, a rare feat in today’s DFW CRE world.  A brief history of recent and not so recent cycles follows.

In 1986, it was overzealous massive overbuilding by Texas developers due to an aggressive tax structure and a cessation of the tax advantages imposed by a congressional act.  The southwest meltdown followed from ’87 – ‘91.  Frost Bank was the only major bank headquarters in Texas to survive the financial tsunami. Texas was redlined and cash was king. 

In 2000 - 2002, it was the tech wreck, or “dot-com” bubble where the Nasdaq fell from 5048 to 1138, some 70%.  Remember the term when leasing office space to the west coast techies, our “burn rate is?”…...  Enron failed; the World Trade Center Towers crumbled.  An afterthought, how do you budget CRE cash-flow for those two years?

In 2007 – 2009, The Great Recession was initiated by sub-prime lending practices in the primary-home residential lending market packaged as AAA credit.  Bear Stearns tanked & Lehman failed.  Wall Street crashed and burned.  Uncle Sam (The Fed) stepped in and bailed out Freddie and Fannie.  And, in rare support of public companies, propped up several automobile companies.

Kevin Santaularia

2021.  COVID.  Hotels trashed.  Office demand sank.  WFH is the theme of the day.

2023.  First Republic Bank.  Signature Bank.  Silicon Valley Bank.  While “blue-state issues”, not so much in Texas.

Where are we headed?  CRE professionals have had a great run since 2010.  Free money with low interest rates, a booming economy, and job growth not exclusive to Texas and in the Lone Star State, historical job growth.  One investing in CRE could not miss succeeding in most all venues of real estate, land, M/F, Industrial, Medical – the dart board of opportunity was the size of Big Tex.

What does 2024 look like?  With 11 rates hikes since March of 2022, have interest rates have peaked?  We think yes, but the damage has been done.  $39B in office CMBS loans are predicted to default (J.P Morgan). Industrial and Multi-Family, the remaining darlings of both Wall Street have recently reported a 10% drop in valuations (BisNow) as demand (industrial) weakens, job growth (M/F) slows with investments underwritten at unrealistic exit cap rates.  

For those parties under the age of 35, there are several new terms circulating.  Capital Calls. Broken Covenants. OOC Bank Oversight & lenders exercising rights not to fund committed loan dollars (because they can). 

Proven CRE Operators plan for problems and provide solutions.  Collectively, we patiently chase opportunities and long-term relationships while having scar'ed memories from the last cycle.  We conserve cash and protect our long-term loyal employees while growing our evergreen platform of operational silos.  2024 is an operational year once again.   We praise Property Management.  Where can we find cost savings to bounce the asset returns while rent increases abate?

Bradford manages and leases 17.0MMSF of assets valued at over $1.0B.  I sometimes say we are not in the real estate business; we are in the “cash flow” business.  For 2024, Cash Flow will be back in vogue and “the rising tide CRE market raising all boats” has sailed.  

Our Bradford Opportunity Funds allow us to be a good steward of your personal HNW investment capital.  Or, for DFW Property Ownerships, allow us to improve your property operations cash flow via our high- caliber Leasing and Management services.


Most CRE is financed in 3-to-5-year blocks of time.  If you borrowed money at 3.5%, it will move soon to 7% plus.  Put that math in your investment grinder.

There will be many opportunities ahead in 2024 for patient capital and CRE Operators.  Cash is king once again!

Article by Kevin J. Santaularia, CEO/President Bradford Commercial Real Estate Services

November 14, 2023

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