Commentary with Sanford Herrick on Last Week's Poll

Has the Downturn Impacted Turnover at Your Firm?

We asked our GlobeSt.com readers how the downturn is impacting their firms. A whopping 43% say the slump hasn’t affected them at all. Nearly a third of our readers have been “tremendously” kicked in the pants, while another heavy 26% are looking for jobs themselves. We spoke with Sanford Herrick, the co-founder and managing director of Hudson Realty Capital, about how this dry spell affects the industry and its service providers.

“Right now on the financing side the impacts seem to be generally greater than they are in the commercial and retail real estate side. Obviously residential developers around the country have been smacked pretty hard. But what we see here in New York are the people who are involved with the financing of real estate who are suffering.

“We, at Hudson, have maintained our acquisition and investment departments at roughly the same levels, but we continue to add onto due diligence, investor relations and asset management as well as financial control. So we continue to be focused on all of the service areas of the business that help us track property values and stay ahead of the curve.

“We clearly remain buyers and investors active in the marketplace. We’ve always been willing to take what we perceive to be a well-reasoned position and continue to make investments where the asset values are appropriate and the upside – even in a down cycle – remains understandable. We hope to be more involved in the purchase of financial instruments from liquidity constrained sellers and at least to some degree participate in equity investments, which is a segment of the business that many people don’t want to be in. We see opportunities on the equities side. We’re looking for the proper risk-adjusted returns in both debt and equity.

“In the industry, certainly what we see at the money center banks and Wall Street in general is that people are being laid off.

“I don’t think there’s much good with people and their families suffering from losing jobs and going through anxious periods and having trouble reproducing the salary and security that they had.

“Part of the natural cycle of our business is there is an ebb and flow. There’s an expansion, and hopefully during that expansion people can make a fair amount of money and then there’s a contraction and people clearly get hurt. Another expansion should follow the current contraction.

“I have been around for a while. I started my career after the construction problems in the ‘70s. There was a big expansion that really propelled my career in the early ‘80s as real estate and real estate finance became internationalized and as a very young man got to see a lot of things about the finance side and about the investors that I wouldn’t have seen unless that downturn hadn’t occurred. In the early ‘90s, there were firms that were like ours or maybe even smaller where people had ideas and thoughts on how to approach the different cycle and had the opportunity to grow their firms quite quickly and quite large.

“Your Rolodex, or your Microsoft Outlook, changes in times like this. People find ways to prosper. I believe there’s great opportunity.

“Gas prices have not affected my business, I believe. But gas prices are clearly affecting retailers. People have less disposable income and that’s showing up in many ways. That has an effect on retail sales and retail leasing.”