Veteran broker on forging close links
“As much as I embrace technology, relationships are key”.
Regarded as the most successful broker ever to work at commercial real estate firm, Eastern Union, Michael Muller (pictured) made the point forcefully.
“I always meet my clients…I always meet bankers. When there’s tight bidding on the lender side you need to know what you’re selling, you need to know what you’re financing and you need to know what you’re buying,” he added.
With more than 20 years’ experience in the sector, Muller has struck deals worth more than $10 billion in that time (he was the second broker Eastern Union hired when the firm started back in 2001) and recently secured an $83 million bridge loan for a 440-unit multifamily property in Atlanta, having closed in a record 45 days.
“That was a challenge due to the size of the transaction and getting the deal done in that timeframe,” added Muller, who is also senior managing director at the New York-based firm.
His client also came away with a better deal to boot. “We actually gave him more money than he initially had set out for,” Muller noted.
Having closed 150 commercial property deals last year alone, Muller is best placed to understand the importance of forging close relationships with clients, even in this techno-driven, everything-at-your-fingertips, information-in-real-time age.
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“I speak to brokers and they’re sitting in their offices, and they’re conducting business but never meeting the client face-to-face, never seeing the property they’re selling or financing.
“I think that’s detrimental because when money flows easily, and everyone is in a deal-making frenzy, it’s very easy to get deals done that way, but as soon as there’s a tightening, you need to know what you’re selling.”
He was nonetheless quick to acknowledge the importance of tech in his profession, which he described as a “game changer” for the industry.
“There’s no longer that quiet off-market deal because of the technology,” he said. “It’s definitely improved the flow of information and allowed people to invest and make decisions much, much quicker.”
Specializing in a wide-ranging portfolio that also includes healthcare, hospitality and numerous investment projects, Eastern Union generates around $4 billion annually.
The firm expanded considerably in 2021 and enjoyed spectacular growth in the south-east of the country, specifically in Georgia, Florida, Texas and the Carolinas, as well as in some of the Midwestern states.
But while the commercial real estate space experienced a rebound last year following a pandemic-ridden 2020, there are concerns that the cooling of the US housing market will also spill over into the sector.
Why? Because although commercial has so far held up much better, this could be due to long-term leases, which, according to analysts, take much longer to reflect a downturn.
In addition, according to a report by Barclays, global demand for offices could drop between 10% and 20% in the long term, despite a return to the workplace for many firms.
Read more: Housing market cooling down
Asked how the commercial real estate sector would respond to the gathering storm clouds, Muller insisted that the fundamentals in multifamily were strong, but warned that with rates rising a slowdown in volume was inevitable.
“When cap (capitalization) rates are low and interest rates rise, there’s a disconnect in the market,” he said. “It takes time for buyers and sellers to recalibrate and for sellers to realize that the price they were selling yesterday is no longer here because the cost of capital is moving up at a quick pace.
“I don’t have a crystal ball, but I think you’ll see an adjustment in the market towards the end of this year and into 2023. We’re definitely going to see a slowdown in volume until there’s an adjustment in pricing.”
Any broker worth their salt will already suspect this, so how should they leverage those essential interpersonal skills Muller values so highly in such a challenging environment?
“You’ve got to be a student of this industry, you’ve got to meet your clients, see the property and learn about the city that you’re conducting (your) business in,” he said.
“My advice to anyone starting out in the business is to embrace technology and find a mentor. Technology today allows us to conduct business at lightning speed and it’s important to have a role model. Finding that mentor is invaluable.”
