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The Generalist vs. The Specialist

by Chicago Agent

By Scott R. Maesel

At Sperry Van Ness, a 23-year-old national commercial real estate company, there has been an ongoing debate whether it is better to be a “generalist” or a “specialist” when it comes to one’s professional focus. The commercial industry is made up of many different disciplines from which an “advisor” may choose. We have retail, office, multi-family, industrial and other less known categorizes such as self-storage, hospitality, sale/leaseback and auctions. There is also the distinction of sales or leasing within most of the specialties listed above, and often times leasing can be broken down by tenant representation and landlord representation or even suburban versus urban properties and clients.

The specialist is an advisor who picks one of these product types and focuses on offering the best possible services to his or her clients in that specific area of expertise. Historically this has been a great way to pursue the industry and to complete transactions.

However, the economy and the last few years commercial real estate market conditions have lead  some to believe that the generalist’s argument, one that encourages advisors to explore several different disciplines , may have some validity. Consider the fact that until recently our industry had many successful advisors that had always focused on one product type often in a defined geographic region. Imagine you were a suburban commercial broker in Chicago, and for as long as you could remember you had been very successful selling office buildings priced at $5 to $20 million. When the economy came to a halt and capital reserves became strained, financing for transactions over $10 million dried up and completely ceased to exist.

The Specialist would hope and surmise that our finance options would come back sooner rather than later and that deals of large stature could be completed in the near future.  The economy is on a slow boat to recovery. No longer is the loan to value, debt coverage ratio, credit tenant mix or borrower’s track record the same. So what does this all mean? It means the specialists may not see the same deal flow they had experienced for at least another five years or until our capital markets adjust to our new reality.

If you have always been a specialist does it make sense to jump ship to become a generalist based on changing market conditions? There are arguments against and proponents for both sides of the issue. The bottom line is that the verdict is still out on how you should choose to focus your efforts. A generalist chases transactions in an up or down market regardless of the economic conditions, but you cannot become an expert if you are just chasing deals regardless of specialty. One might venture to say that in a down market a generalist can survive even when there are fewer transactions because he or she can maneuver between different product types. It follows that a specialist will thrive only in an up market, but that the specialist will add valuable knowledge and experience due to his or her focus. In my humble opinion, in today’s challenging commercial real estate world you need the agility of a generalist due to a lack of overall transactions but you need the experience of a specialist to add value to the client and the transaction.

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Scott R. Maesel serves as Executive Managing Director for Sperry Van Ness, LLC, specializing in the sale and leasing of retail investment properties. With over 17 years of industry experience, Maesel has secured more than 500 transactions totaling in excess of $400 million.

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