Well-known Cape Town property professional Bart Niemczynski has started a boutique property transaction brokerage, The Lead Advisory.
During his fifteen-year career, Bart has concluded leases for over 260 000m2 of space across South Africa and with a thorough understanding of the local market, he has been involved with numerous large commercial property sales – a collective transaction value of just over R3.7 billion.
We caught up with Bart to chat about his new business and his outlook for the commercial property market.
When and how did you start your career in the commercial property brokering industry?
I started with the Amdec Group in 2006 where I worked across their residential, retail and office portfolios and I spent two of my three years with Amdec as Melrose Arch’s Leasing Manager. In 2009 I joined Growthpoint Properties where I worked across their entire domestic real estate portfolio. Having spent twelve years with Growthpoint, I expanded into additional specialised developments which included fitness, leisure, and hospitality.
My career highlights during this time range from deals including ABSA’s Cape Town headquarters, the Virgin Active Classic Silo Gym in the V&A Waterfront to Hilton’s new Canopy Hotel at Longkloof Precinct and the Royal Bafokeng headquarters in Melrose Arch.
What drove you to start The Lead Advisory in what can only be described as a highly competitive market and what sets your business apart from other brokerages?
It is only competitive if you have the wrong attitude to your work effort and ethic. The key is to keep solid relationships with your long-standing clients while adjusting and blending with the market.
With my experience in the commercial real estate capital markets and a corporate background in both REIT and full spectrum developments, I started The Lead Advisory in April 2021 as a niche business that focuses on a small group of key performing clients with target market transactions entailing R100 million or more.
What can we expect to see from The Lead Advisory in the next year?
The Lead Advisory will be targeting in closing capital market transactions valued at R450 million within our first year. We will ramp this up to R700 million during our second year of business with an additional office based in Poland. During our third year, we hope to achieve above R1 billion worth of capital market transactions.
We are looking for a specialized, experienced team to take us to above R1 billion or more in our third year of operating and a possible collaboration is in the works. The Lead Advisory will also be accepting CVs of experienced professionals until the end of 2021.
What advice do you give to your clients who operate in the commercial property space? What should they look out for when buying tenanted assets and what should they be aware of when dealing with existing and prospective tenants?
Firstly, risk management needs to be on top of their priority list. Are the tenants in a good financial position? I would suggest proactive lease deal making and flexibility be offered to tenants to keep them in occupation – The Lead Advisory can provide deeper insight.
What are your predictions for the local commercial property space in the near term?
I believe it is a good time to invest in REITs due to their currently suppressed valuations. In the long-term, savvy investors should be able to achieve strong capital returns when the markets have stabilised. Industrial and retail assets in South Africa should be solid holds for investors too – industrial assets have generally performed well during Covid-19 and retail assets – where the landlord has maintained its occupancy levels, even if short term income has been compromised – should perform well in the post-pandemic environment, more so than the rest of the world where shopping patterns have migrated more permanently to online.
On the other hand, office rentals will remain under pressure for years to come in some nodes, especially where there are multiple single user purpose-built offices that are difficult to utilise as anything other than offices. With oversupply and depressed demand, valuations decreasing significantly (in some cases by more than 25%), some landlords will face difficulties and will need to repurpose their buildings when they can. If investors remain in the office sector, they will face the challenge of tenants requiring shorter lease terms and landlords will need to be flexible with rent, lease duration, lease cancellation options and office installation capital expenditures (capex) to retain existing tenants and to attract new tenants.
Labour costs will continue to rise above inflation and with, for example, security and cleaning taking up approximately 50% of typical building operating costs, these will need to be managed carefully.
Rates continue to rise aggressively as a percentage of operating costs, this will place additional pressure on operating costs that are out of the control of individual funds or investors – an industry approach may be needed to bring these under control.
Connect with Bart on LinkedIn
Source: Propertywheel.co.za | https://propertywheel.co.za/2021/08/our-5-minutes-with-transaction-specialist-bart-niemczynski-the-lead-advisory/