Parker Ridge is one of our favorite realtors to work with. A former standout baseball player for Wartburg College, he’s made a smooth transition from the infield to commercial real estate star. We sat down to talk with him about the current market, what he likes for his listing photos, and much more….
Rich
You know, I think there’s a lot of uncertainty with the average person about the national real estate market. Can you talk about what’s the current state of the market?
Parker
Yeah, let’s back it up to the economy first because, I mean, it all has a rippling effect. So a lot of predictors are out there saying a recession is still more than likely. Wage growth is still cooling, inflation is still not to the Fed’s mandate of 2%. I think in June, it was about three, just under three and a quarter percent.
So a lot of that just comes down to Powell. And if he’s willing to bend, which it seems like he’s not right now, it seems like he’s going to continue staying strong with that 2%. So it’ll be interesting to see how that plays out. I think there’s other economic factors playing in not only interest rate job growth, you know, housing, just commercial values.
And then I think a big portion that many people are not thinking about is just this upcoming election. 2024 is going to be an interesting year. And I think we’re kind of in this standstill right now, we think there’s a recession coming, but it’s really just kind of slowed down right now. And a lot of that’s going to, I think, get itself figured out here in the next year.
So there’s a saying in our business that’s pretty interesting and we kind of stick to it. It’s survive until 25. And I think that is a true, true statement. That is something we’re going to stick to. And, you know, it is a bumpy road currently. And ahead, there’s still a lot of success out there, still a lot of money going around.
And when you have such a boom market, it must be able to come down. I mean, any booming market that goes up, it must also come back down. The real question is how long and how low it’ll go. So I think that’s kind of what we’re trying to look at. And we’re always looking at economic forecasters and just listening to the Fed and all those other resources that are available.
Rich
So definitely later we’re going to talk about Tiffin, talk about some things that I think are really exciting.
I guess staying on this though, for now, how do those how do those high interest rates one can you talk about how do they impact the average residential real estate person? And then also, what’s the effect for commercial?
Parker
Absolutely. So huge effect. I mean, we had record low interest rates coming out of COVID. There just was so much stimulus being thrown out. A lot of money was being spent on the residential side. You know, people were getting record low interest rates. They were locking those in for 30 years. So great buy. It’s just that balancing act of price and interest rate.
So now we’re seeing the interest rates bump up, but it seems like costs are still high and that’s causing those prices to still be high. So it’s making the buy side extremely hard. And we’re kind of having a disconnect on both residential and I’d say it’s more on the commercial side of just seller expectations. They still are expecting that extremely high price and in some situations they have to get it because those costs for those builders were that high.
So we’re having a little bit of a disconnect of what the buyers will pay versus what, you know, the so so it’s going to take. So I think that’ll work itself out eventually. That just goes with demand or supply and demand per norm. So that’ll be interesting. I think it has more effect drastically on the commercial side because when you’re talking about 200, $300,000 home loan, it’s not insignificant.
But when you’re talking about a, you know, five, ten, $20 million loan, you know, that 3% jump in an interest rate is huge and it can kill deals and it can cause some real significant issues on a landlord or an owner side trying to navigate that LTV and cashflow. So I think that’s one thing we’ve seen and that kind of goes into the capital markets with us being with Cushman & Wakefield, we have a large pool of resources, one being a large capital markets team.
So we’re able to tap into that, get their data, and then being able to apply our local market knowledge as well. So we’re roughly seeing about a 10 to 35% decrease in commercial value right now. Some are a little higher, you know, maybe an office buildings a little bit higher with some higher vacancies, but over an average, that’s kind of what we’re seeing.
And I think the appraisals side isn’t seen in as much, just especially in eastern Iowa, just because our our sales are down. I mean, there’s just not as many transactions going on right now. So that’s what an appraiser is looking at, is they’re looking at, you know, what recently is transacting. How does that compare? So then they can value that next appraisal and we’re seeing about 75% down in sales nationally.
And that’s true in eastern Iowa as well, just because of that interest rate bump and that seller buyer disconnect. So I think, again, it’ll work itself out. It’s just tough right now. I mean, not much is trading and I would expect that probably to continue until either, you know, sellers come down on their price or interest rates come down.
And I don’t expect interest rates to come down for quite a while.
Rich
You talked about a couple of factors there. One thing you talked about a little bit was Cushman & Wakefield, kind of some of the data you guys have and stuff like that helps you get some insight that maybe some other players don’t have. Can you talk about what makes a good commercial real state agent? What takes you to that next level…
Parker
Absolutely. I think, one, you have to love the business. I mean, absolutely. You got to love real estate. You got to love people because that’s at the end of the day, we’re in the making people happy business. You know, we’re we want to be able to connect with our clients.
And we understand that it’s an extremely large investment for them, whether you know, they’re a landlord or they’re looking to do retail site and grow their business locally, it’s a big investment. So we understand that. So we just try to…it’s not just about knowing the local vacancy rates or knowing the local market rates, you know, of a retail center.
You got to think also bigger of those economic impacts that we were talking about earlier, because those do have a ripple effect down to our local economy. So just thinking wide scope, what is the overall economy doing? Politics do come into that. Try not to get too political with clients, but it definitely has an impact in real estate and commercial real estate.
So just trying to help them to the best of our ability and use that knowledge to put them in the best situation. And at the end of the day, that’s what we’re here to do, is help them be successful.
Rich
Before we talk about this listing in Tiffin, let’s just talk about Tiffin period. That place is blowing up right now. Every time I drive by I see a new business, what is going on in Tiffin right now!? It looks like the place to be.
Parker
Yeah, it absolutely is the place to be. And I actually just moved there myself, out of Iowa City.
So it’s definitely the place to be. I mean, their population is growing incredibly fast. In 2023, their population is just under 7,000, which was a 13.42% growth. Since 2020, their population has grown 45%, so just under 50% in less than four years. So pretty crazy numbers. I believe it’s fastest growing city in Iowa and it’s expected to continue. By 2030 their population is supposed to be up to 12,000.
And I use my own experience in this. You know, my girlfriend, she went to the University of Iowa, lived down in the University of Iowa, loved the University of Iowa, go Hawkeyes. But at the end of the day, I want to kind of get out of that scene now that I’m getting into, you know, the more day to day work, I still love going to Hawkeye games and I love being close to Coral Ridge Mall and all those amenities, but I do kind of want to get out of the city a little bit. And Tiffin is seems to be a great place for that. And I think a lot of young families agree with that ideology.
So I think it will continue and especially with the developments such as Park Place, you know, bring in a Top Tracer, an IMAX that has your entertainment, I think, you know, 83-80 Commerce Park, long term is going to have some great retail over there.
You’re having Tiffin West, who’s going to get some industrial uses over there for the employment of Tiffin. I think they got it all going on in Tiffin. So I think it’s going to continue to expected to grow. I expect more multifamily, more housing developments over there and then the retailers will just continue to follow the housing.
So the retailers always want to be by those rooftops. And so as you get more rooftops, you get more retailers and they’re getting the rooftops right now and they’re going to continue getting them.
Rich
So 83-80, it’s right by the interstate. I see it right there when I was taking drone photos. Tell me about it.
Parker
Yeah, absolutely. I think a big draw to that is that interchange that’s getting redone and that’s expected to be done this year with some landscaping finishing up next year.
It is an entrance to the city of Tiffin and long term I think it’s going to be a great site for some retailers and some employers in that area.
Mr. High’s development, obviously he has Village Point there and the Hunt Club and I expect there’s a couple more developments that are coming in that area that are confidential at this time, but I think will be great amenities to that area.
And I think the retailers will continue to come to that area. It’s great frontage off of Interstate 80 and it’s great access into the city of Tiffin. So I think long term it is going to be a great site for employers and other retail users.
Rich
I’ve kind of seen the end fliers you guys have. How do you use photos to help your listings?
Parker
I think it really comes down to marketing 101, right?
I mean, there’s so many choices today and, you know, with all the electronics, all the phones, everything, there’s just you have to be able to stand out. To be able to have professional photos done, professional drone photos done for each your clients properties…I mean, that should be an expectation of a real estate agent and broker in our area.
And for our team here at Cushman, it is. So it’s more than just a photo though, and that’s kind of what I think’s taken off on our marketing side is we really be able to tell a story with that photo or that drone photo or video. You want to be able to show people, you know, what are those nearby amenities?
What is that frontage off of 80? Where is it? Every every part of that just goes in to a buyer or a tenants decision of picking one location over another. And you have to be able to stand out in such a competitive market.
Rich
Absolutely. I think you made a good point about that.
Can you talk to us a little bit maybe what, like you’re a busy young guy? Like, what is your time worth? I mean, you know, you could maybe take those photos, but some of those photos with an iPhone or something like that, what is your time worth and how does that relate to you being like, “well, I’m going to use someone else to take the photos because of my time’s worth something”?
Parker
Yeah, I mean, I don’t think it’s not that I’m not capable of it, but when we it kind of goes back to when I have a client that’s investing millions of dollars, even hundreds of thousands of dollars into a property, I’m not going are going to act like I’m the expert of photography.
That’s just not my job. You know, I’m going to hire that expert and each of these fields to be able to do produce for that client. Because at the end of the day, if the client’s succeeding, I’m succeeding. And I want the client to succeed.
Rich
So now we get into the blatant soft sell portion of the interview. What do you like about using us? What do you like about using Flyover?
Parker
Yeah, I mean, you guys, for one, are professional, always able to work in whatever request and you do an incredible job from the photo side to the drone side.
Overall, the photos are incredibly well produced. You can pretty much change a photo exactly the way we need it. You can edit it exactly the way we need it. You get the perfect shots and you understand real estate, which is extremely important because if I have a photographer that doesn’t understand real estate and is trying to shoot real estate, that’s a problem.
So to be able to understand real estate like Flyover does is an extreme advantage and why we continue to use them.