De-Coding the Market Fundamentals

Susan Persin joined the San Francisco office of JLL as a research director for Northern California this summer, bringing with her experience in following the commercial real estate industry from a varied background that included Trepp, as co-founder of Foresight Analytics, which Trepp acquired in 2019, as well as Rosen Consulting Group.

Persin, who will be based in the San Francisco office, will oversee research analysts tracking all major commercial property types throughout Northern California’s key markets from Sacramento to Fresno and including the entire Bay Area. We wanted to get her perspective on the market and her take on her new role. Here’s what she had to say.

Q: What led you to JLL?

After most recently focusing on REITs and capital markets, I wanted to get back to my roots, focusing on real estate supply and demand fundamentals. JLL has a great reputation in the industry, and research is critical to everything the company does, so it seemed like natural fit, and I was excited to become part of the team.

Q: How is JLL using research?

Research is integral to the JLL platform. All of our business lines rely on research, whether to help clients make better decisions or for the company to plan for the future.

Q: What kinds of research do clients ask for most frequently…and why?

It’s hard to think of one thing that clients ask for most frequently. Clients rely on JLL’s market expertise, whether focusing laser-like on a particular market or evaluating numerous markets across the world. Ultimately, though, they want to know where we are in the real estate cycle and our outlook, since that helps them make better decisions.

Q: Has the way the industry has approached research gathering changed dramatically over the years?

When I started in the industry, data gathering was much more manual. We did a lot of “dialing for data,” calling research people at brokerage houses for copies of their quarterly reports. Information on the local economy came from news clipping services. Today, all that information is available online and is much more timely and higher quality. There is also greater transparency in the industry, thanks largely to the growth of the REIT industry, and its public reporting requirements.

Q: Which piece of recent JLL research would be most valuable to our readers today?

So many to choose from. I think our quarterly market insights are particularly useful. I have learned how much effort goes into these reports and have great confidence in their accuracy. They are very timely and provide a lot of good data about what’s happened and where the market is going. And they’re available for markets around the country.

Q: How important is census data to the research process for CRE?

Job and population growth are the basic determinants of commercial real estate demand and provide the foundation of much of what we do. A growing population needs housing, which drives demand for retail space that offers services to these residents and warehouse space to facilitate getting goods to people. They also work and need offices. I use Census data frequently, and the quality of our research depends on it being reliable.

Q: Is there some interesting piece of information that you find particularly insightful that everyone in the industry ought to know?

Many people in the trenches are very involved in their building or deal, losing sight of the broader picture. It’s pretty obvious, but I watch for the national employment figures every month as a barometer of what’s going on nationally that might affect the local market.

Q: Have you seen information be regionalized? In other words, do certain parts of the country look at one set of metrics compared to other parts?

We look at real estate market fundamentals the same in all markets, but differences exist in how we look at the economy. For example, we scrutinize venture capital funding in the Bay Area, because when companies are receiving funding, they can lease space and grow their businesses. We also look at port activity in markets with important seaports, and travel and tourism data in tourism hot spots like San Francisco. In contrast, drilling rig counts are a metric that oil patch markets watch very carefully.

Q: Is there something we should be asking that we’re not asking?

What’s my outlook for the Bay Area market? I’d say that real estate market conditions are very strong and that the economic indicators I follow don’t show any signs of softening, so I think we’re good for awhile. Having said that, real estate is a cyclical business. Because markets haven’t become overbuilt, hopefully, we’ll be headed for a soft landing instead of a crash when markets turn.

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