Gary Ralston | Learn to Earn

August 03, 2022   |   Brokerage

Gary Ralston predicts the future of the commercial real estate world and the recession implications for the economy as whole.

“Mr. CCIM”, Gary Ralston is a Managing Director at SVN | Saunders Ralston Dantzler. Early in his career, he abandoned the men’s apparel industry to pursue a successful career in commercial real estate. This success only grew upon the inception of Saunders Ralston Dantzler Real Estate. In this episode, Gary predicts the not-so-distant future in the commercial real estate world and what that will mean for the rest of the economy.

Below is an excerpt from the interview. Listen above for the full podcast.

How did your career begin? While I was going to school, I got involved with one of the department store chains in Tampa. I was at Eckerd College. I started out as a salesperson, and later, at a very young age, I was named the buyer of the men's clothing department. We had 27 stores and it was a remarkable experience.

I enjoyed it, but I wanted to do better. While I was living in New York, I decided I was going to get closer to Ralph Lauren. I applied for a job to join him and interviewed. I was close to joining Ralph Lauren Western Wear when my father’s boss, a retired real estate executive, convinced me to change careers. He said that if I went into real estate and moved to Lakeland, he would help

Why did you choose real estate? I moved back to Lakeland to join my mother who had been a residential real estate agent. We opened our own office with my mother, myself, and a secretary. The Executive Director of the Lakeland Association of REALTORS®, Ed Miller gave me some advice that I took to heart. He said, “you have to learn to earn” and I've adopted that. I'm a committed continuous learner.

I went to all the real estate courses I could including CI 101. That's the first commercial investment course. It was an evangelical experience that changed my life and gave me a different perspective on things. I didn't have CCIM tattooed on my arm, but I thought about it. That's really what I focused on was commercial real estate here in Lakeland. I was involved with a number of projects including downtown historic rehabs and some syndication projects. My name is still on a brass plaque on Kentucky Avenue.

Are you the most designated broker in the United States? Technically, no. A dear friend of mine, Mark Lavon, who is a professor and he runs the real estate department. He's actually retired now, but Mark technically has more designations than I do. He's also an attorney, a CPA, but I have several real estate designations that he doesn't. So, he has allowed me to say that I'm the most designated practicing commercial realtor. I've got about a dozen designations. I'm good at taking tests.

What courses do you teach? I've been blessed to have the opportunity to be an instructor for CCIM now for over 35 years. I only teach a couple times a year, typically. Teaching forces me to stay current and relearn principles, but I've always had a passion for practical application. “How do you use this?” The goal is to help people understand how to make money with the concepts. That's the practical application perspective.

When you think about understanding the business, the demand for real estate is very simple. It's just people. So it's people, jobs, and income. I often say if you don't know how many people are there and you don't know anything about them, then how do you make good decisions about demand? Have a passion for that.

Why is collecting data important? I was able to work on perfecting some of those models when I was at Commercial Net Lease Realty. It was our underwriting analytics to be able to ascertain financially feasible rent for tenants. This was predicated upon the demographics and economics, people in the functional geography, and the disposable income allocated to whatever the retail line of trade business was.

How did you start at SVN | SRD? Dean [Saunders] actually was a student of mine in one of my CCIM classes back in 2009. I didn't know him when I was in business because he wasn’t in Lakeland in the 80s. I appreciated his unique talents and abilities and we became friends. When I decided to move back to Lakeland, I talked to Dean, we agreed to launch a commercial division, and I joined him. I wasn't around when he founded the company in 1996. This was around 2010.

Why Dean Saunders? I appreciate Dean having perfected the land brokerage business. The data points and information has never been rationalized to the same degree that commercial real estate has. He's been able to be an industry leader in that. It's been a pleasure working with him. We get along well. He accuses me of wanting to pave everything as a commercial guy and he likes to put a lot of wood on everything.

We get along very well because we see the world in different ways. I think Dean's still should have been in politics. He could be a senator by now.

Are we headed towards recession? Real estate is space for people. I think most markets, certainly in Central Florida, are now building and permitting more than current demand. There's some pent up demand from the previous few years, but we are at a point now where we are catching up and building more than demand. As pricing changes, I think we're going to see a slowdown in residential construction as a result. Some things have a negative impact on demand as well. Household formation rates are beginning to decline a little bit, because of the cost of housing. The general parameter for residential is 30% of adjusted gross income for your housing expense. As interest rates go up, it reduces the affordability for many people. 

Residential real estate as a driver for the market is facing some headwinds. We're very much in step for what one might call a mild recession in that space. I think many of the chain builders will make some adjustments, they will start trying to build smaller houses, they'll try to use less expensive materials, and they may adjust their markup. In general, there are meaningful headwinds for the residential market. Some of this is going to translate into issues for commercial real estate as well, just in a slightly different way.

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Gary M. Ralston
Gary is an expert in all things commercial and he holds a strong passion for educating clients on market trends in the current and future economy. Earlier in his career, he guided a corporate real estate firm from less than $15 million in real estate assets to over $1.5 billion. Recognized as...