The explosion in Internet technology and increasing globalization throughout the business sector are causing vast changes in the commercial real estate industry. As a commercial Realtor, I'm very excited about a new alliance - the Realtors Commercial Alliance - that will help provide a framework for collective leadership in developing a common, unified voice for the commercial real estate industry.

Recently established within the National Association of Realtors, this alliance will help us work together to be proactive, not reactive. Its creation will bring real estate associations and large firms together to create a community on behalf of those involved in brokering commercial property.

The proposal to create the alliance was approved by NAR's board of directors during the association's annual convention last November. An alliance advisory board, appointed by NAR's leadership, will work cooperatively to provide strategic direction for the industry, including the legislative commercial initiatives pursued by NAR.

Robert J. Boyd, 1999 chairman of NAR's commercial services work group that formulated the recommendation to create the alliance, and Russell K. Booth, a former NAR president who specializes in commercial real estate, have been named as the board's chair and vice chair, respectively.

The board consists of approximately 35 members, with representation from prominent national, regional and local commercial real estate firms, NAR's Commercial and Investment Committee leadership; Realtor state and local commercial boards; RealSelect, Inc. (NAR's Internet partner); other commercial real estate associations; and NAR's commercial affiliates - the Commercial Investment Real Estate Institute (CIREI), Institute of Real Estate Management (IREM), Realtors Land Institute (RLI), Society of Office and Industrial Realtors (SIOR) and Counselors of Real Estate (CRE).

This is a great step forward for our commercial members. We will join the Realtor family's commercial structures with other groups to accomplish for commercial practitioners what NAR has done for those in the residential industry. The creation of the alliance is a way for Realtor commercial boards to attract new members and get involved with non-Realtor commercial organizations.

NAR's involvement in forming the Realtors Commercial Alliance is the latest of several initiatives the association has undertaken to reinforce the value NAR membership offers commercial real estate practitioners.

Last December, NAR and RealSelect entered into an exclusive agreement with LoopNet, Inc., to create one of the largest sources of commercial property listings and transaction-related tools and services available on the Internet. This arrangement will position NAR's CommercialSource.com and Loopnet.com as the largest online aggregation of commercial properties and transaction-related products and services in the United States and Canada.

Looking ahead, the association is sponsoring the second annual Transact conference next September in Chicago, which is designed for commercial real estate professionals who practice in the United States and internationally.

These efforts reflect NAR's firm commitment to help our commercial members achieve the highest level of success -- in business operations and on Capitol Hill. Already this year, we have achieved some key investment real estate victories in Congress. This month, the Senate and House approved the Civil Asset Forfeiture Reform Act. This important bill will provide key protections to innocent owners who have no knowledge of the use of their property for illegal drug activities, or those who have made reasonable efforts to stop the use of their property for such activities.

Former law allowed the government to seize property -- including housing -- without indictment, hearing or trial. Law enforcement officials only had to show a 'probable cause' of illegal activity and pursue an investigation, including a property seizure. This resulted in numerous property takings from building owners who had absolutely no connection to the charges filed.

The legislation passed by Congress shifts the burden of proof from the property owner to the government, by requiring law enforcement officials to show a preponderance of evidence justifying a property seizure. It also ensures that the property of owners who have taken reasonable steps to prevent illegal activities cannot be subject to forfeiture, and it eliminates a costly bond requirement for owners who contest a property seizure.

Other key protections extend the time period a property owner has to contest a forfeiture; allow innocent owners the right to sue for negligence or loss of property due to forfeiture; and allow the property to be returned to the owner pending final disposition, if hardship would otherwise result.

This legislation protects the property rights of real estate owners without compromising the ability of law enforcement officials to pursue criminal investigations. We applaud Congress for taking this step forward, and we will press for the bill's enactment.

Another recent congressional victory involves the Senate's passage of bankruptcy reform legislation. This bill contains key provisions to eliminate a cap on the value of properties involved in single-asset bankruptcy cases, close the loophole on residential tenant abuse, and provide protections for shopping center owners.

Regarding the single-asset bankruptcy provision, current law subjects properties with a value of less than $4 million to an automatic stay from creditors for 90 days. However, the stay for properties of over $4 million can be extended for more than six months. NAR and its affiliate, the Institute of Real Estate Management (IREM), have long supported the creation of a level playing field for all properties by removing the distinction between properties valued below or above $4 million.

A second key issue in the bill deals with automatic stay provisions in rental housing. The current law contains a loophole that allows a tenant to delay eviction by declaring bankruptcy. As a result, tenants file bankruptcy and refuse to pay rent, costing landlords hundreds of dollars of lost rents and legal fees to pursue bankruptcy remedies. This legislation will close this loophole and put a stop to tenant abuse that ultimately drives up housing costs.

The legislation also addresses the issue of shopping center bankruptcy. Current law allows shopping center tenants declaring bankruptcy up to 60 days to make the decision to assume or reject leases; however courts routinely extend this time for many months.

Due to the complexities of the landlord/tenant relationship in shopping centers, the impact of this delay can be quite severe for landlords and tenants alike. This legislation appropriately limits the discretion of the courts to provide lengthy extensions of deadlines.

NAR has long pressed for enactment of meaningful bankruptcy reform, and the Senate's action builds momentum for enactment of this measure. Similar legislation was passed last year in the House by an overwhelming margin of 313-108 votes. We will press for this legislation to become law.

All our efforts -- from interacting with Capitol Hill to developing better ways to exchange information on markets worldwide -- are designed to keep our commercial members at the forefront.

NAR is shaping the future for commercial real estate.

Published: April 20, 2000

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