The best year that Rod Baker has ever had in 25 years in the commercial property business could end like Wile E. Coyote in midair over a canyon a few feet past a dusty desert precipice.
And over the critter's head is a big dark question mark.
Baker, and everyone else, has to be used to the cartoon antics of the economy by now: 2012, his single best year, came just three years after the single worst year for Baker First Commercial Real Estate Services, 2800 NW 36.
Such was the craziness of the 2007 credit crash, the 2008 recession, the 2009 bottom, the technical end of the recession in 2010 — and quivering lips and quavering business plans that have defined the global economic crisis ever since.
And now this: The specter of a crash at the bottom of the “fiscal cliff” — the tax increases, spending cuts and drawdown in the nation's budget deficit that will kick in automatically in 2013 if laws aren't changed by Dec. 31, the last day of Baker's best year.
It's giving capital pause, he said, even in the face of the cheapest loan money in memory.
“Some of our prospects and investors would like to see what happens, to see if there's some kind of compromise that's going to happen on a national level that'll allow us to move forward as a country, and get over that hump,” Baker said. “One way or another, some decisions need to be made. At that point in time, people will feel like there's a track the country's on that they can rely upon — whichever, whatever track that is.”
The uncertainty has Baker reluctant to look too far ahead in sizing up prospects. But December, the month he founded Baker First Commercial in 1987 — opening the doors in January 1988 — is a good time to look back.
“We started in humble beginnings and have grown to be a substantial management, development and brokerage company in Oklahoma City,” recalling that he started out at the bottom of the 1980s energy and real estate bust, and rode it out.
He started out bringing investors together to buy apartments. The company has long since vertically integrated — with land acquisition, development, construction, management, leasing and brokerage — in retail, office, industrial and other projects. National and regional clients have included Supercuts, Little Caesar's Pizza, AT&T, Enterprise, Edward Jones Investments, Security Self Storage and numerous financial institutions.
A recent project is 23V Retail Center, 2519 NW 23, and the Little Caesar's Pizza next door. The redevelopment is northwest of NW 23 and Villa Avenue, not far from Shepherd Mall and its workforces and Oklahoma City University and its students, faculty and staff. It's a heavy-traffic part of the city.
Baker took a two-story, 24,000-square-foot office building built in 1954, demolished half of it and remade the property into four ground-level retail spaces, a 6,000-square-foot office space upstairs, a freestanding Little Caesar's and plenty of parking.
“It's been well received. We get a lot of attention to this project,” he said. “Of course, there's a lot of redevelopment going on in Oklahoma City. Twenty-third Street, in particular, is getting a lot of attention, at both ends of this main part of town. So we think it's going to be a good long-term investment.”
Baker has come a long way from days in his father John's funeral home in Mayville, N.D., population then about 2,500. Rod Baker did mortuary work himself for a few years — here at Smith & Kernke — before shifting to property, working for C.A. Henderson Cos., in the mid-1980s.
Up from 2009
He said he didn't hit serious trouble until three years ago, but even then things could have been a lot worse. Construction and development — and lending for it — came to a stop while owners of properties already in operation held their breath.
“A few people had difficulties during that time, but our properties continued to perform well,” Baker said.
“We had a good asset base, so we made it through that time and have climbed up and are doing very well right now. Oklahoma has blessed us greatly.”
Except for uncertainty surrounding the “fiscal cliff” negotiations between Congress and the White House, Baker said he remains optimistic.
“The interest rate environment is very good for real estate investment,” he said. “The lenders still are somewhat cautious. But they're eager to make good loans, which is a little different from 2009, when they had to pull back. But for people that they have relationships with, they require a little more due diligence on their loans.
“But they haven't suffered like lenders have nationally, so they've been able to make their way through that part of it.”
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