Bob Godard is a household name if you have been in the Atlanta real estate business for any length of time. The founder and president of Compass Real Estate, Bob has completed hundreds of millions of dollars in real estate transactions during his career. Compass is currently focused on acquiring office, industrial and retail properties and associated notes throughout the Southeast.

We typically call this Four on Friday, but Bob had so many interesting points about investments (and nice things to say about Hartman Simons), we couldn’t limit his Q&A to four questions. Bob, thanks for participating in this week’s Five on Friday!

Bob Godard
HS:
What are the pros of investing in Atlanta?

BG: Atlanta is a top market in the country. It is a good place to own real estate because of its business friendly environment, sustained high employment and job creation, low cost of living, moderate climate, stable government, excellent infrastructure, great health care, high-quality educational system, particularly its colleges and universities, and world-class airport.

HS: What are some challenges associated with investing in Atlanta real estate?

BG: Everyone in Atlanta seems to be in the real estate business – some just dabble in real estate and others have made careers in the business.  Those of us who have been in the business for any length of time understand the nuances and complexities of commercial real estate because we have dealt with many of the challenges unique to this asset class.  When we do our jobs well, we make good risk adjustments and understand how to price properties appropriately based on both market dynamics and asset specifics.  Many of our larger and most active competitors are in the money management business and have little or no experience owning and operating real estate.  Some of those who have been most successful raising huge amounts of money to buy distressed real estate haven’t ever built, owned or managed a single property.  While most of these people are exceptionally intelligent, we often find that they don’t understand and appropriately account for risks and are, therefore, willing to pay more for assets than we would.

HS: What will change Atlanta’s investing landscape?

BG: There is a lot of uncertainty and the lack of leadership at all levels of government is a major issue.  While we are active in the distressed real estate debt market, the broader issue is our national governmental debt.  Unless and until there is a major change in how we operate our government, I am afraid that there are growing systemic issues that might be irreversible.  Also, when interest rates are very low, investors can’t get yield anywhere.  This has pushed a greater share of total capital into commercial real estate as investors seek yield, which has pushed up prices and pushed down return expectations.  According to the Fed, interest rates will be held low through the next presidential election and into early 2013.  A significant concern is what will happen when interest rates rise, especially if it happens quickly and/or dramatically.

HS: Why Hartman Simons?

BG: I have worked with a number of attorneys at Hartman Simons for the past nine years. They all understand that their job is to get deals done.  Hartman Simons has big firm expertise, with a small firm feel and attention to detail.  

HS: What is something most people wouldn’t know about you?

BG: I’m naturally introverted.  While I love interacting with people and find the people to be the most interesting part of this industry, I have always been happier spending time with individuals and small groups of people than at large social functions with hundreds of my business friends.