Having served 10 years of his 37-year career as president and principal of MacKenzie Commercial Real Estate Services, the brokerage arm of MacKenzie Ventures, Scott Wimbrow is liking the traction he’s seeing across various submarkets and approaching 2024 with a heightened sense of optimism.
Wimbrow is responsible for the Brokerage division’s overall operations, including the management of 45 brokers and about seven support staff, including oversight of financial planning, spearheading corporate business development and supporting the efforts between MacKenzie’s affiliated companies, which include MacKenzie Management and MacKenzie Construction. The Eastern Shore resident’s career highlights include transactions that have generated more than $2 billion within the Baltimore-Washington region, with much of it in the Corridor ― which he’s earned while putting 40,000 miles per year on his cars. He also has extensive project development experience and is on the board of MacKenzie Ventures, the holding company for all of the MacKenzie Companies.
What’s your view of the overall commercial real estate market?
Not nearly as bad as what you read in the other newspapers. Yes, the office market is weak, but it’s not dead. What we’re typically reading is that some big national company is cutting their space in half, but nothing about how the local doctors, law firms and accounting companies are adding space. All told we and many other firms had record-breaking years in 2023. We’re a private company, but I’ll tell you that we were up about 10 percent from 2022 and last year our numbers were already up over pre-pandemic figures.
How do office vacancy and lease rates today compare to those from before the pandemic?
The vacancy rates are higher, but the office occupancy rates are lower. That’s what people need to look at: this trend is really about people being in the office and supporting each other, as well as the local business community. If you don’t have a full office, that hurts the Main Street businesses ― the delis, the dry cleaners, the small retailers ― that succeed based on its support.
What are your thoughts on virtual work and hybrid offices?
In some format, I think hybrid work is here to stay. It’s been a slow rebound, but every week we seem to hear about a major company that’s requiring that employees come back full-time to the office. That’s important with us because the big thing with any company is creating a culture; Main Street America has already figured it out and I think corporate America is starting to understand that your company is better off when your employees are working from an office.
We’ve been back to the office five days a week since June 8, 2020, so about three months into the pandemic. We don’t have a work-from-home policy and I think our staff likes that, though I know we’ve lost a few employees and potential hires on our administrative side for that reason.
How far away are we from seeing speculative office properties built?
A couple of years. When it comes back, I think much of it will be led by some of the new green initiatives. I don’t believe the office market is dead, it’s just changing. Tenants want more amenities and more conveniences, and at MacKenzie we’re working on creating that environment. That includes more spaces with glass and more conference rooms to encourage people to collaborate, eat lunch together, etc. That’s not just at our newest office in Columbia, but in Downtown Baltimore, which is undergoing a refresh.
Interestingly, the work-from-home employees are driving our efforts to keep people happy while working at our offices.
Do you think we’re nearing the end of the trend of turning vacant office space and other properties into housing?
Yes. Doing that is more difficult than it appears to be on the surface, especially with the low-hanging fruit gone. There can be problems with floor plates, as they relate to the depth of the hallways and the lobbies. Also, not all urban buildings offer much parking, but (a continuance of this trend) won’t happen where parking is abundant, which is in the suburbs.
Will we continue to see more mixed-use projects built?
Yes. The live-work-play concept is alive and well, but it’s getting harder to find the right land to build them. Metro Center in Owings Mills is an excellent example of the Live-Work-Play concept.
What types of properties are the best investments at the moment?
Retail and industrial are still strong, and there is growing speculation that office is coming back. There is a distaste in the banking community for that part of the market, but I’m seeing, and have taken note, that the risk-takers are buying office buildings.
How’s the market for industrial space in the Baltimore-Washington area?
Still strong, but weakening a little bit because it’s been so hot for so long. Yet there’s still great demand exceeding availability for most product. Anything south of the city seems to be a strong market, and anything with outside storage is very desirable, especially if it has easy access to the port.
Do you think the demand for flex space will ever dissipate?
No, just by its nature. Flex is that either/or property type and it fits the bill for many, many users. Ed St. John (president of St. John Properties) has redefined that market so office users are not ashamed to go into it and flex users can afford it. Flex used to just be for small warehouse concerns, but they are now clean, attractive and efficient buildings that can even be used for retail in some cases. Take, for example, the Starbucks on Aviation Boulevard, in Glen Burnie.
What’s your read on the overall market in Howard County?
It has a lot of new space and demand is strong as well. I am very bullish on this market.
How about Anne Arundel?
Retail is very strong with several new projects in Annapolis. Industrial dominates the northern part of this healthy market, while office demand remains steady, too.
Are there any hot spots for even small data centers in the Baltimore-Washington metroplex?
Not really. In Maryland, our utility rates are much higher than they are in Virginia. There is however one enclave in Frederick County, the (master planned data center community) Quantum Frederick project, that is doing well, but that’s only because there is a separate utility company that serves that part of the state with much lower rates. We may have a shot at some, but unless the rates drop across the state I don’t see that market growing into Maryland from Virginia.
What are your thoughts on today’s architecture and the often pedestrian look of various types of commercial structures?
We’re in a glass building in Columbia and I love it. I’m a big fan of glass and glass engineering, and technology has improved to the point where glass is as strong and as energy-efficient as other options. The key to success for any building is how you can divide the floor for multi-tenant use.
What’s the best thing about being president of the company? And the biggest challenge?
I say in all sincerity, it’s that I’ve gotten to work with great people here at MacKenzie during my more than 35-year run (which was intersected by three years at MIE (now St. John) Properties from 1991-94) and many of my colleagues have become friends. Additionally, I love the synergies that our company can create among our service lines and the advantages that creates for the client. The challenging part is trying to stay ahead of the ever-evolving demands of the market. But MacKenzie is a relatively small company with 220 employees and 45 brokers so we can be nimble, and decisions can be made, and strategies altered relatively quickly.
What did you tell your daughter, Morgan (Wimbrow, a senior real estate adviser with MacKenzie) when she got into the business?
That it’s the most exciting business you’ll ever come across, but also the most aggravating. You’ll frequently put a great deal together, but then something out of your control, like a recession, market shift or a pandemic, quickly sends it south.
Are you optimistic about 2024?
Very much so. I think the talk of a recession has subsided and the pundits are saying that we’re in for better times. At this time last year, I wasn’t as optimistic, but we had a great year; so today, I’m optimistic. Then again I was optimistic in January of 2020.
When I’m asked for a prediction, I always answer ― but then ask you to check back with me in nine months, as I may want to amend it.