Larry Pobuda, a Twin Cities real estate veteran and principal of boutique real estate development firm ?Stewart Lawrence Group, in Bloomington, will be installed this week as the new chairman of NAIOP, a national real estate trade group. His appointment comes in the midst of one of the worst slumps in the commercial sector in the past two decades.

The Minneapolis/St. Paul Business Journal caught up with Pobuda and asked him a few questions about the market and his plans for NAIOP this year.

He said he will work closely with NAIOP’s 20- to 30-person staff in Washington, D.C., and the members of its 55 chapters across the country to help move the organization forward as it works through the economic recovery.

Business Journal: What do you hope to accomplish with NAIOP this year?
Pobuda: It’s a challenging market. There’s no question our markets are difficult and certainly a reflection of the overall economy. One of my key messages is going to be to encourage our members to think broadly. Commercial real estate is a big world, and some of our members might think of it in terms of office, or industrial or retail, but commercial real estate encompasses a lot of different applications, including senior housing, student housing and medical office properties. It’s a great opportunity to think about different demographic trends and opportunities.

Business Journal: Sounds like you aim for NAIOP to have a broader reach — is that why the organization changed its name?
Pobuda: The organization went through a significant re-branding campaign about a year ago. It is no longer an acronym for the ?National Association of Industrial and Office Properties, but instead is now NAIOP, the commercial development association.

Business Journal: Why did they do that?
Pobuda: It was really a reflection of our members and what they were doing and where they were spending their time. So many of our members were doing mixed-use projects that include retail and housing with office and industrial development. A lot of our members have gotten into medical office and senior-housing development, so it’s a much broader category than only office and industrial.

Business Journal: Let’s talk about the market. Is it as bad as the ?Wall Street Journal says, with rents falling nationally at the fastest rate in over a decade and vacancies creating a glut of space?
Pobuda: It’s difficult to paint a broad picture and try and capture the office market in one statement. But there’s no question that our industry is challenged and vacancy rates are climbing. To use words like “glut” is a bit dramatic. Landlords, like other businesses, are trying to make the best decisions they can given the information that they have.

Vacancy rates are expected to climb probably for the next six months, but our business has always been driven by job growth and job creation. In the last 12 months, as companies have cut employees, what they’re now doing is taking a look at their facilities.

Business Journal: How is Minnesota’s scene different from the national market?
Pobuda: I think many of the dynamics are the same as other parts of the country. However, I don’t think it’s as acute here as in other parts of the country, such as the high-growth states, whether it’s California, Florida, Arizona and Nevada, where you had exponential growth in the residential market. In those markets, they may be hurt worse than other parts of the country. But this is pain that’s being felt nationwide, from the West Coast to the East Coast, and I think in all product types.

Business Journal: How will the market look in late 2010?
Pobuda: My sense is that things will look better. I’m hoping there will be more economic stability, which will translate into our tenants doing better and beginning to prosper again. That would certainly be a hope of mine. We’ve got to get the economy back on its feet before the commercial real estate market can.

Business Journal: What will happen in the credit market?
Pobuda: The other hope is that there’s better clarity in the capital markets. That we understand what the rules are from the financial institutions and how loans can be procured. Hopefully, there will be better clarity on how real estate can be refinanced as it’s coming up for renewal. We have a huge bubble, probably $1 trillion worth, of commercial real estate that needs to be refinanced. It was originally financed by ?Commercial Mortgaged Backed Securities, and right now, that doesn’t have a clear path to being refinanced.

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