Larry Pobuda won’t take over the top volunteer position in NAIOP, The Commercial Real Estate Development Association, until January 1, but he is already sending a strong message to the organization’s more than 16,000 members.

“Our industry is facing tremendous challenges in 2010: economic forces unlike anything we’ve seen before, frozen credit markets, and a legislative climate that is creating additional headwinds,” said Pobuda.

“Development has always followed job growth. When jobs are growing, our industry is robust. When job growth stalls, we suffer. In challenging times like these, as an industry, we need to think more broadly and more creatively than ever before. While our traditional markets are on hiatus for a while, we need to aggressively seek out new opportunities that are not as dependent on job growth, but instead, leverage favorable demographic trends.”

As 2010 Chairman of the nation’s single largest group of developers, owners and related professionals, Pobuda says he plans to urge his members “to retain their core expertise of office, industrial and mixed-use development, and begin supplementing those business lines to build a much broader platform.”

A partner in Minneapolis-based StewartLawrence Group, Pobuda has a long history of active involvement in NAIOP, both nationally and for the Minnesota chapter, of which he is a past president. His appointment to the top national post, announced during the organization’s Development ’09 conference and annual meeting held last month in Chicago, is the culmination of a 15-year relationship with the organization.

Although real estate developers are by definition optimists, Pobuda says he found the mood at the NAIOP National conference to be generally positive, although realistic about the current challenges. These are incredibly turbulent times, both economically and politically. So much is in flux that developers and investors are being very cautious about jumping in. Until there is private sector growth, and greater political certainty, investors and developers will be on the sidelines.

Although the credit markets remain difficult, Pobuda says there is a lot of money on the sidelines, but little movement. “It’s like a junior high dance - boys lined up on one side and girls on the other, and everyone waiting for the first person to step out. We’re in a protracted state of caution.”

What will ease the caution, and when? In his view, “when major financial institutions muster the political will and the courage to throw themselves back into the market, to make commitments, to say ‘we believe in these great businesses, the great locations and tenants. It makes good business sense for us to be part of the opportunity and fund them.’ ”

Although Minnesota and the Twin Cities are feeling the same pain as commercial markets in other states, he says “we are not in the camp of the most distressed and overheated, like Las Vegas, Miami, Phoenix, and parts of California. We were not overbuilt when the downturn started. In fact, I think the development industry here was appropriately cautious and showed great restraint, resulting in a relatively healthy balance.”

What concerns him most, however, is that the prognosis for commercial real estate will be driven by the degree of job growth—a major question mark for Minnesota.

“Minnesota needs to position itself as a place that cultivates entrepreneurs, bringing business growth and job creation,” he says. “Although it’s true that we have a strong corporate base, we have historically never been a fast-growth state, and that’s okay. However, our legislators need to be cognizant of the impact our high tax environment has on decisions by businesses to locate, expand or invest here”

“Some folks take pride in the fact that Minnesota outperforms the Upper Midwest region. To me, that is the booby prize, and an absolutely meaningless comparison. Flying that banner gets us nothing in the worldwide competition for business. The world is getting smaller. Minnesota needs to think more broadly about its future, and our legislators must keep this in mind when they consider increasing business taxes or creating new regulations that will further inhibit business growth.”

Contrary to the observation of some that this may be the worst possible time to lead a major commercial real estate organization, Pobuda sees it as the opposite, “as a time to view the world and our industry differently I’m looking forward to the continuing evolution of our profession, and I’m especially pleased to see that, despite the current challenges, we continue to attract more young people, more women and more minorities--and develop new leaders--who see the opportunities commercial real estate offers long-term.”

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