Commercial brokers are swimming in empty space

Real estate broker Carl Muhlstein maneuvered his silver BMW convertible through downtown Los Angeles traffic, one hand steering the car and the other pressing a cellphone to his ear.

"Come on," he teased. "Insult me with an offer."

While some who swim the deep and often lucrative waters of commercial real estate have retreated to the golf course, Muhlstein is among those pushing on -- joking, nudging and networking in hopes of making deals in a time of no deals.

"The conversations are tougher, the challenges are greater, the stakes are higher," Muhlstein said, as odds grow that a multimillion-dollar transaction may end badly for somebody. "Will the landlord lose the building? Will the tenants stay in business?"

Among his tasks is finding a buyer for Park Fifth, a stalled $1-billion high-rise condominium and hotel development proposed for a block next to Pershing Square downtown. At Playa Vista, he advised the owners of the enormous Spruce Goose hangar -- built by famed aviator Howard Hughes -- to take it off the block because prices are depressed.

Muhlstein tries to use humor to cope with hard times in the commercial real estate industry, a business in such pronounced distress that some experts predict its problems will thwart the nation's hopes for an economic recovery.

Nearly 16% of office space in Los Angeles County is sitting vacant as tenants close up shop or move out of expensive properties. Nearly a third of the space around up-market Playa Vista sits empty; office buildings in the Inland Empire and parts of Orange County are completely vacant.

It all adds up to less work for brokers like Muhlstein, who make their living facilitating the sale and leasing of these properties.

Commercial brokerages such as CB Richard Ellis, Grubb & Ellis, Jones Lang LaSalle, and Cushman & Wakefield, where Muhlstein works, have contracted during the recession, collectively shedding thousands of workers as profits plummeted in the slow market. Many brokers, who survive on commissions, are among the departed.

Still, brokers are a persistent lot, drawn to the business by the opportunity to earn lots of money. When the market is good, top producers can earn $100,000 to more than $1 million a year on commissions of 2% to 5% on the value of a deal. The risky, competitive field is still made up almost exclusively of men, a disproportionately high number of whom learned to battle at the top levels of collegiate sports.