When Richard Alter gets stressed out, he reaches for junk food.
Lately, the chief executive of Manekin Corp. has been reaching more and more for the three-pound bag of M&Ms he keeps in one of his file cabinets and the oversized box of Utz pretzels in another. In fact, he's gained 10 pounds since January.
"The industry is facing conditions worse than anything since the Great Depression and Richard is munching his way through," says Robert Manekin, a senior vice president for the essentially family-owned business.
Manekin's CEO undoubtedly will be doing more munching before the commercial real estate industry reaches recovery.
With more than 50 buildings and 4.5 million square feet of space, Manekin is vulnerable to problems facing the entire real estate industry: declining demand for office space, slow payment by tenants and increased competition amid a sea of excess space.
Manekin's revenues have fallen 5 percent a year for the last two years and the value of its assets has also slipped, says Louis LaPenna, Manekin's chief financial officer.
"Three years ago, real estate was everyone's darling," Mr. Alter says. "They said it was recession-proof, a hedge against inflation and viewed favorably by the credit markets. Today it is 180 degrees opposite. It is viewed basically as a non-growth, non-promising industry."
To cope with the growing glut of office space, Manekin has made leasing deals that would have seemed unimaginable just a few years ago. For example, it recently signed a five-year lease with an important tenant, Don Richard Associates of Baltimore Inc., an employment agency, that involves free rent in the Bank of Baltimore Building for the first two years. Like others in the market, Manekin is also making concessions to tenants that include free building improvements or payments for the tenant's moving expenses.
"Anyone who has vacant space on the market is being confronted with offering substantial concessions," says Robert Manekin, who heads general business development for Manekin and is the son of Chairman Bernard Manekin.
Despite the problems, industry executives see Manekin as a survivor in the shakeout that has already caused a number of casualties in the region's commercial realty field.
To cope, Manekin has slashed costs. It has cut 10 percent of its staff of just over 100 and has reduced executive salaries by 30 percent over two years. It has also withdrawn from high-risk ventures, such as speculative development, and maneuvered back into old lines of business or found its way into new fields.
