State of the Industry (from RCA Global Trends-April 2009):
The global slide in property acquisition in Q1’09 reached well beyond any adjustment for currency fluctuation. Worldwide sales volume and the number of trades plummeted to one-sixth their levels of two years ago and fell 73 % from Q1’08 to just $47 b and 1,014 properties in Q1’09. The broad drop in activity cut across all property types and just about every market. Compounding the drop in transactions is an astounding rise in properties that need to be recapitalized. New reports of defaulted mortgages and failed commercial property companies exceeded $55 b in Q1’09, bringing the total universe of property assets currently known to be in distress to $153 b. And, as Walter Cronkite used to end his broadcasts, “And that’s the way it is.” Sounds like there will be a lot of opportunities out there.
Big news this week, in addition to some senior level departures, is the bankruptcy filing of the second largest shopping mall owner, General Growth Properties. As a former long time shopping center industry guy this is a somewhat monumental event. However, it is probably the best thing that could happen right now given the circumstances. And while we may say that this could be a forerunner of things to come I’m not sure that it is…or at least at this scale. Looking out of my office window I see the building that was built as the W.T Grant HQ. W.T. Grant was the first national retailer to go out of business in my lifetime filing bankruptcy in 1976. When they went it seemed like anything could happen but over the years since then Chapter 11 filings have become while not commonplace at least more common. But seeing GGP go through this is still a little disturbing given that I’ve known some of their senior people over the years and always admired them.
This week some real estate group that I’ve never heard of first changed their conference venue from a hotel to the Internet and then canceled it altogether. On their website I couldn’t find a single person’s name behind the organization. I don’t know about you but I’m getting more and more skeptical about the web and who is doing what and whether the privacy issues that I’ve sort of ignored all along have some validity to them.
And speaking of the Internet, some of you have to be among the almost 16 million people that have viewed the video on YouTube with Susan Boyle singing for the show 'Britain's Got Talent.' For those of you who haven't watched it, please do. It is one of the most inspiring and emotional things I have ever seen. In a time of stress, strain and economic pain globally, this momentary glimpse of someone realizing their dream, through some sort of reality show, is, well, extremely special.
And while I’m on the subject of dreams how many of us have ever dreamed of doing something great? I know, you say, “What makes something great?” And of course you’re right because it’s different to every one of us who has thought about it. I’d guess that most thoughts of greatness might relate to a world changing discovery, like the Salk vaccine or the artificial heart and those certainly are great things and have not only changed our society but also saved lives. Or it could relate to sports, holding a sports record or winning a big game with a bottom of the ninth home run, or a goal that breaks a 0-0 soccer game or a 62-yard field goal with no time left on the clock. And those too are great things especially if one has dedicated their lives to sport. Or it could be creating a painting that is considered great by the art world, or even a more widespread audience. Most songwriters are hoping they’ll write one hit or great song which is why it’s so amazing that The Beatles have had so many songs that have become as recognizable as a country’s national anthem and have been the first words that some people have sung in English, even if they don’t know what the words mean. But greatness does not always or just have to be something big, something covered by the media or something that gets a statue erected in your honor. Greatness is really made up of little things, sometimes everyday things but more likely something done because one person cares about another person. It’s great things that are done where no one is looking for credit, not looking around to see if others have seen it but done just because it’s the right thing to do, it’s a good thing to do and it by doing it it makes you feel good.
Next week I'll report back to you about what I heard at the INREV conference in Athens. INREV, as many of you know, is the European Association for Non-Listed Real Estate Vehicles and many institutional investors will be in attendance.
Where I'll be:
April 23-25: Athens, Greece for INREV’s Annual General Meeting and Conference
Apr. 26-Apr. 30: Chicago to record my second CD of original music for the benefit of Keys-4-Kids.
May 1-12: New York
May 14-16: North Palm Beach, FL to attend the annual Homer Hoyt Institute and Weimer School sessions with some of the industry’s leading academics.
If you’d like to reach me the best email address is (email@example.com).
These are my personal views and not that of my employer.
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