Saturday, September 13, 2008

Sunday Update

Hi. Sorry for sending this out again. I got some feedback that the font was too big and the CREOPoint link didn't work. I've tried to fix both. Thanks for bearing with me as I learn how to use this service.

There were no less than six commercial real estate events going on in New York this past week. I guess organizers saw it as a window of sorts or tried to create a window. Other than the proven or niche events, from reports I received, the others struggled to attract numbers and calibre of people they promoted being able to do. But, notwithstanding, I had a great week. The Investment and Finance seminar that RealShares ran was well attended. When I took the 'attendance' of the audience prior to starting the session I was moderating it indicated about 45% to be owner/operator/developers, another good chunk were brokers and finance types and then there were a few 'others' (which I didn't have time to inquire about). We got good feedback on our panel and it was due to preparing for it and having knowledgeable panelists who answered questions directly. I have to blow my own horn here just a little as the success of any panel also has to do with the moderator and if there's one thing I know how to do it's moderate a panel. I ran into a lot of people I knew and hadn't seen in a while both at this event and at Real Capital Analytics rooftop reception at their building at 139 Fifth Avenue. So it's clear that everyone is 'back to school'.

Here are some of the things that I heard this week:

1. "We're sitting on a lot of cash right now. Our biggest challenge is deciding when we should start deploying in scale. We just don't know." Mike Fascitelli, Vornado Realty Trust.

2. "Terrorists are not going to do anything against the U.S. before the election. They don't want a woman in office and they don't want to give the Republicans more reason to play the "terrorism" card."

3. The diversity of cities around the world that are seeing global capital investment in real estate are expanding.

4. The U.S. is the biggest exporter of commercial real estate property capital worldwide.

5. In 2007, the number of commercial property transactions in Asia surpassed the U.S. for the first time.

6. Seller financing is coming back in a big way.

7. U.S. office buildings bought by foreign investors has almost doubled in 3Q08 compared to 1Q and 2Q 2008.

Seven years ago on Thursday, I was driving to work in California. My father who lives in Florida called my wife and asked her where I was, knowing that I might be anywhere. She told him and then called me. I turned on the radio and heard that two planes had flown into the World Trade Towers. I don’t know if I’m alone but to a New Yorker like me when I heard those words I thought, “Oh, some small planes hit the TV/Radio towers on top of the WTC One and/or Two. It was only when I got to the office that I saw on a fuzzy TV that had been set up what had really happened. To this day, it is hard to believe that this could and did happen. The loss of life and the injuries that were suffered too tough to think about. But we cannot forget. Sadly, the long, drawn-out process by which a decision was made to rebuild on that site has been embarrassing for the U.S. If this had happened in London, how long do you think it would have taken to build: my guess is 18 months. But we had led a sheltered life in the U.S. for so many years and even now I get a sense that day in and day out we may consider ourselves safe again. On Tuesday I had a meeting at 195 Broadway which was the former HQ of AT&T (which which used to be called The American Telephone and Telegraph Company). I got there early and walked around the block which puts one right at the World Trade Center site. I stood off to the side for a few moments thinking back to August 2001 when my son and I saw a concert one beautiful evening on the stage in the WTC plaza. Prior to the music starting I elbowed Kevin and said, "Look up. Can you believe how big these buildings are. It's an amazing feat." That recent and vivid exposure to the buildings was why it was, and in some ways is, difficult for me to fathom their crumbling so quickly. I don't know why I'd never explored it but I stopped in to St. Pauls Chapel. They have some very moving exhibits and was also where the Sept. 11 workers took naps, got counseling, and restored themselves while working. If you're in the area I encourage you to visit it.

It’s interesting. Principal Global Investors and UBS announce reducing their real estate staffs l due to the slowdown in real estate activity but there continue to be hirings going at other firms. Perhaps it’s just a function of companies having built up larger teams over the past years when things were booming and now they just don’t need all those people. I was part of a downsizing once but I took that job (Workout officer at a large commercial bank) knowing that the best job I could do for them was to work myself out of a job. It lasted three years and it was a great experience. One thing I’ve learned from these type things along the way is that you have to keep an eye on the future, your own future. Only you are in charge of your life, whether you work for a company or not and even if you are blindsided by your employer, if you’ve taken the time to build your own visibility in the industry, nurtured your network and kept your nose clean, you’ll be able to find your next adventure whether it be a job or starting your own firm.

I don’t know about you but when I visit companies and am sitting in the reception area I like checking out the publications that they have on the table. Some companies have the Wall Street Journal, the Financial Times or industry specific publication. Sometimes there’ll be a publication, it doesn’t matter if it was four years ago, that featured said company in their cover story. For those companies that have real art in their office there may be an art book or an architectural book (most often about the city in which they’re located). But sometimes there are product research related publications, especially in the larger firms. Not long ago, I was in the office Morley (now Aviva Investors) office in London and a brochure caught my attention. On the cover it said “Peoplebuilding: A place that builds people builds business.” It's a project brochure for a site in in the London suburbs. Much of the content is accompanied by cartoon type graphics but here’s some of the language that interested me about how they’re thinking about (and marketing this concept): A place that builds people builds business. An office building shapes the people who work in it. Years of experience has taught us that if a workplace is built with people in mind, it can actually help build the people working there. If these people become more fulfilled and more energized, that has to be good for business.
What makes a building a Peoplebuilding? There are a number of things which help people work better, such as good light, good air, and attractive design and a good buzz. These things keep people happier and they encourage people to stick around-not just in the working day, but in the number of years they work with you.

Without trying to reproduce the entire brochure here, I’ll just give you some of the ‘headlines’:
Huge floor plates that allow you to be more flexible
Light: lots of glass. (Bright places, bright people).
Air: Good air puts people in a better mood.
Life Beyond Work: bar/brasserie, health and fitness club including day care center (Energy breads energy).
Spirit: a change of environment can raise peoples’ energy levels, clear their heads or give them an idea they wouldn’t otherwise have had.
Peoplebuilding is designed to make people feel good. The buildings and landscape encourage visitors to be inquisitive and sociable. The sounds of a meandering stream, people chatting and the wind in the trees encourages people to be more community minded-proud of their workplace.

Yes, this is a suburban location but I feel that these are the kinds of things that many workers can be attracted to because it talks to their needs and likes as human beings. Yes, the ‘green’ and ‘sustainable’ movements are very important and good and are incorporated into this particular project as well. But mostly, as society changes in ways that perhaps Dr. Schweitzer was way ahead of happening, things more than money are starting to mean a lot to a lot of people around the world. The world consciousness is raising and it’s the young people, who are concerned about their future and the future of planet earth, that are leading the charge. We in the real estate industry can never lose sight of the future.

From Seth Godin’s Blog this week:
Fixing the one big thing
  • Joe Biden is long winded. His voters say so, so does the press. And now his new boss does as well. The feedback couldn't be more clear. So why not fix it?
  • Verizon has mind-numbingly bad customer service. People hate to call them. People switch providers just to avoid this problem. So why not fix it?
  • DiFara's makes the best pizza in New York. But it takes 90 minutes or so to get a pizza. Everyone complains, so why not fix it? In the case of DiFara's, the answer is easy: because fixing it would make it normal. It would take away what makes the place special. People wouldn't complain any more, but people wouldn't go, either.

If your 'one big thing' is a key part of what makes you successful, how dare you change it.
On the other hand, if momentum or laziness or lack of will (or focus) is the thing holding you back, it's time to get serious. When you remove the one big thing from people's list of objections, your career and organization will take off.
Joe Biden can carry a timer in his pocket. He can become reticent in public. He can, in just one day of hard work, solve his problem. Verizon can invest focus and and money and solve their problem. AT&T can invest and fix their wireless network. It just takes commitment, not a miracle.

I met with Jean-Claude Goldenstein, the founder of CREOpoint
. He went through a thorough explanation of how the site works now and what additional features and opportunities it will have. He is one of the most passionate guys I've run into in a long time and I respect what he's doing. And, while I've been spending more time on Linkedin and Facebook and have gotten some idea of how people are using them (you need to decide to allocate a part of your week to these things), CREOpoint is looking to take the best of those sites and aggregate them. In a similar but different way, Reutersrealestate ( has launched their own community (Disclaimer: I have been doing some advisory work for Reutersrealestate). It seems like our industry, one of the slowest to adopt technology, is finally catching up.

I was walking past the MTV store on Broadway in New York and stopped in to see some kids playing with the 'video game', "Rock Band". You don't have to be a musician to thoroughly enjoy it. It is very cool. Rock on!

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Where will I be?
Sept. 9: New York

Sept. 10: New York for RealShares Investment & Finance Conference
() where I’ll moderate a panel called “The Influence of Foreign Banks on Today’s Market.”

Oct. 1-3: Chicago for PREA’s 18th Annual Plan Sponsor Real Estate Conference

Oct. 6-8: Munich for Expo Real

Nov. 12-13: New York to moderate a panel at The PERE Forum (Private Equity Real Estate).

Feb. 19-20, 2009: Chapel Hill, NC to attend the Kenan-Flagler Center for Real Estate Development’s Annual Conference and Real Estate Challenge Case Competition.

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