Friday, October 28, 2011

ULI, Emerging Trends, The Beach Boys

This week, at the last minute, I decided to attend the ULI Fall Conference in Los Angeles.  +/-6,000 commercial real estate industry people and as diverse a group as you can imagine which spans the entire spectrum of commercial real estate were there.  I ran into a good number of people I knew including two that I haven't seen in a dogs' age.  ULI/pwc also released the legendary Emerging Trends 2012 report authored by my good friend, Jonathan Miller.  The findings are based on opinions of trends for 2012 gained in more than 950 interviews (including me for the first time!) or surveys . The release presentation featured Jonathan, Mitchell Roschelle and Chuck DiRocco of pwc and one of the most savvy guys in the commercial real estate industry,  ULI Senior Fellow (and long time good friend) Steve Blank.
  • "Demand drivers don't exist and fundamentals need to catch up."
  • "Is it global chaos or crisis?"
  • "Dysfunctional government."
  • "Too much capital chasing too little product."
  • "No refinancing emergency."
  • "Pension funds:  Talk-Seek income returns.  Walk-Shout for more opportunistic returns to fill liability gaps; the denominator effect is back."
  • "Foreign investors:  The U.S. looks relatively safe compared to their home countries."
  • "Most U.S. markets have stopped deteriorating but most haven't really improved."
  • "Most 'walkable' cities are doing better (NY, San Francisco, Boston, Seattle, DC, San Jose, Austin)-check this out."
  • "Caution rules-it's not the time to be "all in"-investors should maintain liquidity."
  • "Holders and sellers may do better than buyers."
One interesting sidenote:  It appears that the word 'tenant' is gone from our lexicon.  It's been replaced by 'occupier' which is the term used by our British friends.  Can it be long before "z" is replaced by "s?" and what about that 'u?'

One ULI panel that was of particular interest to me was where very senior leaders of CBRE, C&W, JLL and Colliers shared their thoughts on commercial real estate service companies.  Here are a few of their comments:
  • Clients want 
    • more integration of  services
    • more information
    • their problems solved
    • a broad range of services
    • consistency and quality of services
    • targeted solutions that create value
    • customized solutions to their needs
  • From the service company perspective
    • Winners will be those firms able to bundle services, align them and price them properly
    • Services where one size fits one vs. one size fits all are key
    • You can't just offer services; you have to be really good at what you offer
    • Be able to offer strategic advice for the lifetime of an asset
    • Clients don't care how we do it; they just want their needs met
    • Young people joining our organization have less of an entitlement issue
There was another panel, apropos of the Gender Networking piece I quoted (and a bunch of you asked  me to send you the whole article) last week, made up of all women.  The dynamics were much different from all-male panels.  Even the way some things were said shows the differences between how women and men do and say things. The subject focused on doing business globally.  A few quotes:
  • "We want to find opportunities we can believe in." 
  • "There's no difference between doing business in Galveston, TX in the late 70's and going into Brazil now."
  • "There is only one time that the world is globalizing and that's now and I want to be part of it."
  • "I love operating cross-border because people will pay you for it."
  • "In the Western world you negotiate a pre-nup before you get married; in China you work out the details afterwards."
  • "Don't forget:  Americans think linear; Chinese think circular."
  • "You have to know what makes the other person tick."
  • "In China, there's a lot of domestic money searching for knowledge."

At ULI, a former boss of mine and I were catching up when a former boss of his ambled up with his sons who are also in the industry.  I had not met this fellow before but he was introduced first as Jim.  And then in a few minutes, Jim's other 'titles' came out:  "Godfather of the Workout", "Pioneer of Asset Swaps" and "Jimmy the Magician."  Having been involved in workouts for so long myself I don't know why I hadn't heard of him.   He's a guy that I could see sharing workout stories with for hours and hours.  In my career I have worked for (although never met as he lived somewhat like a recluse), the original sale/leaseback "King" and others who have been pioneers in the industry.  I've also met some who claim to have been pioneers but they are cut from a different cloth.  It's one thing when others give refer to you a certain way versus how you refer to yourself.  Anyway,  we had a great time for those few minutes and that is why I love attending conferences and other industry events so much...that random connection that you remember for a long time.

Last item about ULI:  They hired Brian Wilson of The Beach Boys to perform.  Listening to Brian and his great back-up band go through hit after hit after hit, so true to the original recordings, sent chills down my spine.  Brian, as brilliant as he is, has had a difficult life.  Seeing him, on stage, leading that band was really, really special.  

Personal note:  My heartfelt thanks to all of you who wrote to me or talked with me at the PREA and ULI conferences about the upcoming changes in my career announcement that was sent out by my employer, Aviva Investors.  I appreciate all the offers of assistance and support.  I'm having some very interesting conversations about different things but have determined that whatever I do I'm going to be true to myself.  Recently, I've begun to appreciate and understand who I am and what that would mean to what I do going forward.  Conveniently, many of my friends see me in the same way I see myself.  Phew!  Anyway, I will be in my current position until the end of the year.  We are looking for recapitalization deals (fund, joint ventures, etc.).  Please feel free to contact me if you have something which is up that alley.  Thanks.

Photo:  A really interesting thing at the ULI Convention.  "Reimagine Wilshire" by James Rojas.  "An interactive model that invites participants to explore and reshape this Los Angeles street to fit their ideas.  Participants will be provided with a medley of recycled materials ranging from colored (no 'u' yet!) and popsicle sticks and discarded metal and bottle tops.  Using these materials, they will create their ideal urban forms on a plot plan of Wilshire Blvd. that will change and develop throughout the course of this exhibition."  Fun eh?  No, these pieces are not edible!

On the road....
Nov. 2-3:  Washington, DC to attend the Counselors of Real Estate (CRE) annual convention and play once again with the "CREatures of Havoc" band.
Nov. 4-11:  New York
Nov. 9-10:  PERE Forum in New York where I'll be moderating a panel called "LPs: Far from Limited).  My panelists:  Tom Arnold, Abu Dhabi Investment Authority; Steve Hason, APG Asset Management; David Rose, HewittEnnisKnupp and Bill Bowman, former senior portfolio manager for an institutional investment management company.  There is still time to sign up and be there.
Nov. 30-Dec. 2:  Chicago to attend NCREIF's 'Nuts & Bolts of Institutional Real Estate 2.0.'
Dec. 12-16:  New York
Jan. 25:  London to moderate a panel at the annual Reuters Real Estate Conference.

These are my views and not that of my employer. 

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