Friday, January 20, 2012

2012: The Year of Caution? The Corner Office. Apple's Obsession

Resigned is not a particularly positive word.  The thesaurus suggests submissive, reconciled, accepting, stoic, long-suffering, prepared to accept.  Well, some of these are even less appetizing.  But resigned is the word that came to my mind this week about the state of things in the commercial real estate industry (perhaps throughout the business community in general).  While we were all waiting for things to revert to normal, the normal that we wanted it to be, it hasn't.  It's been a while now and I believe we've all accepted that we may not see a time like the last 'normal' for a long, long time.  But what's interesting to me is that there are groups, not long-time real estate investors but rather private equity firms, hedge funds, etc. who have seen the light and see that there is opportunity in that there real estate business.  And, they've started building real estate investment groups within their companies.  They're hiring top talent and throwing dollars at, hopefully, doing it right.  Some, perhaps most, of the money these firms manage is not institutional in nature and yet, some of it is.  And, at a time when many investors are staying close to those managers with whom they've had a good relationship with and who have proven trustworthy and putting new money out with them, either in the form of a separate account or a joint-venture or a club deal, there are some investment fiduciaries who have been successful in raising good-sized commingled funds.  That's what makes this time in the history of our industry so fascinating to me.  We are living through change and it's not a change that has been thrust upon us by an alien force, it's an organic change that develops based on the fact that any company that launches a new product or service either has to fill a need or solve a problem.  And if you can bring that to the table, whether you are an investment manager, a manufacturer or a consultant or any kind of service provider, there is business to be done.

A weekly column called "The Corner Office" interviews executives and asks them a few questions.  I thought this one was pretty good:  "If you could ask someone only two or three questions to decide whether you would hire that person, what would those questions be? (1) What idea is driving you right now? (2) What’s on your mind about any aspect of life that you’re really excited about? (3) Tell me about that."

CBRE published its' The Global View 2012 this week.  Here are the bullets from their executive summary:

  • Macro-economic and political landscape uncertainty across the world suggests that a cautious outlook in local property markets is likely to persist into 2012.  While 2011 is in the past, many of its challenges continue.
  • Corporate occupiers in 2012 will continue to exercise caution in their decisions, and demand for space will remain moderate.
  • Investors in Europe and the United States will therefore tend to adopt more defensive strategies, focusing on high-quality buildings in prime locations within the most liquid and transparent markets.
  • Asia has not decoupled:  Occupiers and investors are becoming more cautious in many markets across Asia due to slowing economic growth in China and concerns about the global impact of the economic slowdown in Europe and sluggish growth in the U.S.
  • High-quality real estate assets in prime locations should continue to perform well compared to secondary real estate and very competitively with regard to other asset classes.  From an investment point of view, secondary property will continue to underperform.
  • A lack of new construction in many markets globally will boost the performance of existing prime properties.

In line with my first paragraph, note these words sprinkled about in their executive summary:  uncertainty, cautious, caution, defensive strategies, cautious.  It appears that we may be resigned to accept that 2012 will be The Year of Caution.  But, it sure sounds to me like there is opportunity out there, ready to be mined.

I've only had a few of my friends become published authors.  The latest, a long-time friend and the drummer in the first real band I played in,  Ken Segall's.  His book, Insanely Simple:  The Obsession That Drives Apples' Success will be released on April 26th.   While not suggesting that you do it, I've pre-ordered it for my Kindle.  Ken is a veteran advertising guy on the creative side.  He has been behind some of the most recognizable advertising campaigns over the past 30 years including some of Apple's major ads and branding stuff.  He's a brilliant guy and pretty funny as well.  I am sure this will be a good read and not just for core Apple fanatics. 

On the road...

Jan. 23-25:  London to attend the INREV Winter UK Seminar 2012 and the Thompson Reuters Global Property Outlook 2012 
Jan. 30-Feb. 1:  Scottsdale, AZ to attend IREI's VIP Conference
Feb. 6-7:  New York
Feb. 8:  Baltimore, MD to speak with students in the Accelerated Masters of Science Real Estate Program as Johns Hopkins Carey Business School about careers in commercial real estate.
Feb. 9-10:  New York
Feb. 23-24:  Chapel Hill, NC to attend the University of North Carolina Keenan-Flagler Real Estate Conference and be a judge at their real estate case competition.
Feb. 25-26:  Asheville, NC
Feb. 27-29:  Scottsdale, AZ to attend the NCREIF (National Council of Real Estate Investment Fiduciaries) Winter Conference
March 29-30:  Philadelphia to be a judge at the Villanova University Real Estate Case Challenge
April 22-25:  Chicago to attend the CRE Mid-Year Meetings
April 25-27:  Vienna, Austria to attend the INREV Annual Meeting
May 17-20:  North Palm Beach, FL to attend the Hoyt Fellows/Weimer School Annual Meeting

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