Friday, March 9, 2012

Feedback on risk & communications; MIPIM 2012

First, some feedback from OTR readers about a couple of things I wrote about in recent weeks: 

Risk:  "One thing I would add to your list is the lack of understanding about risk. Lots of people are talking about risk, but we don't have a good measure and even worse, investors don't have a good understanding of the risks they are exposed to. Some of it is a disclosure issue (which can be easily remedied) and some is a measurement (which we are working on)."

Communications:  "Something a client once told me, 'I can tolerate bad news; I can't tolerate surprising bad news.'  Get in front of of problems, not behind them and treat your clients like adults and speak up about everything, not merely the good news."

Curious as always, yesterday afternoon I had a chance to meander around the giant global real estate expo they call MIPIM held every year around this time and, as sometimes happens, I came upon a couple of stands (aka booths) that really grabbed my attention:

First, nef, a Turkish developer.  Very innovative.  You should watch their video.  Apartments, offices, dormitories are designed with the same underlying theme:  Why pay for space until you need to use it?  So, you have one of their 1+1 apartments (one bedroom/one bath).  They're small and let's say you want to have some friends to watch a movie.  You rent the "Movie Room" for the length of the movie.  Now your band needs a place to rehearse or your kid needs a place to practice the piano, drums, etc.  You rent the "Music Room."  Get the picture.  I love it.  

Second, Agencja Mienia Wojskowego, a Polish government agency, which is selling military installations (and other stuff).  I saw some very cool properties including a great former military barracks site on a river.  The price for that one was $10MM but during the MIPIM show I could have had it for $5MM.  Amongst their catalogue there's also a peninsula which might be a compromise location for the Isle of Steve but that's a story for another day.

The inherent optimism of the global commercial real estate community was powerfully evident at MIPIM.  Models of cities, master-planned communities and projects of huge scale (and dramatic design) were everywhere.  In some ways, if you were blindfolded and then shown the scale models of many of these buildings you would swear you were looking at early plans for what went on in Dubai!  We are deep into this new generation of spectacularly designed buildings, each one grander than the next.  But, while I wouldn't hazard a guess, I did speak with a few folks who brought their scale model to MIPIM hoping to find equity and debt or both and so, a good percentage of these buildings and projects will not get built, or at least not right now, not until there's clear evidence of enough demand for various types of space in different markets around the world that will justify the investment.

18,000 attended MIPIM 2012, that number being a testimonial to the impact that this truly global commercial real estate event continues to have.  A number of universities bring student groups as it's the next generations in our industry who will expand the envelope, or should I say the back of the envelope even further.  I got to see a lot of friends and there was a tremendous energy in the Palais (the primary expo building) and on the yachts, or as one friend called them "vessels", that some firms hire for the week as well as at the invitation-only luncheons and dinners.  I know I've said this before but if you are already playing in the global real estate world and want to build brand recognition or want to explore opportunities, you should plan on attending MIPIM 2013.  

Only one thing was a little disappointing.  Some of you may know Joni Mitchell's song, "They paved paradise and put in a parking lot."  Well, one of the things that I loved about the area around the MIPIM venue is that with all the hoopla, a good sized piece of dirt had long been a boules court (sort of like bocce but different).  Anyway, all through the days, you could see local men (I did see one woman once) playing.  But, while they didn't pave it over, it's now been lined so that cars can park there.  Hopefully it's only during the big expos but it really represented local color and the dichotomy of a simpler time amidst an avalanche of hard-charging real estate people moving at lightening speed to get to the next meeting.

Congratulations to my friend, Lee Menifee, who recently joined American Realty Advisors as Managing Director, Research & Strategy. 

On the road....

March 13-15:  Boston to attend the PREA Spring Conference.
March 26:  Please join me in celebrating the launch of Solutions by Steve Felix at Joe G Restaurant, 244 W. 56th Street (bet. B'way & 8th), downstairs in the DaVinci Hotel.  6-9ish p.m.  I'll provide the Joe G pizza made famous on the David Letterman Show.  You provide the drinks!  Bring your industry friends.
March 26-29:  New York
March 29-30:  Philadelphia, PA to be a judge in the Villanova University Real Estate Case Challenge
April 24-25:  Los Angeles for the PERE Global Investors Forum 2012
May 17-20:  North Palm Beach, FL to attend the annual meeting of The Homer Hoyt Fellows

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