On the Road...Austin & Hedgesville, WV

Today I'm writing to you from The Woods, a resort in Hedgesville, WV where yesterday eight guys, including me, who all grew up in Forest Hills (Queens), NY, are getting together for a reunion with some of us seeing each other for the first time in more than forty years! In this group are three attorneys, a doctor, two PhD's, a retired IBM exec and me (funny that one of the guys said he had gone back to read some of these columns and doesn't for the life of him have any idea what I do). Amongst us we have twenty-two children and also a number of grandchildren. It's very interesting what one person will remember about another person but that person doesn't remember it at all. Dinner last night was our first group get together and I will have much more to write to you about this wonderful experience next week. But suffice it to say that this is very, very special, for all of us and it is going to be one memorable weekend fueled by the memory of memories. It is interesting that different people remember different things about others and that the person they remember something about sometimes has no recollection of it at all. Oh that we could see each other as others see us. (BTW, I am the Head of Real Estate Client Relations-North America for Aviva Investors, the global asset management arm of Aviva pls, the world's fifth largest insurance group. We have +/- $36Bn in real estate assets under management globally including +/-$6Bn in multi-manager and fund of funds strategies).

Real Capital Analytics (RCA) published their July Capital Trends Monthly reports this week. Here are a few morsels to take chew on this weekend:

1. Retail: Many buyers remain on the sidelines until more distressed situations become available. The steep plunge in average prices reflects some market movement but is exacerbated by the dearth of sales needed to set market clearing pricing. This conclusion is also borne out by the most recent Moody’s/REAL Commercial Property Price Index data, which show a year-over-year decline of 18.5% for retail properties nationwide in the first quarter of 2009.

2. Industrial: Buyers continue to add downward pressure to pricing as motivated sellers are becoming more accepting of reduced prices. Average pricing per square foot fell to its lowest level since 2005. The most recent Moody’s/REAL Commercial Property Price Index data showed a decline of 12.3% for industrial properties yoy for Q1’09.

3. Apartment: Virtually all the growth in sales volume in the second quarter was from garden apartments. Financing from Fannie and Freddie is behind at least 50% of all closed deals. There are other—if faint—signs that the apartment market may be waking up as well.

4. Office: The office sector may also be poised for increased trading, as sales in June were up along with deals reported in contract. Included in these pending transactions are some larger deals, which have been rare this year. Significant declines in prices are likely behind this recent burst of activity, but many buyers remain on the side-lines until more distressed situations become available. The steep plunge in average prices last quarter reflects some market movement but is exacerbated by the dearth of significant CBD tower sales. This conclusion is also borne out by the most recent Moody’s/REAL Commercial Property Price Index data, which show a year-over-year decline of 28.7% for office properties nationwide in the first quarter of 2009. The slide was the largest for any property type.

I got a few emails about my comments last week from people who feel that the other shoe is yet to fall in the commercial real estate world. As they are closer to the deals than I, I defer to their judgment as perhaps I've become part of the group who are thinking that positive thinking and actions will bring us through. From reading RCA's full Capital Trends Monthly reports, there seem to be a mixed-bag of signals, none of which appear to be crystal clear about the industry's future.

My flight from JFK to Austin, Texas this week was one to remember. Due to a runway closure we sat for at least an hour waiting to take off. Then, from the minute we took off until the minute we landed the seatbelt sign was illuminated (as they say in airplane talk) and the plane bounced around like an apple in an apple-bobbing tank. I don't mind it but what's amazing is how many people simply ignore the sign and stumble their way back to the restroom (yes, I was seated in the last row). It's just another example to me of people not caring about anyone else (was I interested in this 300 lb guy falling into my lap saying, "Sorry", when the turbulence jolted the plane again? Anyway, we made it and I had forgotten (or never experienced, I can't remember) the feeling of walking into a blast furnace (hmmmm, did I ever actually do that before?) when walking out into the 105 degree F/40.5 C heat of Austin, Texas!

Also, this week stayed at the historic Driskill Hotel, in Austin. Reading the story behind the hotel it seems like a history of Texas in a ways. This hotel has had numerous owners since it's opening in 1886. It's currently owned by Lowe Enterprises and is operated by Destinations Hotels & Resorts. Walking into the lobby is breathtaking and both a throwback to yesteryear (whatever year that is) and a testament to modern historic renovation. The other times I've been to Austin I've stayed at a very funky motel which was converted to a hip place called the San Jose hotel.

Walking around Austin, Texas at night after a great dinner at Truluck's (see below) and hearing a band, we wandered into the back entrance of a club called Antone's. Front and center was an elderly man playing the piano and singing the blues, backed up by what appeared to be the houseband. I asked the sound guy and found that it was Pinetop Perkins, a legendary bluesman who is 95 years old! I had heard of Pinetop but couldn't have picked him out of a lineup. It was great to see him, doing his thing and fronting the band. After a few songs, he left the stage and took up what looked to be a regular alcove near the restrooms and set up his display of CD's (one of which I bought). While inspiring it was also a little sad to see a guy with his reputation and recognition, sitting all alone, smoking cigarettes and selling his own CD's. There was just something sort of unfair about it. But checking his website there are plans for celebrating his 96th birthday and seemingly no plans for retirement. When I was playing in the house band at a club called Cheers in Long Branch, NJ in the early 90's. There was a regular named Dancin' George. He was in his 80's. Came in at least several times a week and loved to dance with the young girls. He was clearly a character in a sea of regulars and we loved him...everyone did. Showing respect and kindness for 'elders' is something that should be ingrained in all of us and sometimes in situations like this I find myself thinking that at some point, many years from now, I'm going to be old and hopefully still being able to stop into a neighborhood club and have the band allow me to sit in for a few songs. I don't see myself being like Dancin' George but then again you never know how time will change things.

Congratulations to my good friend and top-notch real estate journalist Mark Cooper who told me this week that he and a colleague have purchased AsiaProperty magazine and will be launching a website in the very near future. Mark will be relocating from London to Hong Kong. All the best Mark. And in late-breaking news, congrats to Cathy Ebert, Blackrock alum who has joined Emmes Asset Management as MD of Client Relations. Congrats to you too Cathy.

One thought I pulled from a column I read this week. It's about all the technology connectivity tools that are out there:
"Try everything, but stick to what works best for you. Pick a few things every week to try, but don't invest too much time. Just because it's free doesn't mean it doesn't cost you anything. You can't make or buy more time!" I agree with this guy and I guess my trials of Linkedin and Facebook and my decision to stay with just my own address book and my trusty Gmail account are what works for me.

I used to be a regular reader of the NY Times Op-Ed columnist Tom Friedman ("The World Is Flat"and other books) until, for me, his writing became too darn promotional of his latest book. But this week, he wrote a moving piece and I'd like to share it with you in it's entirety.

59 Is the New 30

By THOMAS L. FRIEDMAN

Published: July 28, 2009

Last April I took a break to caddy for the former U.S. Open champion Andy North when he teamed up with Tom Watson to defend their title in the two-man Liberty Mutual Legends of Golf tournament in Savannah, Ga. So it was with more than a casual spectator’s interest that I watched in awe on Armed Forces television from Afghanistan as Watson made his amazing run at winning the British Open at age 59. Watson likes to talk about foreign affairs more than golf. So to let him know just how many people wanted him to win, I e-mailed him before the final round: “Even the Taliban are rooting for you.” Indeed, I have been struck at how many golfers and non-golfers got caught up in Watson’s historic performance — tying for the lead after four rounds at Turnberry, but losing in a playoff to the 36-year-old Stewart Cink. I was not alone in being devastated that Watson was not able to par the last hole and clinch the win. Like millions of others, I shouted at the TV as his ball ran across the 18th green — heading for trouble — “STOP! STOP! STOP!” as if I personally had something at stake. Why was that?

Many reasons. For starters, Watson’s run was freaky unusual — a 59-year-old man who had played his opening two rounds in this tournament with a 16-year-old Italian amateur — was able to best the greatest golfers in the world at least a decade after anyone would have dreamt it possible. Watching this happen actually widened our sense of what any of us is capable of. That is, when Kobe Bryant scores 70 points, we are in awe. When Tiger Woods wins by 15 strokes, we are in awe. But when a man our own age and size whips the world’s best — who are half his age — we identify.

Of course, Watson has unique golfing skills, but if you are a baby boomer you could not help but look at him and say something you would never say about Tiger or Kobe: “He’s my age; he’s my build; he’s my height; and he even had his hip replaced like me. If he can do that, maybe I can do something like that, too.”

Neil Oxman, Watson’s caddy, who is a top Democratic political consultant in his real life, told me: “After Thursday’s round with Tom, when we left the scoring tent I said to him, ‘You know, this is a thing.’ He understood what I meant. On Sunday morning, the two of us were in the corner of the locker room without another human being around, sitting in these two easy chairs facing each other behind a partition. We were chatting about stuff, and I said to him, ‘For a lot of people, what you’re doing is life-affirming.’ I took it from a story about when Betty Comden and Adolph Green — the writers of “Singin’ in the Rain” — showed Leonard Bernstein the famous scene of Gene Kelly. Bernstein said to them, ‘That scene is an affirmation of life.’ What Tom did last week was an affirmation of life.

Also, as Watson himself appreciates, the way he lost the tournament underscored why golf is the sport most like life. He hit two perfect shots on the 18th hole in the final round, and the second one bounced just a little too hard and ran through the green, leaving him a difficult chip back, which he was unable to get up and down. Had his ball stopped a foot shorter, he would have had an easy two-putt and a win.

That’s the point. Baseball, basketball and football are played on flat surfaces designed to give true bounces. Golf is played on an uneven terrain designed to surprise. Good and bad bounces are built into the essence of the game. And the reason golf is so much like life is that the game — like life — is all about how you react to those good and bad bounces. Do you blame your caddy? Do you cheat? Do you throw your clubs? Or do you accept it all with dignity and grace and move on, as Watson always has. Hence the saying: Play one round of golf with someone and you will learn everything you need to know about his character.

Golf is all about individual character. The ball is fixed. No one throws it to you. You initiate the swing, and you alone have to live with the results. There are no teammates to blame or commiserate with. Also, pro golfers, unlike baseball, football or basketball players, have no fixed salaries. They eat what they kill. If they score well, they make money. If they don’t, they don’t make money. I wonder what the average N.B.A. player’s free-throw shooting percentage would be if he had to make free throws to get paid the way golfers have to make three-foot putts?

This wonderful but cruel game never stops testing or teaching you. “The only comment I can make,” Watson told me after, “is one that the immortal Bobby Jones related: ‘One learns from defeat, not from victory.’ I may never have the chance again to beat the kids, but I took one thing from the last hole: hitting both the tee shot and the approach shots exactly the way I meant to wasn’t good enough. ... I had to finish.”

So Tom Watson got a brutal lesson in golf that he’ll never forget, but he gave us all an incredible lesson in possibilities — one we’ll never forget."

Restaurant of the week: Austin, TX-Trulucks. Great seafood. Nice ambiance. Large, diverse wine list offering tastings of more than 100 wines. 400 Colorado, Austin, TX.

On the Road to:
Atlanta, GA
Chicago, IL
Cleveland, OH
Ormond Beach, FL
Portland, OR
San Diego, San Francisco, Sacramento, CA

Photo: Day One-Hedgesville Reunion



These are my personal views and not that of my employer.

on the road....

Have things begun to turn around? I don't know but it sure feels a little like it. People are hiring (as my phone has rung three times in the past two weeks) and it seems like, "People are beginning to poke their heads out of the sand to see what's going on", as my good friend Bob White, Founder of RCA said to me tonight. And all of this bodes well for our industry. Of course, on the other side, is the brutal truth that it's very difficult to raise money for real estate related funds these days. Everyone I've spoken with in North America and Europe has pretty much the same story. And, as you can't get blood from a stone it is a time where patience is required until the institutional investors have sorted through their problems and money to be allocated to real estate has been freed up. But from times like these we all learn things. Some good, some not so good. Some of it about how people behave during difficult times (one of the key things that institutional investors and their consultants are watching carefully)....is your firm doing the right thing? For, no matter how difficult times get, doing the right thing is always, well, the right thing. And when people talk about their reputations, it's times like these when our reputations are either maintained, enhanced or damaged. So, be wise about what you choose to do or not to do as your actions will always speak louder than your words.

I'm getting concerned that we are living through a hugh sea change in communications. My concern is based on several things not the least of which is all the posters I see in the NY subway cars promoting Kindle. This week while looking at one of the posters a got the feeling that Kindle was the future of reading. How long will it take for it to replace real books? 5, 10, 15 years? I think it depends on how long it takes for each generation to get further and further away from books but I am pretty sure it will happen. I can see books being like LP's, rare items, collected by some diehards or memorbilia people looking to sell them at a profit to other collectors. But it's not just books that seem likely to disappear. Daily newspapers are in serious jeopardy right now. I grew up as a New York Times reader because my mother read it. And I do still see some people reading papers in subways, buses, airports and airplances. But I see many more who are not. I see a lot of people staring at the TV monitors in airport waiting areas listening to the constant drivel of talking heads with too much time on their hands to fill. I also see more and more people wearing earphones/headphones and listening to who knows what, mostly music I assume. But it could be podcasts of news or of business related things or just plain entertainment. So I guess what I'm saying is that at some point things we're familiar with will be extinct and I guess it's just an evolutionary thing. But I just wonder if 50 years down the road there won't be a return to the past and a resurgence of the printed book, not just as a novelty, but as something that provides pleasure, not just in what is written, but in the actual holding of the book and looking at them on a bookshelf. It's a warm feeling that I get when I look at my books and I fear that the totally digital age is a much colder one and if I'm right then that's a sad thing.

Tony Lopinto of Eqinox Partners must've been thinking somewhat similar thoughts this week as he wrote this in his blog: "I miss the Cronkite evening news, uncluttered with headlines telegraphing across the bottom and highlight balloons popping-up here and there--not to mention the political bias, which varies depending on which station you are watching. Dissemination of the news, including on the business front, has deteriorated into sound bites, screaming journalists, twitters, Facebook postings, and now, the venerable Wall Street Journal has a sports page. I guess that, now that the Bankers are rolling in big bonuses again, they can focus on yesterday’s golf match."

On Thursday I drive to Hedgesville, WV for a reunion of eight guys that grew up in Forest Hills, NY. Some of us have not seen each other for a really, really long time. Why Hedgesville you ask? Well it met a number of criteria that the survey that were taken by reunion organizer, Mike Goldfischer took. I am really looking forward to catching up with these guys and wearing our reunion golf shirts to the country fair near the place we'll be staying at. Anyway, I'm sure I'll have something to tell you about.


Photo: Franz West's The Ego and the Id at the south entrance to Central Park

on the road....
austin & waco, tx
san diego, san francisco, oakland, sacramento, ca
cleveland, oh and chicago, il
atlanta, ga

Virtually each week I run into someone who tells me they miss this column. That's very sweet but it makes me realize that there may be others who don't know that i've continued to self-publish. So, if you know someone who you think might enjoy this or that used to get it please forward them this which has the infoTo subscribe to this column please go to this link and type your email address in the field provided (http://stevefelix.blogspot.com). Thanks.




These are my personal views and not that of my employer.

on the road

Well, my drive from Montreal to Chicago last weekend was absent any tornadoes (like the one in Kearney, NE last summer) but the torrential downpour west of Toronto was absolutely amazing. I almost pulled over under an underpass but decided to just put my flashers on, slow down and turn the wipers up to ludicrous speed. Isn't Mother Nature amazing. And, before leaving the subject of Toronto (or TO to locals) it took me two hours to drive about 10 miles. Yes it was Friday at 5pm but tell me this: why, after sitting in bumper to bumper traffic, with no accident (causing rubber-necking) or toll in the way, does traffic all of a sudden open up and start moving?

Martin Wolf, chief economics commentator for the Financial Times is a brilliant writer. I say this because he is great at taking complex subjects and synthesizing them into relatively short, understandable yet though provoking paragraphs. Witness this one from this week:

"If the exit into vigorous recovery seems still so uncertain, has the world at least been learning the right lessons for future management of the world economy? I believe not. The financial sector that is emerging from the crisis is even more riddled with moral hazard than the one that went into it. Its fundamental weaknesses are not yet redressed. Questions also remain about the working of the dollar-based international monetary system, the right targets for monetary policy, the management of global capital flows, the vulnerability of emerging economies, demonstrated in central and eastern Europe, and, not least, the financial fragility demonstrated so often and so painfully over the past three decades. However difficult the recovery may be, we must not ignore these questions."

What strikes me most is his comment about us not learning from previous mistakes and, to add my own two cents, it's amazing how quickly we seem to have moved on to other 'news', especially in this country where more and more people are losing jobs, homes and self-esteem. Things are not good yet some Wall Street houses, reportedly, are back to business as usual after taking (and paying back) massive loans from the U.S. Government. I guess it's the difference between the top-down and bottom-up approach to saving a society. The government felt it needed to make sure the banking industry survive (btw, when did investment banking and just plain banking get lumped together?) when I think it's at least equally and maybe more important to help our citizens from the bottom-up. I don't get the sense that that is really going on and I think that regardless of whether the media reports it or not we as a people of the U.S. are suffering. Sure, you can say that we deserve what we've brought on-easy money, tapping into home equity (that's now disappeared for many) and yes, some more discipline would have been smart. But if large corporations, some of which have not been able to run their company properly or profitably for years, deserve help, then so do all Americans.

Tim Riggins, one of the lead characters in the TV show "Friday Night Lights" regularly refers to "Let's make some memories." Now you might think that he only uses this line when he's talking with a "Rally Girl" (cheerleaders assigned to an individual football player to attend to his every need...including homework). But it's more than that and it's got me thinking: isnt' that what life is all about? Making Memories? It's sort of like the marketing book "The Experience Economy." People buy souvenirs to remember good experiences. Some of us probably do the same...whether it be buying a souvenir or taking photos to remember the good times. But what about those experiences where you didn't have a camera: no one did and you want to remember. And all we have is our memory. For me those memories include some of the concerts I've attended over the years (like going to the Fillmore East at the last minute and buying tickets (yes, right at the box office and just before the show) to see 'The Voices of East Harlem', "Fleetwood Mac", the original "King Crimson" and yes, finally, "Joe Cocker and the Grease Band." I had started to document these things and other memories and observations about myself and my growing up in my at some point to be published autobiography, "Driving With Your Knees." But I'm not going to waste any more time in noting those things that I remember now and want to remember and pass along to the next generation, just for historical purposes. We tend to forget things as we grow older and one never knows, given the fragile nature of life, when we simply won't be able to do those things we planned to do....somewhere down the line.

My apologies for last week's column in which (pointed out by two people) the editing in the second section was sloppy.



On the Road
Austin
Dallas
Waco
Cleveland
California
Oregon
Hedgesville, WV: For a reunion of some guys I grew up in Forest Hills, NY and who haven't been together in a long, long time. Talk about memories!


Photo: Sean Felix







These are my personal views and not that of my employer.

On the Road

We are in times of reinventing ourselves and discovering transferable skills. Things are not what they used to be in so many ways and especially service companies in our industry are looking high and low for some way to generate revenue. Some have chosen to open 'workout' shops but I'm not so sure there are that many real real estate workouts in the market yet. More of the 'workouts' involve institutional investors (LP's-Limited Partners) and their GP's (General Partners) whose romance that flourished and grew over the past say 10 years or so has lost it's bloom. The realization that in some cases values need to be written down to Zero (yes with a capital Z) is not easy to stomach but what it is it is and these are not times to be fooling oneself. Discovery of clauses in documents is another wake-up call for investors in commingled funds as during the hey-day, when investors were asked to say 'yes' or 'no' to commiting huge somes of money in the blink of an eye, a lot was overlooked or just deemed 'this will never happen.' But happen it has and as we all know about contracts, from our cable contract to our cell phone contracts, there are penalties for early termination (and other things) and the learning is not easy.

I believe that one of the most important words in the english langue is 'Patience' (with a capital P) and we're going through economic and business times that require a lot of it. Patience is also important in all aspects of our lives and, at least from what i've found, lack of patience not only causes us to make wrong decisions but also don't give things a chance (what about "Give Peace A Chance?) to evolve. As we enter the second (and last) half of 2009 it appears that those who proclaimed that we should just write-off 2009 (way back in 4Q08) may be right. but the write-offs that are involved in making things right again are what have a lot of CIO's awake at night. intuitively we know that things will improve, where the patience comes in is that we don't know just when and it's taking longer than we would like and i'm not so sure that the U.S. government, for all it's good intentions, is keeping it's eye on our problems but is distracted by too many external world problems (how about us focusing our time and resources on our own country for a chance and let the rest of the world fend for itself while we solve some of our huge internal problems). But even in times like these, and perhaps especially in times like these, those entrepreneurs who have the guts to start new things may find success, some in distressed opportunities. Other companies, large and not so large that are looking at the changing landscape and changing with it will also find success albeit in different ways than they originally thought. Clearly, this period that we are living in is a significant era (aren't they all?) and the media doesn't let us forget that 'news' is just that: something new to be pounded on and reported on in an over-the-top way but only for a very short time....until the next new thing happens. The media exhibits no patience and for my money they don't exhibit much character or integrity anymore. But just because they've fallen into an abyss doesn't mean that we have to follow them. We need to think for ourselves and not follow, we need to be leaders and good examples and we need to be patient for there is some peace of mind coming down the road and we don't want to miss it when it pulls up along side us.

one of these weeks i'm going to write a whole column on snipets of conversations i hear while people are on their mobile phones and i happen to be walking by. i don't consider it evesdropping as that connotes standing at a door with a glass to your ear and covertly listening in to a conversation. it still continues to amaze me at how unaware people are about what's going on around them or who might be standing nearby (does anyone really know?) when they're talking loudly on their mobile phones. first of all, perhaps people don't realize how powerfully sensitive the microphone in these phones are and you can, unless there's a huge amount of background noise, speak in fairly quiet tones and still be heard perfectly. so soon i'm going to start noting those little phrases i hear (you know what i mean as you experience the same thing) and just jot them down and write them hear. i think it'll be amusing but also enlightening as one day i'm expecting to hear someone talking about me to someone else or even better get some hot tip about a horse running in the sixth race at saratoga.

restaurant of the week: famous dave's bbq, madison, wisconsin (there are a few other locations as well). old photos, memoribilia hanging all over and, from what my colleauges told me, pretty excellent bbq. btw, here's a trivia question (i found the answer above the urinal at dave's): at the 1911 indianapolis 500, what was the average speed of the winner? multiple choice (courtesy of the series 7 and 63 exams that i recently passed). (a) 75mph, (b) 82mph, (c) 113 mph, (d) none of the above.

i had breakfast this week with an industry friend that i originally me through this column and while i feel like i've met a number of you through this medium (as many of you have told me you feel about me) there are only a small group who i've had a chance to have substantive chats with in person and/or continuing dialogue. but this to me is what has made this column so special. the chance to 'meet' people who may react or respond to something i've written and have taken the time to reach out to me. i feel very fortunate to be able to connect with you each week and look forward to hearing from you from time to time.


Upcoming travels (dates being coordinated as we speak):
Texas
California
Oregon
Missouri
Illinois
Boston
Atlanta




these are my personal views and not that of my employer.

on the road

I had dinner last night with two true real estate professionals. One, an owner of retail properties was telling me that he's decided to forego annual rent increases to show his tenants he's really their partner....a truly commendable, and shrewd decision. While we as real estate professionals watch what's happening to retail sales and tenancies (or vacancies as it were) we're also participating in the challenging times that retailers are having as consumers who have slowed down their consuming. Regardless of what the government wants us to think, this recession is no where near over and the jobless figures are somewhat frightening. It seems to me that after a lot of hoopla about solving this and funding that and helping this group or that that the focus is on other things. But we have problems right here in River City and it's not the pool hall opening this time (See "The Music Man"). With the commercial real estate market behaving like it's been the victim of a stun gun attack, it appears that only time will heal this situation. But how much beats me. If anyone thinks they know, I think they don't.

Serendipity again Thursday night. For some mysterious reason I chose to take a different path through Central Park while walking home from work. What I came upon was very special. An unprecedented event featuring the 16-piece Duke Ellington Big Band and 14 grand pianos on the Great Mall. According to Edward Kennedy (Duke) Ellington II, grandson of the famous composer, "Nothing like this has ever been done in Central Park before." I love when stuff like this happens but then again I don't believe anything happens by chance.

I don't tweet or IM. They're just too slow for me. It's amazing how fast we've become so, well, fast with our communication. The need for virtual instant communication gratification is so much a part of our lives that I can't imagine where it'll be by the third of November or by the time my grandson starts talking. Although, right now, he's the star of screaming video which is just his way of telling his parents what he needs. When cavemen were around (or at least in Mel Brooks mind) they spoke in sounds: Duh, Huh, MMMM, Grrrrr. But it must've worked (although we don't really know how much miscommunication occurred). I mention miscommunication because how many times have you miscommunicated with someone even via the slow and lengtht, soon disappearing medium of email? It happens all the time which is why, thankfully, we haven't totally abandoned the phone (not for texting but for talking to each other). But what I'm waiting for, and I don't think it will be 'long time comin', is one letter communication. The extent of mine is 'k' when I'm replying to something and don't have the time to key-out 'okay' as I may be walking my dog, drinking my coffee, wheeling my baby carriage, putting on my makeup, jogging, etc. Multi-tasking has never had a better friend than the cellphone or PDA (is it still called that or am I really behind the times). But think about how much time we can save by using just one letter to communicate. And, what will the next stage be? I perish to think about it. BBFN.

Still a lot of people movement being announced throughout the industry and around the globe. My friend Simon Mallinson told me he is joining INVESCO as their Head of European Research. Congrats Simon.

On the Road:
Montreal: July 9
Chicago: July 6-8
Texas: July 27-28
Chicago: July 10-14
Dates TBD
Boston
Atlanta
America's Heartland
California
Oregon


Photo: Berlin Cathedral (Courtesy Jon W.)






These are my personal views and not that of my employer

On the Road

“ If we want things to stay as they are, things will have to change. D'you understand?”* Since I got my first Roget's Thesaurus when I was about 14, I’ve always loved quotes. I still have that edition on my bookshelf and it still has the quotes that I underlined way back then that meant something to me. But thanks to my friend Ted Leary, I was introduced to a new quote this week and decided, just for the heck of it, to Google it (maybe that is the single most life-changing phrase of our times). What I found is how many different ways people used that quote, from talking about the current economic situation and it’s (hopefully) resolution, to a change management consulting firm to a law firm (leave it to the lawyers to find a way to turn everything towards them). But Ted pulled the quote from a piece last week by economist Martin Wolf who also said, “Reform of regulation has to start by altering incentives.” Well, maybe because so many people have time on their hands these days hoping that things will change and not stay the same, there’s a lot of noise about altering incentives. But isn’t working for incentives part of a free-economy and, excuse me the rest of the world, isn’t entrepreneurship and taking risks what America was built on? While I lost interest in professional sports when the players started making a lot of money and started showing loyalty to money rather than their teams and fans, I have, at this stage of my life, decided that if someone can make a lot of money, they should be allowed to, no mater what field it’s in. Unless, of course, it's made illegally or unethically. I think the U.S. government is attacking the wrong culprits. Where we need attention is in oversight and compliance, that’s where the system failed and that, to me, is at the root of what has to change. We can’t rely on people having a conscious when it comes to making money (hmmmm: are ethics and conscious the same thing?). Sure, how many meals can you eat in one day and how many suits or pairs of shoes do you need in your closet. But what we need to do focus on fixing the system to prevent abuses from happening. And, from what I see, abuses continue to happen where some of those who were involved with causing problems are now making money in solving those problems. In that there seems to be something really wrong. Are we doomed to continue to go around in circles?

RCA (Real Capital Analytics) June Capital Trends Reports were published today. I offer you a few choice morsels:

1. Apartments: Some encouraging signs include some larger deals now in contract, the emergence of new buyers and the return of some investors after a year or more on the sidelines.
2. Industrial: Drop in transactions is on par with other property types but defaults and foreclosures in the have been relatively mild so far compared to other property types.
3. Retail: Sales volume languish and the inventory of properties for sale swells and defaults and foreclosures proliferate.
4. Office: Some signs that investment trends are stabilizing. Although they are not improving on an absolute basis, the pace of decline is slowing.

I feel that it's a given that the industry considers RCA to have the best monitor of the pulse of the industry so these comments should make us feel both somewhat optimistic but also decidedly realistic. And while it's not a 'stand up and cheer' comment, based on what we've been through already, hearing that the 'pace of decline is slowing' in some property sectors, well, that's a good sign isn't it?

Riding in the subway this morning I saw an ad for a cellular phone service offering a deal at 99 cents per day. But then I thought: hmmmm, that’s like $365 per year (which could still be a great deal but seemed like a lot of money to me). But the point is in how things are presented. This phone company just wanted to get people to consider changing. Just like all the fast food companies throw unbelievable bargains out to us from time to time: they just want us to change, to change our habits. So I got to daydreaming (after all it is a summer Friday) and thought about how that might correlate into our industry. Most service businesses employ the same strategy: give us a chance to prove ourselves and we think you'll use us. But in my experience, while things often look greener on the other side of the fence, you generally don’t get something better when you change-you may get something equal or even worse. Surveys indicate that institutional investors, more focused inwardly these days in resolving their own portfolio issues, have been reducing the number of managers that they do business with for a variety of reasons. Of course, some of these relate to lack of performance and perhaps some relate to the loss of key individuals (once the promotes evaporated) that were managing their account. But to me, there is opportunity in the air; the opportunity to build relationships now that will lead to new business when things open up again. I’m not saying that things will stay as they are (or were) but the change that our industry is experiencing now will get us to another place where we’d like them to stay as they are. Still no one knows how long that’ll take although it seems like a lot of folks are hoping it’s after we come back from ‘summer vacation.' And while change always brings certain challenges with it, being stuck in the world of ‘same’ may not be totally unchallenging itself .

The amazing photo above is one taken by my friend Sam from Toronto. He and his family visited Iceland recently and sent me some pix they took. At first, I thought they were Adobe Photoshopped. But no! These are real and amazing and makes me want to visit that country and experience the beauty and the wide open spaces.

*From Giuseppe di Lampedusa's The Leopard






These are my personal views and not that of my employer.

On the Road with Steve Felix

A lot of us are not in our comfort zone anymore. Things have changed. We've changed and are changing. But that doesn't mean we like it. Things used to be more fun. Now we're dealing with all kinds of stuff. By now, I don't think there's anyone I know that hasn't accepted things as they are. I don't hear people talking like they were a year ago about 'when things get back to normal.' This is what normal looks like right now people. When you're in the business of building a business, all gung-ho, you sort of expect everyone to be excited about what you're doing. And, while what you're doing may be new and interesting and worthwhile and timely, when others are busy dealing with their own stuff, when they too are out of their comfort zone, well, things don't move as quickly as one would like. It takes longer to arrange meetings and get phone calls and emails returned. And, that seems to be today's challenge. Looking at the world and realizing that things will take time, that we have to have patience and that we have to look for ways to both reinvent ourselves in some cases or reinvent how we approach things. Old techniques of doing business may not work anymore and that too takes us out of our comfort zone. In the good old days (like up until mid-2007) some of the fun was going out for business lunches and arguing who was going to pick up the tab and charge it to their expense account. I don't know about you but not only have the lunches become fewer and farther between but when I do go out there's more 'dutch treat' and going to diners rather than for sushi. But that's the way it is. There are all kinds of cliches to describe where we are and they're those philosophical statements that we sometimes turn to in difficult times that give us the hope and strength to carry on and the belief that things will get better. But when someone is going through a really tough time and while we are trying to help that person with some of our positive thinking philosophy, the person who is struggling simply can't see the light at the end of the tunnel. It's called depression and those who have never experienced it have no idea what it's like. But there are milder forms of depression and being taken out of ones' comfort zone is a symptom of that feeling.

There are some who are saying that we've hit the bottom and that things are picking up in the commercial real estate industry. I am not one of them. I don't believe we've hit bottom although there are several types of bottom to be hit. The transaction world, the foundation of our business, still seems dead in the water. The proliferation of workout and restructuring practices within law firms, accounting/consulting firms and simply independent start-ups is somewhat staggering. I don't hear or see enough work for all these folks right now and in some cases I wonder if the level of experience is even there to deal with these situations or are some planning on learning on 'my dime'? However, with the federal government looking like it wants to be the partner of choice (or no choice as it were) for banks and businesses, reading their announcements virtually every day addressing something different and seemingly making things up as they go along, well, I think we're still in for a long haul.

I visited my new grandson last weekend. I had forgotten how tiny and perfect the teensy hands and feet are and how simple a newborn's life is. Get a little fussy and you get fed, or have your diaper changed or get burped or just walked around. Then serious napping during the day is not only acceptable but expected. And the magic of having that little baby open it's eyes when you're holding it, and look at you, no matter how much or how little they can actually focus on, is an experience that is to precious for words.

The following is a Commencement Address given by Paul Hawken at the University of Portland which was forwarded to me by an old college friend. I found it very moving and hope you do too.

The unforgettable Commencement Address 2009.

By Paul Hawken

When I was invited to give this speech, I was asked if I could give a simple short talk that was “direct, naked, taut, honest, passionate, lean, shivering, startling, and graceful.” No pressure there.

Let’s begin with the startling part. Class of 2009: you are going to have to figure out what it means to be a human being on earth at a time when every living system is declining, and the rate of decline is accelerating. Kind of a mind-boggling situation... but not one peer-reviewed paper published in the last thirty years can refute that statement. Basically, civilization needs a new operating system, you are the programmers, and we need it within a few decades.

This planet came with a set of instructions, but we seem to have misplaced them. Important rules like don’t poison the water, soil, or air, don’t let the earth get overcrowded, and don’t touch the thermostat have been broken. Buckminster Fuller said that spaceship earth was so ingeniously designed that no one has a clue that we are on one, flying through the universe at a million miles per hour, with no need for seatbelts, lots of room in coach, and really good food—but all that is changing.

There is invisible writing on the back of the diploma you will receive, and in case you didn’t bring lemon juice to decode it, I can tell you what it says: You are Brilliant, and the Earth is Hiring. The earth couldn’t afford to send recruiters or limos to your school. It sent you rain, sunsets, ripe cherries, night blooming jasmine, and that unbelievably cute person you are dating. Take the hint. And here’s the deal: Forget that this task of planet-saving is not possible in the time required. Don’t be put off by people who know what is not possible. Do what needs to be done, and check to see if it was impossible only after you are done.

When asked if I am pessimistic or optimistic about the future, my answer is always the same: If you look at the science about what is happening on earth and aren’t pessimistic, you don’t understand the data. But if you meet the people who are working to restore this earth and the lives of the poor, and you aren’t optimistic, you haven’t got a pulse. What I see everywhere in the world are ordinary people willing to confront despair, power, and incalculable odds in order to restore some semblance of grace, justice, and beauty to this world. The poet Adrienne Rich wrote, “So much has been destroyed I have cast my lot with those who, age after age, perversely, with no extraordinary power, reconstitute the world.” There could be no better description. Humanity is coalescing. It is reconstituting the world, and the action is taking place in schoolrooms, farms, jungles, villages, campuses, companies, refuge camps, deserts, fisheries, and slums.

You join a multitude of caring people. No one knows how many groups and organizations are working on the most salient issues of our day: climate change, poverty, deforestation, peace, water, hunger, conservation, human rights, and more. This is the largest movement the world has ever seen. Rather than control, it seeks connection. Rather than dominance, it strives to disperse concentrations of power. Like Mercy Corps, it works behind the scenes and gets the job done. Large as it is, no one knows the true size of this movement. It provides hope, support, and meaning to billions of people in the world. Its clout resides in idea, not in force. It is made up of teachers, children, peasants, businesspeople, rappers, organic farmers, nuns, artists, government workers, fisherfolk, engineers, students, incorrigible writers, weeping Muslims, concerned mothers, poets, doctors without borders, grieving Christians, street musicians, the President of the United States of America, and as the writer David James Duncan would say, the Creator, the One who loves us all in such a huge way.

There is a rabbinical teaching that says if the world is ending and the Messiah arrives, first plant a tree, and then see if the story is true. Inspiration is not garnered from the litanies of what may befall us; it resides in humanity’s willingness to restore, redress, reform, rebuild, recover, reimagine, and reconsider. “One day you finally knew what you had to do, and began, though the voices around you kept shouting their bad advice,” is Mary Oliver’s description of moving away from the profane toward a deep sense of connectedness to the living world.

Millions of people are working on behalf of strangers, even if the evening news is usually about the death of strangers. This kindness of strangers has religious, even mythic origins, and very specific eighteenth-century roots. Abolitionists were the first people to create a national and global movement to defend the rights of those they did not know. Until that time, no group had filed a grievance except on behalf of itself. The founders of this movement were largely unknown — Granville Clark, Thomas Clarkson, Josiah Wedgwood — and their goal was ridiculous on the face of it: at that time three out of four people in the world were enslaved. Enslaving each other was what human beings had done for ages. And the abolitionist movement was greeted with incredulity. Conservative spokesmen ridiculed the abolitionists as liberals, progressives, do-gooders, meddlers, and activists. They were told they would ruin the economy and drive England into poverty. But for the first time in history a group of people organized themselves to help people they would never know, from whom they would never receive direct or indirect benefit. And today tens of millions of people do this every day. It is called the world of non-profits, civil society, schools, social entrepreneurship, non-governmental organizations, and companies who place social and environmental justice at the top of their strategic goals. The scope and scale of this effort is unparalleled in history.

The living world is not “out there” somewhere, but in your heart. What do we know about life? In the words of biologist Janine Benyus, life creates the conditions that are conducive to life. I can think of no better motto for a future economy. We have tens of thousands of abandoned homes without people and tens of thousands of abandoned people without homes. We have failed bankers advising failed regulators on how to save failed assets. We are the only species on the planet without full employment. Brilliant. We have an economy that tells us that it is cheaper to destroy earth in real time rather than renew, restore, and sustain it. You can print money to bail out a bank but you can’t print life to bail out a planet. At present we are stealing the future, selling it in the present, and calling it gross domestic product. We can just as easily have an economy that is based on healing the future instead of stealing it. We can either create assets for the future or take the assets of the future. One is called restoration and the other exploitation. And whenever we exploit the earth we exploit people and cause untold suffering. Working for the earth is not a way to get rich, it is a way to be rich.

The first living cell came into being nearly 40 million centuries ago, and its direct descendants are in all of our bloodstreams. Literally you are breathing molecules this very second that were inhaled by Moses, Mother Teresa, and Bono. We are vastly interconnected. Our fates are inseparable. We are here because the dream of every cell is to become two cells. And dreams come true. In each of you are one quadrillion cells, 90 percent of which are not human cells. Your body is a community, and without those other microorganisms you would perish in hours. Each human cell has 400 billion molecules conducting millions of processes between trillions of atoms. The total cellular activity in one human body is staggering: one septillion actions at any one moment, a one with twenty-four zeros after it. In a millisecond, our body has undergone ten times more processes than there are stars in the universe, which is exactly what Charles Darwin foretold when he said science would discover that each living creature was a “little universe, formed of a host of self-propagating organisms, inconceivably minute and as numerous as the stars of heaven.”

So I have two questions for you all: First, can you feel your body? Stop for a moment. Feel your body. One septillion activities going on simultaneously, and your body does this so well you are free to ignore it, and wonder instead when this speech will end. You can feel it. It is called life. This is who you are. Second question: who is in charge of your body? Who is managing those molecules? Hopefully not a political party. Life is creating the conditions that are conducive to life inside you, just as in all of nature. Our innate nature is to create the conditions that are conducive to life. What I want you to imagine is that collectively humanity is evincing a deep innate wisdom in coming together to heal the wounds and insults of the past.

Ralph Waldo Emerson once asked what we would do if the stars only came out once every thousand years. No one would sleep that night, of course. The world would create new religions overnight. We would be ecstatic, delirious, made rapturous by the glory of God. Instead, the stars come out every night and we watch television.

This extraordinary time when we are globally aware of each other and the multiple dangers that threaten civilization has never happened, not in a thousand years, not in ten thousand years. Each of us is as complex and beautiful as all the stars in the universe. We have done great things and we have gone way off course in terms of honoring creation. You are graduating to the most amazing, stupefying challenge ever bequested to any generation. The generations before you failed. They didn’t stay up all night. They got distracted and lost sight of the fact that life is a miracle every moment of your existence. Nature beckons you to be on her side. You couldn’t ask for a better boss. The most unrealistic person in the world is the cynic, not the dreamer. Hope only makes sense when it doesn’t make sense to be hopeful. This is your century. Take it and run as if your life depends on it.