Tuesday, June 30, 2009

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

Friday, June 26, 2009

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.

Friday, June 19, 2009

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.

Thursday, June 11, 2009

On the Road with Steve Felix

Used to be that when real estate people got together they were talking about deals being done and the occasional “Remember that deal we did together in 1982?” But now it’s about deals yet to come, opportunities anticipated and capital markets open for business. No matter who I talk to, and I’m certain it’s the same with you, people are just not sure what’s going to happen and when. Many feel that the big stress in commercial real estate industry has not yet surfaced but maybe, in the U.S. anyway, our government will realize that they have the capability, nay the obligation, to stick their noses into our sector and force the use of some tools that will prevent a different kind of debacle than we saw in the RTC days. If the government can doll out gazillions of dollars to guys in Detroit who have been building crappy cars, paying $65/hour and wallowing in self despair, how about us who have been caught in both a credit crunch and a vast economic downturn that is eroding rental income and occupancies (not to mention buying and selling of building). Don’t we deserve a break?

RCA’s Global Capital Trends Report, released today offers this overview of the industry:

GLOBAL SALES HIT BOTTOM: No Rebound, but Little Room Left to Fall
“Global transaction volume continues at a remarkably sluggish rate—and that is good news. Although Q2’09 sales are now estimated at $48.6 b worldwide, a 67 % year-over-year drop, the decline from Q1 volume could be as little as 5%, indicating a plateau has been reached, although there is no recovery in sight. Quarterly volume projected for the Americas is almost negligible at $8 b, a 6% consecutive drop but an 83 % fall yoy. EMEA is likely to take the most dramatic hit from the first quarter, down 24 % at $17.3 b and 71 % yoy. But with Australia, Japan and China beginning to stabilize, Asia Pacific sales are expected to be positive with an 18 % gain on the prior quarter at $23.3 b. That’s nearly half of estimated global volume and marks Asia Pacific’s first quarterly lead in sales worldwide—even as the Americas accounted for just one-sixth of that volume.”

This is pretty sobering stuff for the commercial real estate world and while RCA’s information is “spot on”, as my London colleagues say, a lot of what is going on is behind the scenes, in the offices of investment managers and pension funds, endowments and foundations who have moved into M.O.’s that may have never before been required. And, it’s the results of those evaluations, discussions, debates and decisions that will result in some of the opportunities that, well, opportunisitic investors are looking for. But from what I hear, there’s still a ways to go and that doesn’t even begin to address the availability of a capital.

And here are a few takeaways from the PERE Forum/Europe:
There are reasons to be cheerful: Citi’s Roger Orf said property is bombed out, investors are “shell shocked” and times like these can ”try one’s soul”, but he also pointed to some “silver linings”.
Green shoots in the capital markets: Some capital market events in the UK are helping confidence to grow.
LPs need to be leaders too: It is easy to bash GPs at the moment, but LPs should shoulder some responsibility to be more pro-active in these difficult times.


Well, this was a pretty big week for me. I became a grandfather for the first time on Wednesday when my grandson was born. It’s an unbelievable feeling: Ob-la-di, Ob-la-da life goes on! I also had two other really good things happen and was reminded that they come in threes. And so they did.

Thanks to the law firm Greenberg Traurig who invited me to their reception at the Rockefeller Center Café (down on the skating rink level). They had a great turnout of both members of their firm and lots of commercial real estate people from around the country talking to each other about how difficult things are. But I got introduced to someone who has been reading this column and has enjoyed it and that kind of stuff means a lot to me.

Restaurant of the week: Tia Pol, 205 10th Ave (bet. 22 & 23rd streets), NY. (212) 675-8805. It's a noisy but very cool tapas place with really great dishes. If you make a reservation you'll sit at a communal table. If you go on the early side, you'll get a seat at the bar or one of the tables.

Photo:
Prometheus Fountain, Plaza, Rockefeller Center




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




Friday, June 5, 2009

On the Road-Not in the Air

A lot of us are in airplanes on a regular basis. I don’t know about you but I’ve been particularly disturbed about the news that has come out about both the Colgan Air flight that crashed near Buffalo and the Air France jumbo jet that disappeared this week. If I take what I’ve read at simply face value, the Buffalo crash was a combination of total and complete pilot incompetence and an airline who had been permitted to violate myriad rules about training and pilot behavior. While the Air France situation is brand new, the warning from AirBus yesterday was very politically unacceptable. To send out a warning, obviously prompted by their lawyers, to all owners of that model about things they should be aware of that could cause the plane to evaporate during a storm seems to point the finger right at them. If they knew about these malfunctions that indicate the planes speed why wasn’t more of a big deal made out of it before this plane evaporated into thin air? Given the amount of scrutiny and compliance that is being looked at and thrust upon the financial services industry, which, when you get down to it is dealing with people’s money and not life and death (except for those to whom money=life) wouldn’t you think there’d be a lot more of this anticipatory oversight going on in an industry where a blatant mistake causes actual death? It worries me and for now, I’m happy not to be getting on any long haul flights for a while.

One of the few email columns that I subscribe to is called “All About Presentation.” As someone who as acted as sort of a presentation counsultant himself, I like this column, probably because it mirrors a lot of the advice that I not only have given others but that I strive to remember for myself. Here is one from this week:

“So when it comes to crafting presentations or communication pieces for an external audience, consider hiring a writer or editor -- if for no other reason than to have an outside set of ears and eyes experience the communication piece. You won't believe the alphabet soup I've often encountered in external marketing presentations. It often slips by, unnoticed to ears that have grown tone-deaf to the buzz of interdepartmental acronyms. For a fun little exercise, open up any one of your recent corporate or organizational PowerPoint presentations. Do an acronym count -- it's quite likely that you'll find at least one. And before you think, "Yeah, but everyone knows THAT acronym..." please think about how little work it might take to change it. You can make yourself more clear by actually speaking the words -- instead of chanting the letters that represent the words. This one simple act may keep your suspects -- er, prospects -- from running away!”

And while I’m on the subject of things that I subscribe to (not that anyone asked me) there’s a good daily news blast that comes out from REP in The Netherlands. You can sign up for it on their website (http://www.europe-re.com).

PEI (Private Equity International) who among other things publish Private Equity Real Estate magazine and sponsor excellent conferences were kind enough to send me a complimentary copy of their 2009 LP Survey the results of which came from their robust database of LP’s called PERE Connect. Some bullet points I pulled out for you:

• 65% said that their approach to real estate investing will remain relatively unchanged. (GOOD NEWS)

• 26% said they are likely to increase their participation in commingled limited partnerships while only 6% said their increase will be in separate accounts.

• Over the next 3-4 years the most attractive real estate investments will be in:
1. North America
2. UK/Europe
3. Asia, ex Japan

• With regard to fund investing, which term will be the most difficult to negotiate?
o Distribution Waterfall/Clawbacks
o GP commitment to the fund

• Overall, how have GP’s communicated with you during the economic crisis?
o Good enough
o Average
o (Poorly and Very Well were both considerably lower on the spectrum)

• What would your one biggest criticism of GP’s be in the wake of the crisis?
o Paid too much for properties
o Used too much leverage

• I am considering pursuing a secondary transaction to get liquidity for one of my real estate partnership interests:
o No: 84%

• I am considering buying a real estate partnership interest on the secondaries market?
o No: 68%

Surveys are good things. But one has to remember that they are don’t at a point in time and may become dated quickly. For example, there are many who believe the secondary market will become more and more vibrant as time goes on. Given the speed with which the world and our industry is changing it may be interesting for someone to start using a “Survey Monkey” type thing to get ‘real-time’ replies to a small group of question as LP’s (and GP’s) deal with continually evolving issues.

Oh, one more thing the PERE Connect survey asked (I’ve chosen to list the reasons rather than the firm names):
• What do you admire about one particular GP group?
o Good communication
o Extensive underwriting and strategic thinking
o Doing the right things
o The people and their experience
o Low management fees and sustained high performance
o Generating competitive returns with low leverage
o Disciplined consistent approach to real estate investing
o Straightforward
o Straightforward

So, with this I believe I have shared with you the things that many LP’s find most important to them and as the competition for fewer institutional dollars heats up it seems easy to make sure that your firm things you are employing these characteristics (unless you are already…but the proof is always in the eye of the beholder isn’t it?).

There was an interesting piece in the NY Times this week. Allison Arieff, who writes the 'By Design' column for the New York Times was brought to the recent ICSC convention as a juror for the organization’s inaugural Future Image Architecture Competition, which asked entrants to imagine the shopping mall of the future. “My expectations for the entries were high — and probably too preconceived. This seems like a watershed moment for malls, much as it does for housing. Surely, I thought, the entries will reflect the extent to which business as usual — i.e., massive anchor retail tenants surrounded by thousands (even millions) of square feet of specialized yet mass retail, in settings only accessible by car — cannot possibly continue. Despite near-non-existent consumer spending, the declining popularity of shopping as America’s favorite pastime and the chilling effect foreclosed homes in housing developments are surely having on nearby malls, most entries in the ICSC competition responded less to the future of the shopping mall than to the glory days to which we’ve recently bid adieu. I was struck by how little attention entrants paid to things like sustainable architecture, alternative transit or changing consumer attitudes about consumption. Architectural visions tended toward iconic futurist forms — domes or similarly curvy buildings that felt right in line with World’s Fairs past. Distressing to think that in 2059, we’ll finally get to live as the Jetsons did back in 1962.”

It’s poignant to see how many groups are holding ‘Career Counseling’ programs. Yes, there are some techniques for finding a job. Goodness knows in my life I’ve employed them. But no matter what what you do or how diligent you do it it’s very, very difficult to find a job when there aren’t any. One of the things that I learned along the way, and this may be one of the most important things anyone looking for a job can do right now, is to assess your ‘transferable skills.’ Break down who you are by skills rather than by accomplishments or job titles. I guarantee you that by doing that your world of possible paths to your next job will be dramatically increased and it may lead you to another industry completely.

Last item. Former Wall Street donut darling Krispy Kreme has announced that they will be opening a new type of store going forward which will be a "smaller, more compact retail concept.” I am assuming that these smaller stores will be selling smaller donuts. This sounds like a good idea to me given the number of really overweight people there are in the U.S. today ( I can stand to lose about 20 pounds myself). But ain’t it amazing at how good old Dunkin’ Donuts is increasing their market share? Do you think it’s only because their cheaper than Starbucks? I think there’s a lot more to it than that.




These are my views and not that of my employer.

Friday, May 29, 2009

On the Road-Upper West Side

I got an email from my alma mater, Fairleigh Dickinson University mentioning that the 2009 graduation took place a couple of weeks ago (and also asking me for money). It made me think back to my college graduation. Sadly, I didn’t take the education part of college seriously enough but was involved in a bunch of extra-curricular activities: school newspaper, baseball and basketball teams, playing in a band. Our graduation was held outside on the campus. The music was provided by the first steel drum band I’d ever heard and kept looking to see where the organ was until I realized that it was all coming from the drums. So we are sitting in our respective colleges (mine was the school of business). At that time I had very long hair and a full beard. I’ve always worn sport jackets with jeans and that was my outfit that day (under the cap and gown). I’m sitting amongst a group of clean-cut business majors, not one of whom I knew. As the processional came down the aisle (I was sitting three seats in) the school president, J. Osborne Fuller, who was leading it, saw me and said “Congratulations Steve.” Well, you should have seen and felt the stares and looks of amazement that came from those guys around me. “How does this hippie know Dr. Fuller?” Well, I guess even back then I was involved in human relations, communications (and to some degree public relations). With all the scrutiny today public relations (and in some cases damage/crisis control) is becoming more of a valued art than ever. And all of us who are in client relations need to be on top of things and on our toes continually. But the communications challenge isn’t just with our clients or third-parties. It’s a huge part of working in a company environment. Big or small, intra-company communication is also an art which some have mastered and some have not. I put myself in the second category although I am trying. And, it requires me adapting to others and not feeling that the way I communicate (very openly) is the way others are going to do it. In fact, I have found over the years that some colleagues feel threatened by my openness, honesty and desire to be helpful. But when communication becomes a political tool it is not only dangerous but also creates negative energy and wastes time. There’s a lot of talk about ‘open lines of communication’ but there’s not as much action as there are words. And, when someone who promotes themselves and even trains others on the art of communicating can’t do it themselves, well, you’ve got a real problem; one that sets the tone in an organization and can be its undoing. But communication and trust go hand in hand and if we don’t start trusting each other to speak without forked-tongue or out of both sides of our mouths and just to do the right thing and do what we say we're going to do it’ll be even more difficult to make it through these challenging times.


I grabbed this off a website of Erika Anderson who is an author of Growing Great Employees and Being Strategic:

Here's some stuff that people are doing that seems smart and useful:

  • using their best minds to explore alternative revenue streams and approaches to distribution and marketing,
  • focusing on serving customers better than ever (and in ways their competition isn't),
  • communicating consistently and honestly with their employees about what's happening and what the company is doing about it,
  • setting clearer performance standards and figuring out how to hold people accountable to them,
  • letting go of marginal performers,
  • hiring newly available 'rock stars' to fill key open positions,
  • agreeing on those efforts most essential to growth and directing resources toward them,
  • using any available resources to take advantage of market opportunities created by others' failures (as long as those market opportunities lie squarely in their core competencies).


Book of the week: The Genius Machine: The Eleven Steps That Turn Raw Ideas into Brilliance by Gerald Sindell . I have not read it yet (just ordered it) but I know Jerry and he’s a "brilliant" guy so I’m sure this is a great read.

Photo: Mural at I.V. Lab Studios, Chicago



Upcoming travel (dates not certain except for Whippany next week):

Atlanta
Austin
Boston
Chicago
Cleveland
San Francisco
Whippany, NJ

Friday, May 22, 2009


Something got me thinking about all the different ways people are connecting, or trying to connect, today. I remember one of my best friends’ brother in law opened a nightclub called “The Phone Booth” in Manhattan. The gimmick: many small round tables in a trendily decorated (i.e. black) room each with a telephone. If you saw someone at another table, you just dialed them up. The club lasted for a few years but I thought it was a great idea. Another great social networking idea, which no one has launched, is, picture this: you’re driving in your car and you see someone in another car that you’d like to talk to. Wouldn’t it be great if there was some way to share cell phone numbers while driving on the Adirondack Northway? Well, maybe not as we’re all getting more and more protective of our privacy and sadly there are just too many lunatics out there. But social networking also applies to business and I’m finding more and more people less and less good at networking. Networking is an art. And that runs directly to something that I read in a book on networking many years ago: not everyone is a networker and if you are then you should gravitate towards people who are. One tip: if you attend a conference or any type of event where you gather even a few business cards, drop each person an email, within 24-hours of the exchange of business cards. All it has to say is: “Nice meeting you at such and such event. Look forward to staying in touch.” Although with some folks you meet there will be a desire on, hopefully, both your parts to do more than exchange pleasantries in an email, as there may be some real potential business that can be explored. Anyway, now that the whole world is a “Phone Booth” the only thing that is missing is how to find out the phone number of the person standing right next to you. Although, I guess you could ask. Hey, whatever happened to ‘beaming’ contact info from one device to another?

We’re seeing more and more of government injecting itself into the business world. Some of it appears to be for the greater good. But this thing about politicians trying to find opportunities to build their own reputation is really something that needs it’s own watchdog looking over the shoulder of the politician claiming to be a watchdog. This is happening right now in the placement agent business and it’s not fair to indict a whole industry because of a few bad apples. And, today, with everyone in the investment world nervous about everything, this is not good. Institutional investors in particular are so wary of doing business that many have closed up shop temporarily until things get sorted out and it’s safe to go back into the water. But, because there are still leaders (vs. followers) who actually think for themselves there will continue to be capital flowing into the alternative investment industry and while it may be less it will be going to those firms who not only have communicated openly but who are doing the right thing, right now, during a time when no one wants to be surprised…about anything-except perhaps for a birthday cake.

It’s perfectly clear, based on an industry webinar this week, that institutional real estate investors not only want they expect their managers to communicate more frequently and totally openly. And why shouldn’t they? But it seems like some are not. One firm this week had an investor call where the head of client relations didn’t even make an appearance. What message does that send? And, investors won’t get fooled again. Sure these times are trying with valuations falling like the mob hit victim who was fitted for cement overshoes and thrown into the East River. But it’s not like it’s really anyone’s fault. It’s pandemic of the whole industry around the world. So what can managers do? They can take appropriate action, assign their most experienced people to specific problem situations (or hire outside expertise) and communicate, communicate, communicate. And, as much as there are things being said about how we may be past the worst, I don’t really thing so but I do feel that there are strategies that are timely and opportunistic and that investors are looking for those firms who not only have done the right thing but know the right thing to do.

Photo top right: Chalkboard from one of Tom's class. He was famous for them (and for stealing chalk from neighboring classrooms).
Photo top left: Recently discovered photo of my friend Tom David (center) the bass player from the band "Everyone" who passed away in late 2008. His students remember him this way (how will people remember us?):

"Mr. Davis always took time for others. This is his legacy."
"He always had a smile on his face and something pleasant to say."
"His life was worthiest of all because he was able to show you your worth."
"For someone over 40, he's cute as ever! Ask to see the pics of him in his band when 20ish!"
" I have never met another professor who was so passionate and wise about what he was teaching."
"An inspired and inspiring man. Zany, insightful, intelligent, interesting and benevolent. One of the best. (The classes weren't bad, either.)"
"He loves to jump down the rabbit holes. he doesn't ever make a student feel like their views are insignificant, he considers all points."
"He's probably the nicest person you could possibly meet."



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

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