Principle advantage of adaptive reuse is using a lot less materials and LEED gives points by using part of old structure. A disadvantage of adaptive reuse is that reused buildings may never be as efficient as new construction because of new construction technologies. With the trend of moving to the core of the city adaptive reuse is becoming more of a necessity than anything.
We talked at length about population trends and urbanization and where people are wanting to live. It is pretty apparent that the trend is going back into the urban core, but the argument was regarding technology. With technology the way it is today, why can’t people live out in the middle of the nowhere but still be connected to the rest of the world. With webcams and all kinds of telecommuting capabilities what would be the point of living in the urban core? Just a matter of preference, but for people like me who enjoy lots of open land to hunt, fish, etc I would love to be able to work from a ranch.
San Francisco is starting a $4.2B high speed rail project. It is supposed to create many jobs.
We discussed a lot of different adaptive reuse projects. I have mentioned this many times but again the trend of people migrating to the urban core will cause adaptive reuse to be much more prevalent. Right now it is still a niche market, but I believe that is rapidly changing. There really are a lot of cool projects out there in which the developer has been really creative, but with green technologies being so popular it may be hard to incorporate these into older structures. So there may have to be lines drawn regarding aesthetic qualities, historical preservation and being green efficient.
Thursday, August 12, 2010
Thursday, August 5, 2010
Class 9: August 5, 2010
DFW area has been growing a great deal. It will be another year or so before the market works its self out. 12,000 units are expected to be delivered in DFW in year 2010. This shows that construction is still taking place in the area. A lot of this because it makes economic sense to go ahead and finish building then leaving the project partially finished. Multi-family will continue to do well in the coming years because many people have to rent because they are scared of home prices dropping or cannot get loans and it just makes more sense to rent than to own.
One of the things slowing single family home construction is that banks are not allowing AD&C lending. This could be a problem if demand picks up for homes and the lending will not be there.
iPad is being used a lot in construction. Project and construction managers have all drawings and schematics on hand and it saves them on printing costs but also just streamlines the process when you can straight to the specs on site. Also, if an architect and engineer need to change plans it can be instant on the iPad.
D.R. Horton reported earnings of $50.5 million but with the expiration of the new home tax credit they are looking at some hard times ahead. However, D.R. Horton is known for slashing prices.
Investors are looking more favorably upon apartment REITs because of current market trends. If REITs were smart they would hire up all the excellent property managers because that is where the value comes from in a REIT. The higher occupancy you can achieve and the more you can lower your OPEX and just run the property more efficiently that is where the value in a REIT lies.
Because of oil spill the governor of Florida wants all residential and commercial real estate values to be re-appraised to calculate the loss in property values. He wants to send this loss to BP to foot the bill for the value decline. This causes a problem for some cash strapped counties as staff time and cost will be tough.
A lot of private equity swooping in on apartment communities in markets that have bottomed out or become somewhat stabilized.
Economists project many different outcomes for the comeback of the housing market. One economist thinks the market will increase by 37% and another thinks it will decline by 18% over a five year span. It is funny how a so-called expert can say one thing and it is perceived as fact.
One of the things slowing single family home construction is that banks are not allowing AD&C lending. This could be a problem if demand picks up for homes and the lending will not be there.
iPad is being used a lot in construction. Project and construction managers have all drawings and schematics on hand and it saves them on printing costs but also just streamlines the process when you can straight to the specs on site. Also, if an architect and engineer need to change plans it can be instant on the iPad.
D.R. Horton reported earnings of $50.5 million but with the expiration of the new home tax credit they are looking at some hard times ahead. However, D.R. Horton is known for slashing prices.
Investors are looking more favorably upon apartment REITs because of current market trends. If REITs were smart they would hire up all the excellent property managers because that is where the value comes from in a REIT. The higher occupancy you can achieve and the more you can lower your OPEX and just run the property more efficiently that is where the value in a REIT lies.
Because of oil spill the governor of Florida wants all residential and commercial real estate values to be re-appraised to calculate the loss in property values. He wants to send this loss to BP to foot the bill for the value decline. This causes a problem for some cash strapped counties as staff time and cost will be tough.
A lot of private equity swooping in on apartment communities in markets that have bottomed out or become somewhat stabilized.
Economists project many different outcomes for the comeback of the housing market. One economist thinks the market will increase by 37% and another thinks it will decline by 18% over a five year span. It is funny how a so-called expert can say one thing and it is perceived as fact.
Trinity River Vision: July 29, 2010
We met with Shanna Cate of the Fort Worth Trinity River Vision.
There are a couple different aspects to this project and the first one is the development of trinity uptown. This will be where all the private development takes place. They are looking to develop a channel through uptown so can develop right up on the waterfront. The city rezoned about 1000 acres where they want development to take place. The type of zoning is form based code. This is where there is no particular use a building has to comply to, but the building just has to be built to certain specifications and then can have whatever use is feasible. If any public dollars are used for development of multi family must comply to affordable housing laws.
There are four main components to this taking place and making a hip urban environment while being safe at the same time. They are flood protection, urban revitalization, ecosystem improvement, and recreation. The plan for the project is to have the East Bank for development and the West Bank for recreation (trails, etc.). City wide citizens have wanted better amenities along the water and trails.
For the recreation part of the project they want to redevelop Gateway Park and make it one of the biggest and nicest urban programmed park in the country. One of the coolest things about the recreation is the wake park that could happen. They would like to use one of the levies for people to go wakeboard and participate in water sports equipped with ramps and all.
The project has a 12 year construction plan. The order of the construction phases is bridges, bypass channel, storm water management, isolation gates, dam and channel lock, interior water feature, trinity uptown. When the project is completed it is supposed to increase property tax revenues to $1.3 billion, 16,000 permanent jobs, and 10,000 mixed income residential units.
There are a couple different aspects to this project and the first one is the development of trinity uptown. This will be where all the private development takes place. They are looking to develop a channel through uptown so can develop right up on the waterfront. The city rezoned about 1000 acres where they want development to take place. The type of zoning is form based code. This is where there is no particular use a building has to comply to, but the building just has to be built to certain specifications and then can have whatever use is feasible. If any public dollars are used for development of multi family must comply to affordable housing laws.
There are four main components to this taking place and making a hip urban environment while being safe at the same time. They are flood protection, urban revitalization, ecosystem improvement, and recreation. The plan for the project is to have the East Bank for development and the West Bank for recreation (trails, etc.). City wide citizens have wanted better amenities along the water and trails.
For the recreation part of the project they want to redevelop Gateway Park and make it one of the biggest and nicest urban programmed park in the country. One of the coolest things about the recreation is the wake park that could happen. They would like to use one of the levies for people to go wakeboard and participate in water sports equipped with ramps and all.
The project has a 12 year construction plan. The order of the construction phases is bridges, bypass channel, storm water management, isolation gates, dam and channel lock, interior water feature, trinity uptown. When the project is completed it is supposed to increase property tax revenues to $1.3 billion, 16,000 permanent jobs, and 10,000 mixed income residential units.
Thursday, July 29, 2010
ULI Presentation: July 22, 2010
Instead of having traditional class tonight we went over to Dallas to hear a presentation regarding the Trinity Trust Project. Once upon a time the Trinity River was a clean river, but the settlement of Dallas is where that all changed. Also the river used to contain lots of limestone, but has been removed. The whole thing with this project is that the vision is to turn it into a big urban wetland park. Dallas believes that if they can sell the water they can sell the land. Basically there will be no income producing propperties for this project. It is completely a public project. He did show us one concept for the project and it looked like a bunch of lilly pads but all I gathered was that it was for aesthetic purposes. During this whole presentation I kept wondering how this project was going to be funded. I just see it being very expensive and don't see any incentive for investment from private players. The only way I see it happening is being completely publicly funded by raising tax dollars and such etc. I don't see the citizens of Dallas being too happy about taxes being raised for a project most of them will never utilize anyway.
Thursday, July 15, 2010
Class 6: July 15, 2010
Cities are starting to look at penalizing banks for not managing foreclosed assets. Banks do not want to asset manage though because they do not do it well. You would think we would learn from our mistakes in the 80s. Instead of just foreclosing and then turning around and putting it on the market maybe banks should branch out and have a property management division within their business plan. The way things are now though banks just let the property sit in their portfolio for long periods of time without maintaining the property or getting it ready for resale.
Obviously one of the biggest problems with commercial property today is that a lot of them are “underwater”. In other words the borrower or property owner owes more than the property is worth. A lot of this has to do with the perfect underwriting that went on before the crash. Properties were underwritten with 5% annual increases in rent with zero vacancies and then valued with really low cap rates. This is not realistic however and when the crash happened borrowers could no longer make their loan payments. This is a problem when cap rates rise drastically and when most commercial loans have five year balloons and as these balloons come due it will be hard for borrowers to find refinancing.
We talked at length about a few topics and articles that seemed to contradict themselves. One of the articles which talked much about the things in the paragraph above, but 2010 is just the start of all the balloon notes coming due. This means 2011 could be the big “shitstorm” of when commercial real estate really starts to tank. This notion directly contradicted with an article that said institutional investors are starting to turn away from stocks and look at ‘alternative’ investments with commercial real estate being one of them. The same article went on to say that professionals in the industry see it getting worse in 2010. The majority of those asked believe 2011 will be the turnaround year while others think it will be 2012 or 2013. So why would institutional investors be so interested in commercial real estate? The answer is that they see it better as long term investment. It stated in this article that an Oklahoma Teacher’s Fund made a 24.5% return in 2009 with 70% of their money in stocks. So why would you want to go to real estate when they can earn that kind of return in a down economy?
Atlanta is the worst in the country when it comes to problem CMBS loans.
I mentioned in an above paragraph about how lenders and owners etc. used to underwrite properties to meet a perfect standard. Now that there is more conservative underwriting standards and bottomed out property values J.P. Morgan Chase and Bank of Scotland may be treading back into the commercial mortgage backed securities market.
Not many property owners own their property free and clear, but for the ones that do they may have an opportunity to sell their properties on a quicker timeline. This could be done utilizing seller financing. By offering better rates than a bank, a seller can entice possible buyers to purchasing their property.
Workouts- Negotiations between the lender and borrower to restructure a loan. The lender does not want to hold the real property because of the costs. So ways of negotiating a workout is to change the terms or maybe an interest-only payment. An idea discussed that I really liked is to relieve the borrower from payments for an agreed on amount of time and in exchange the lender would receive a portion of the appreciation upon sale of the property. Also a lender could also basically take control and really monitor the operations by watching what checks an owner writes or picking which tenants can and cannot occupy the space.
The final thing we discussed is the tax implications of debt relief. If a lender relieves a borrower of debt than the borrower has to report that debt relief as taxable income. I tried to provide some insight to tax implications as I have heard my uncle and dad talk at nauseam about a workout my uncle is doing. To put it simply the mortgage is worth way way way way more than the property, but if foreclosed upon then the mortgage balance is recognized as the gain per se, not the value of the property. And if the lender grants relief of the debt than there will be huge tax burden for the investors of the property.
Obviously one of the biggest problems with commercial property today is that a lot of them are “underwater”. In other words the borrower or property owner owes more than the property is worth. A lot of this has to do with the perfect underwriting that went on before the crash. Properties were underwritten with 5% annual increases in rent with zero vacancies and then valued with really low cap rates. This is not realistic however and when the crash happened borrowers could no longer make their loan payments. This is a problem when cap rates rise drastically and when most commercial loans have five year balloons and as these balloons come due it will be hard for borrowers to find refinancing.
We talked at length about a few topics and articles that seemed to contradict themselves. One of the articles which talked much about the things in the paragraph above, but 2010 is just the start of all the balloon notes coming due. This means 2011 could be the big “shitstorm” of when commercial real estate really starts to tank. This notion directly contradicted with an article that said institutional investors are starting to turn away from stocks and look at ‘alternative’ investments with commercial real estate being one of them. The same article went on to say that professionals in the industry see it getting worse in 2010. The majority of those asked believe 2011 will be the turnaround year while others think it will be 2012 or 2013. So why would institutional investors be so interested in commercial real estate? The answer is that they see it better as long term investment. It stated in this article that an Oklahoma Teacher’s Fund made a 24.5% return in 2009 with 70% of their money in stocks. So why would you want to go to real estate when they can earn that kind of return in a down economy?
Atlanta is the worst in the country when it comes to problem CMBS loans.
I mentioned in an above paragraph about how lenders and owners etc. used to underwrite properties to meet a perfect standard. Now that there is more conservative underwriting standards and bottomed out property values J.P. Morgan Chase and Bank of Scotland may be treading back into the commercial mortgage backed securities market.
Not many property owners own their property free and clear, but for the ones that do they may have an opportunity to sell their properties on a quicker timeline. This could be done utilizing seller financing. By offering better rates than a bank, a seller can entice possible buyers to purchasing their property.
Workouts- Negotiations between the lender and borrower to restructure a loan. The lender does not want to hold the real property because of the costs. So ways of negotiating a workout is to change the terms or maybe an interest-only payment. An idea discussed that I really liked is to relieve the borrower from payments for an agreed on amount of time and in exchange the lender would receive a portion of the appreciation upon sale of the property. Also a lender could also basically take control and really monitor the operations by watching what checks an owner writes or picking which tenants can and cannot occupy the space.
The final thing we discussed is the tax implications of debt relief. If a lender relieves a borrower of debt than the borrower has to report that debt relief as taxable income. I tried to provide some insight to tax implications as I have heard my uncle and dad talk at nauseam about a workout my uncle is doing. To put it simply the mortgage is worth way way way way more than the property, but if foreclosed upon then the mortgage balance is recognized as the gain per se, not the value of the property. And if the lender grants relief of the debt than there will be huge tax burden for the investors of the property.
Thursday, July 8, 2010
Class 5: July 8, 2010
Hospitality Industry – Part of decline of hospitality market is the cost savings going on by corporations and businesses. Companies are trying to cut travel costs and there are many ways in which it is being done. Conferences at convention centers and such are a thing of the past with teleconferencing and technology advancing the way it is. There is no need to set aside blocks of rooms for business trips anymore because of shorter meetings or no meetings at all. Also, with the internet you may not need to travel your employees to sell products or go to tradeshows. It all comes back to that we are moving away from building relationships face to face and it is all being done through computers.
Coming more and more efficient when it comes to utilizing resources when it comes to business travelers and using your employees.
A property can reach maximum efficiency. Once a property becomes fully occupied and all tenants are paying bills on time then reached maximum efficiency. Same goes for OPEX, can only lower expenses so far while still maintaining property and also debt service because you can only go to a certain low point for your cost of debt. The other income line in a pro forma is where a property owner or manager can be creative and figure out other services that may generate extra revenue. Which brings a question, why invest in a property that has reached maximum efficiency? Invest if you want a fixed income security because otherwise there is no upside.
Travel with a purpose – essentially instead of asking yourself where should I go? Ask yourself why go there? So instead of traveling to getaway type place just to go there find out your motivation for wanting to travel in the first place.
Train vs. Plane vs. Car – A point was made in class that because of transit oriented developments trains may become more appealing as a mode of transportation. I agree with this, but still think it will take a while before it becomes people’s first choice to ride the train at least in Fort Worth. In Texas I would argue that most people are like me in that they would just prefer driving and would go on to say that most people enjoy driving even on long trips over any other mode of transportation.
Most important initiatives for hotel operators in 2010 are to streamline business practices and become more efficient and to seek out new revenue generating opportunities. Part of this is focusing on customer engagement efforts such as dining establishments, or coffee shops. Point brought up in class that business travelers need free Wi-Fi and maybe an overnight dry cleaning service at a hotel. Basically hotel operators need to focus on service to their current and prospective clients.
Gulf Coast hotels were not doing well but after oil spill occupancy rates have gone way down. Right now people are just not traveling to the gulf and if they are they are just not spending money like they used to. At this time though is when they make all their money because of the season so now fear not even able to make it next year because they won’t have the cash reserves from their busy season to keep the afloat.
Beijing and Shanghai prices are grossly inflated. Transparency is weak in Latin American markets as they are not very forthcoming with performance measures. New multi-million dollar deal mixed use project could go up in Iraq. This is the first big real estate project in the post-Saddam Hussein Iraq. 3500 residential apartments, office tower, 5-star hotel, and upscale shopping mall are all part of the project. Some believe because of better security in Baghdad it should make foreign investments more prevalent.
Coming more and more efficient when it comes to utilizing resources when it comes to business travelers and using your employees.
A property can reach maximum efficiency. Once a property becomes fully occupied and all tenants are paying bills on time then reached maximum efficiency. Same goes for OPEX, can only lower expenses so far while still maintaining property and also debt service because you can only go to a certain low point for your cost of debt. The other income line in a pro forma is where a property owner or manager can be creative and figure out other services that may generate extra revenue. Which brings a question, why invest in a property that has reached maximum efficiency? Invest if you want a fixed income security because otherwise there is no upside.
Travel with a purpose – essentially instead of asking yourself where should I go? Ask yourself why go there? So instead of traveling to getaway type place just to go there find out your motivation for wanting to travel in the first place.
Train vs. Plane vs. Car – A point was made in class that because of transit oriented developments trains may become more appealing as a mode of transportation. I agree with this, but still think it will take a while before it becomes people’s first choice to ride the train at least in Fort Worth. In Texas I would argue that most people are like me in that they would just prefer driving and would go on to say that most people enjoy driving even on long trips over any other mode of transportation.
Most important initiatives for hotel operators in 2010 are to streamline business practices and become more efficient and to seek out new revenue generating opportunities. Part of this is focusing on customer engagement efforts such as dining establishments, or coffee shops. Point brought up in class that business travelers need free Wi-Fi and maybe an overnight dry cleaning service at a hotel. Basically hotel operators need to focus on service to their current and prospective clients.
Gulf Coast hotels were not doing well but after oil spill occupancy rates have gone way down. Right now people are just not traveling to the gulf and if they are they are just not spending money like they used to. At this time though is when they make all their money because of the season so now fear not even able to make it next year because they won’t have the cash reserves from their busy season to keep the afloat.
Beijing and Shanghai prices are grossly inflated. Transparency is weak in Latin American markets as they are not very forthcoming with performance measures. New multi-million dollar deal mixed use project could go up in Iraq. This is the first big real estate project in the post-Saddam Hussein Iraq. 3500 residential apartments, office tower, 5-star hotel, and upscale shopping mall are all part of the project. Some believe because of better security in Baghdad it should make foreign investments more prevalent.
Thursday, July 1, 2010
Class 4: July 1, 2010
A lot of Developers in Dallas have been applying for funding through HUD and being turned down by the city of Dallas. To be eligible for HUD financing 51% or more of the units have to be “affordable.” Dallas receives HUD funds from the federal government but then denies its developers access to those funds because does not want too much low income housing in Downtown. So basically author of this article believes Dallas is making a conscious effort to deceive the FEDS by accepting HUD money but then not using it for its intended purposes. A lot of this has to do with the image we have in our minds of low income housing. When someone hears low income housing they may think of drug dealers and prostitutes etc. and I really think this is the case here. I have never been the biggest Dallas supporter but I believe this is what is going through Dallas city officials’ minds. Dr. Forgey then made a very good point that to truly create diversity and a live work play environment then you need to have affordable housing for the people that serve food, clean toilets etc. (Don’t want to sound elitist but it does bring up an interesting point).
We discussed for a while the social obligation someone may feel to help find low income families find a new place when they are being forced to relocate.
When a group find a development with actual affordable housing it can cause an economic boom in the area. It makes sense because if it is truly affordable people will not live outside their means and have more discretionary income. This leads to more profitable businesses in the area which could also drive up property values.
Thought for the Day: If any average Joe off the street is making money buying and selling real estate then something is fundamentally flawed because it should not be that easy.
TAXES
The U.S. is broke so trying to figure out how to generate more revenue. Basically, they are proposing taking away the capital gains tax and taxing the income at your tax bracket, essentially turning a 15% tax rate into a 30%+ tax rate. Maybe too much money is chasing real estate deals and this will take away some of the players in the market. Policy has skewed real estate values in that it transfers risk from individuals and corporations and lenders to society.
In San Francisco they are proposing that tenants that rent a space would have to pay a commercial rent tax. This is absolutely retarded in that it will do nothing but drive small businesses out of San Francisco. Shifting burden away from landlord and on to the tenant is what this is doing.
INDUSTRIAL
Retailers are tightening up inventories therefore manufacturers are not getting the orders needed which leads to a lot of available space. Canada’s economy is strong at the moment and going through their own real estate bubble.
We discussed for a while the social obligation someone may feel to help find low income families find a new place when they are being forced to relocate.
When a group find a development with actual affordable housing it can cause an economic boom in the area. It makes sense because if it is truly affordable people will not live outside their means and have more discretionary income. This leads to more profitable businesses in the area which could also drive up property values.
Thought for the Day: If any average Joe off the street is making money buying and selling real estate then something is fundamentally flawed because it should not be that easy.
TAXES
The U.S. is broke so trying to figure out how to generate more revenue. Basically, they are proposing taking away the capital gains tax and taxing the income at your tax bracket, essentially turning a 15% tax rate into a 30%+ tax rate. Maybe too much money is chasing real estate deals and this will take away some of the players in the market. Policy has skewed real estate values in that it transfers risk from individuals and corporations and lenders to society.
In San Francisco they are proposing that tenants that rent a space would have to pay a commercial rent tax. This is absolutely retarded in that it will do nothing but drive small businesses out of San Francisco. Shifting burden away from landlord and on to the tenant is what this is doing.
INDUSTRIAL
Retailers are tightening up inventories therefore manufacturers are not getting the orders needed which leads to a lot of available space. Canada’s economy is strong at the moment and going through their own real estate bubble.
Thursday, June 24, 2010
Class 3: June 24, 2010
Retail is shrinking. People’s spending habits are changing. Virtual stores also have a big role in the decline of traditional retailers. Some things you can buy online and some things not so much. Music, movies, electronics, and books are common items. Not often do you buy “Big Ticket Items” online. Patience could also be considered as some people want to have the item in their possession upon purchase and not having to wait for it to be shipped. This all affects retail real estate in that there is not as much need for square footage. Many retailers can be more efficient by downsizing to smaller shops.
In the higher end market may not need to reduce square footage because they built their stores to be destinations in the first place. Jason argued that the middle market such as Gap, Macy’s, Banana Republic etc. becomes very discretionary.
When it comes to restaurants and bars is there really a need for more square footage because people eat out more or are spending their time differently. So basically is the demand for restaurants increasing as people are using restaurants and bars as gathering places over churches, schools and community centers? Example would be the west 7th development in Fort Worth as there are more restaurants and bars being placed there then shops and traditional retail.
TECHNOLOGY
Depending on the business is how technology will ultimately affect you. You can have a restaurant in a crummy area but still get business because of apps like urban spoon or yelp that will help you find places to eat including holes in the wall. Would be stupid for businesses and employers not to advertise or use internet and social networking sites to get attract new customers or employees. 80% of companies today are using LinkedIn as a networking tool to hire new employees or to make business contacts for present or future endeavors. Realtor.com and other such sites actually limit the role of the buyer’s broker and helped the role of the listing agent or seller’s broker. By using these online sites it going to squeeze the commission structure because limiting the work of the agents but also creating a la carte services in which a fee can be charged for an open house or putting up a billboard etc.
The new iphone4 and the videoconferencing feature may have a dramatic effect on society. It could lead to way we live and work. Could be a game changer for medical office space in that I could call a doctor and have him look at some kind of problem I am having without having to physically go to his office. Also, could get real time decisions as someone is touring a property and can basically broadcast the tour to the major decision maker who is at a different location or city and can make real time decisions.
One thing that kind of shows how bad things really are is that as interest rates go down values will go up, but interest rates are low right now yet values are not increasing. Just indicative of what kind of shape we really are dealing with. At some point the federal reserve will have to raise interest rates, but what does that really do since values are decreasing even with such low interest rates that exist now. So essentially when interest rates rise then values could decline even more.
La Gran Plaza: Investors and Developers took a dying product of a mall and turned it into a very useful and successful project. They looked at their demographics and realized that the mall did not make sense in that the surrounding population was dominated by Hispanics. So got a more Hispanic look and feel to the property by changing the façade to a more southwestern look and just put a tenant mix in there that was more Hispanic friendly.
In the higher end market may not need to reduce square footage because they built their stores to be destinations in the first place. Jason argued that the middle market such as Gap, Macy’s, Banana Republic etc. becomes very discretionary.
When it comes to restaurants and bars is there really a need for more square footage because people eat out more or are spending their time differently. So basically is the demand for restaurants increasing as people are using restaurants and bars as gathering places over churches, schools and community centers? Example would be the west 7th development in Fort Worth as there are more restaurants and bars being placed there then shops and traditional retail.
TECHNOLOGY
Depending on the business is how technology will ultimately affect you. You can have a restaurant in a crummy area but still get business because of apps like urban spoon or yelp that will help you find places to eat including holes in the wall. Would be stupid for businesses and employers not to advertise or use internet and social networking sites to get attract new customers or employees. 80% of companies today are using LinkedIn as a networking tool to hire new employees or to make business contacts for present or future endeavors. Realtor.com and other such sites actually limit the role of the buyer’s broker and helped the role of the listing agent or seller’s broker. By using these online sites it going to squeeze the commission structure because limiting the work of the agents but also creating a la carte services in which a fee can be charged for an open house or putting up a billboard etc.
The new iphone4 and the videoconferencing feature may have a dramatic effect on society. It could lead to way we live and work. Could be a game changer for medical office space in that I could call a doctor and have him look at some kind of problem I am having without having to physically go to his office. Also, could get real time decisions as someone is touring a property and can basically broadcast the tour to the major decision maker who is at a different location or city and can make real time decisions.
One thing that kind of shows how bad things really are is that as interest rates go down values will go up, but interest rates are low right now yet values are not increasing. Just indicative of what kind of shape we really are dealing with. At some point the federal reserve will have to raise interest rates, but what does that really do since values are decreasing even with such low interest rates that exist now. So essentially when interest rates rise then values could decline even more.
La Gran Plaza: Investors and Developers took a dying product of a mall and turned it into a very useful and successful project. They looked at their demographics and realized that the mall did not make sense in that the surrounding population was dominated by Hispanics. So got a more Hispanic look and feel to the property by changing the façade to a more southwestern look and just put a tenant mix in there that was more Hispanic friendly.
Thursday, June 17, 2010
Class 2: June 17, 2010
We started our discussion today with three questions.
1. How do we become more efficient, effective & equitable from this point foward?
2. What are the challenges we face and how do we overcome?
3. What are the rewards if we succeed? The penalties if we do not?
We then defined the difference between being efficient, effective and equitable. A good quote to help illustrate this is "There is doing things right and there is doing the right thing." Doing the right thing would be being effective. You may have set a goal for yourself and you have either effectively achieved that goal or effectively working on achieving that goal. The other part of doing things right is being efficient. Being efficient is in simple terms doing more with less. By putting out maximum output with minimun input is the means of being efficient. When you are equitable you are minimizing negative externalities and creating a win-win situation for everyone involved.
We then talked about briefly about how suburbia is not sustainable at all. By nature suburban areas were created to be consumed and used up. Houses were built to last for about twenty years and anything else in "suburbia hell" could never really be used for any other purpose.
That led us into our next discussion of office space and the creation of flexible space. There is a trend going away from the cubicle and partitioned off office space to a more open layout as to encourage more interaction. With this offices need to be more flexible in how they can change their layouts and constantly adapt to growing trends. Also, in the case of foreclosure or even if an owner sees a shift in demand he may want to change the space from office to residential or retail.
With regards to office space we also talked about worker satisfaction. Things that could directly impact a worker's mood are exposure to natural light, better air quality, or just the amenities that the building has to offer. Bosses are constantly looking for ways to increase productivity out of their workers but while keeping them happy at the same time.
Next topic discussed was the whole idea of these big regional malls that are seen everywhere. We discussed the difference between the big retail lifestyle centers, the malls, and the central business district street level retail shops. Personally, the only difference I see in malls and lifestyle centers is air conditioning as you walk from store to store. If I were to go shopping I would want something that is convenient and also where I can possibly go to many shops in the same visit.
We then switched gears and began talking about LEED certifications and green development. I am honestly not completely sold on this topic but Dr. Forgey is trying to get me to be more forward thinking and show me that I should care about it.
We discussed how being LEED certified can be used as a major marketing tool. This could be important as a company is trying to get a better reputation by saying they built or are about to occupy a LEED building. China is actually becoming one of the leaders in green development, buth they really had no where to go but up as their pollution and smog etc. has been so horrific in the past. We discussed the other benefits of being LEED certified and lower OPEX costs on a building would definitely benefit a landlord's utility costs or the tenants depending on who is paying them. Being LEED could also affect the money you would be able to borrow for a project because if your OPEX comes down drastically then your cash flows become less risky so maybe could borrow more money and at a lower interest rate.
One of the questions that was asked to us was should the government give any incentives to become LEED certified and go green? I am of a small government belief system so I believe the government should not be involved and if LEED develops into the norm then it would just be good business sense to become LEED certified and therefore one would not need any incentives.
1. How do we become more efficient, effective & equitable from this point foward?
2. What are the challenges we face and how do we overcome?
3. What are the rewards if we succeed? The penalties if we do not?
We then defined the difference between being efficient, effective and equitable. A good quote to help illustrate this is "There is doing things right and there is doing the right thing." Doing the right thing would be being effective. You may have set a goal for yourself and you have either effectively achieved that goal or effectively working on achieving that goal. The other part of doing things right is being efficient. Being efficient is in simple terms doing more with less. By putting out maximum output with minimun input is the means of being efficient. When you are equitable you are minimizing negative externalities and creating a win-win situation for everyone involved.
We then talked about briefly about how suburbia is not sustainable at all. By nature suburban areas were created to be consumed and used up. Houses were built to last for about twenty years and anything else in "suburbia hell" could never really be used for any other purpose.
That led us into our next discussion of office space and the creation of flexible space. There is a trend going away from the cubicle and partitioned off office space to a more open layout as to encourage more interaction. With this offices need to be more flexible in how they can change their layouts and constantly adapt to growing trends. Also, in the case of foreclosure or even if an owner sees a shift in demand he may want to change the space from office to residential or retail.
With regards to office space we also talked about worker satisfaction. Things that could directly impact a worker's mood are exposure to natural light, better air quality, or just the amenities that the building has to offer. Bosses are constantly looking for ways to increase productivity out of their workers but while keeping them happy at the same time.
Next topic discussed was the whole idea of these big regional malls that are seen everywhere. We discussed the difference between the big retail lifestyle centers, the malls, and the central business district street level retail shops. Personally, the only difference I see in malls and lifestyle centers is air conditioning as you walk from store to store. If I were to go shopping I would want something that is convenient and also where I can possibly go to many shops in the same visit.
We then switched gears and began talking about LEED certifications and green development. I am honestly not completely sold on this topic but Dr. Forgey is trying to get me to be more forward thinking and show me that I should care about it.
We discussed how being LEED certified can be used as a major marketing tool. This could be important as a company is trying to get a better reputation by saying they built or are about to occupy a LEED building. China is actually becoming one of the leaders in green development, buth they really had no where to go but up as their pollution and smog etc. has been so horrific in the past. We discussed the other benefits of being LEED certified and lower OPEX costs on a building would definitely benefit a landlord's utility costs or the tenants depending on who is paying them. Being LEED could also affect the money you would be able to borrow for a project because if your OPEX comes down drastically then your cash flows become less risky so maybe could borrow more money and at a lower interest rate.
One of the questions that was asked to us was should the government give any incentives to become LEED certified and go green? I am of a small government belief system so I believe the government should not be involved and if LEED develops into the norm then it would just be good business sense to become LEED certified and therefore one would not need any incentives.
Thursday, June 10, 2010
Class 1
The first thing we talked about were a couple projects. One was in Kansas City, MO and was basically an ENORMOUS underground facility. It is a very green development. It is unique in that they charge a lot less for rent than buildings that are above ground and they also save 50%-70% in energy costs. The climate below ground is controlled when it comes to humidity and temperature.
Another project was the first Platinum LEED certified building in New York City (The Bank of America Tower). We watched a brief video of the energy efficient components of the building.
We also discussed topics such as: office hotelling, demand for educational space because of online education, career opportunities and search methods.
Some of the opportunities include: Adaptive re-use, acquiring skill sets, the value of internships, importance of writing skills and senior housing with baby boomers leaving the work force at a rapid pace.
Another project was the first Platinum LEED certified building in New York City (The Bank of America Tower). We watched a brief video of the energy efficient components of the building.
We also discussed topics such as: office hotelling, demand for educational space because of online education, career opportunities and search methods.
Some of the opportunities include: Adaptive re-use, acquiring skill sets, the value of internships, importance of writing skills and senior housing with baby boomers leaving the work force at a rapid pace.
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