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.
Thursday, June 24, 2010
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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