Commercial Property Herald

Troubled CRE Assets Take Down Another Six Banks - CoStar Group

I read this article, Troubled CRE Assets Take Down Another Six Banks - CoStar Group, from CoStar, feeling a bit like Michael Corlioni from the Godfather.  "Just when you think that you got out of it, they keep dragging you back" or words to that affect.  I haven't heard much about bank failures lately only to hear that 6 more banks were taken down by the FDIC in the past two weeks. Analysts suggest that many of the failures are due to the CMBS and commercial mortgage issues. I guess bank failures are alive and doing well, back in the US.

Earlier in the week, Costar also reported that there has been a significant increase in CMBS defaults in the office sector.   There can be no doubt that my law practice, which currently focuses on post-foreclosure representation of lenders and buyers has seen a significant uptick in office properties as compared to the last 3 years in retail.  I will add that I have also seen a significant increase in new lease work and not just tenant collections.

The good news is that the pace of bank failures has gone down to an average of 5.5 per month over the first 4 months of 1012 as compared to an average of 7.7 in 2011 as reported by CoStar.

The bad news is that some analysts believe that some of the reduction in failures is attributable to giving banks more time to get the financial house in order rather than pulling the plug as fast as they did in 2010.

So what does this say about the state of commercial property and the economy.  Well, what I see is continuing economic pressure in both directions leading me to believe that we are close to the bottom, with slight blips in both directions but no real clue in which direction will be sustained.  Bottom line for me is that I really don't see a sustained major dip but a slow gradual improvement with some slight hiccups along the way.

Luxury Theater was a Good Idea, I Think

Remember about a month ago, I wrote a blog post entitled, "Replacing Closed Theaters," in which I discussed my ideas on replacing closed down, older multi-screen movie theaters, using as an examptle the recently closed Edwards/Regal Theater in the small bedroom community of Rancho Santa Margarita.  My only, I thought, good idea was to put one of those new luxury theaters into the former space.  They are different enough from the "standard" multi-cinema experiences and probably enough so to justify the smaller population and higher prices, I opined. The truth is that, being in the theater, I really liked the idea of a live theater, but it didn't make a lot of sense to me.

Well it looks like someone actually read my post and took my advice.  Okay, it was probably that someone else had the same idea but didn't get it from me.  The Orange County Register has reported this Sunday that Cinepolis Luxury Cinema will be filing the space in Rancho Santa Margarita.  I think it is a great idea and I am looking forward to seeing movies there.  It should also serve as a boon for the local shops and restaurants. 

Now for more of the unusual ideas.  Since it is going to be located opposite the city hall and pretty much in the heart of the city/community, maybe they should reserve one theater as a movie/live theater that can host live theatrical events.  I suspect that a state of the art removable screen could be designed and removed, (perhaps raised), for a full stage that can accommodate sets.  A live theater would give the city some additional identity.

 

The Awardable Value of Teamwork in Commercial Real Estate

Last night I had the pleasure of attending the 1st annual Spire Awards sponsored by the Orange County Chapter of CREW, (Commercial Real Estate Women) at the Pacific Club in Newport Beach.  There were 7 awards presented, one of which was awarded posthumously. These awards were presented in various categories reflecting excellence related to commercial real estate and were not limited to women.

One of the recipients, Rod Hamett the project manager for the construction of two phases of construction of the University of Irvine, Medical Center was honored for completing both phases of the construction on time and on budget, and in one case, early.  Can you imagine that; early and within budget; unheard of.  Now that is a rare feat and one worth recognition.

But, it is not Rod's diligence and frugalness that I am writing about in this post.  I was most impressed with his humble and his immediate and sincere recognition of the contribution of his team when accepting the award.

So much of what we do in commercial real estate and, for that matter, life, is dependent upon the contribution of others.  Being responsible for the management of other people in business, I am all too familiar with the value of good team work.

My hats off of my bald head to Rod and his team as well as OC Crew for putting together a valuable event and bringing together commercial real estate professionals in Orange County, doing so as a team.

 This is the first in a series of post in which I will be writing about the signficance of the Spire award recipients all leading up to a radio show.

Industrial Property Improvement Portend Better Times for #CRE?

For over 4 years, I have been looking for a sign of better economic times.  I have seen little blips and blurps at times but nothing really solid leading me to believe that there was light at the end of the tunnel,..........until now.

I don't want to get too carried away with this and truthfully, I have been seeing improvements and solidification in the industrial an warehousing market but the emprovement in 2011 is significant.  

The LA Times reports that Industrial property leases jumped nationally in 2011. I think a good part of the improvement is in the pricing.  But in this case, I believe that it truly is a philosophy of "lease it and they will come."  I suspect that this trend portends more employment.  Mind you that I do not see a sky rocket of good times but I do see signs of some improvement here.

How Should Video be Used by Commercial Real Estate Professionals?

I know it sounds like I am gushing and I suppose that I am a bit, but Duke Long as come a long, long way in a short time with his video series, "The Real State of Real Estate."

His newer videos evidence a focus on using the visual medium of video to enhance his message. Furthermore, he seems to have thought out what he wants to accomplish and what message he intends to convey through each of his videos.

For example, The key message that I got from Duke's, "Bricks & Slaughter" video was that shopping center owners better start consider the growing effect of online sales as part of their overall strategy for their centers.  While verbally expressing himself on the video, the visual presentation of the empty parking lot and the locked and apparantly abandoned store fronts, said as much, if not more than his verbal comments.  Not only that, the video had significant emotional impact, maintaining the audiences attention.

Duke's, "Wabash Landing" is another example of a thoughtfull mix of the conjunction of visual messaging and audio content. The message that is conveyed to me in this video is that if you are an owner of a shopping center, it might be worth your time to give Duke a call to get some help.  This video enhances Duke's personal brand.  More videos like this one may serve to increase business for his day job, which is being a broker.

My third example of a Duke Long video is his, "Super Bowl Central. Georgia Street". Duke isn't even in this video which is fortunatly, hosted on screen by Leslie Bonacker of Cresa Partners. The clear reason for this video was to promote a.k.a. market the "newly redeveloped Georgia Street".  It seems to me that its purpose is to get people to lease space on Georgia street. To be frank, I am not as enamored with this video as I am with the prior two.  The audio script wouldn't motivate me to lease space nor is the visual component of the video, showing an empty lobby and two people walking down the street compelling.  While I have no problem with Leslie giving some background and describing what is going to be happening on the street during the Super Bowl festivities, it seems that the purpose of the video would have been better served by adding some drawings or video of what one would expect to see during the Super Bowl.  My gosh, its the Super Bowl.  The street should be mobbed and the visual element should  convey that message. Now if I were a retailer, I would want to lease space as fast as I could if I believed that street would be as crowded as I expected.  In this case, I believe the video detracted from the message rather than enhance it.

From a Business Perspective, are Women Different from Men - Part II?

As expected, I've received a couple of comments my blog post "From a Business Perspective, are Women Different from Men?", that I posted on January 1, 2012.

A.L. (Ann Lisa) Braun writes about a story she heard  on the radio about a recent UK study confirming what Ann Lisa believes most most people already knew--men and women are very different.   According to Ann Lisa and the report, "The researchers concluded that there were ‘extremely large’ personality differences between the sexes which could have implications in the workplace."

From my perspective, I wouldn't be at all surprised that there are "typically" some personality differences between men and women although I am not sure that those personality differences are as a result of hormonal or other physiological differences or expirational differences typical of men or women or perhaps a combination or both. I am also not sure that this means that an employer should treat women, as a class, differently than men.

As Ann Lisa comments that "what we should do with this information is definitely fodder for debate." However, she is confident that there generally ARE differences, and she recommends being flexible with your style in order to best work with different personalities (and the same goes with different personalities within the same gender.)

Here's a link to an article about the study.

Now I have read the study and frankly, I don't need a study to tell me that there are differences between men and women including general phycological differences.  It may seem like a joke that men seem to control the TV remote or tend to flip through the channels like a race horse, but my anecdotal experience tells me that some of these habits are very typical of the sexes, to a very considerable extent.  But the question I ask again is, do these differences generally mean that it would be advantageous or dissadvantageous for a company to work with men or women?  I think not and any distinction to be made should be done on an individual basis.  I still think that more women should get involved in commercial real estate which as a profession is grossly under represented by women.

Thanks Lisa.

Kinect for Windows - Can We Use This Gesture Interpreting Technology for Commercial Real Estate?

As reported by ZD Net, Steve Ballmer of Microsoft announced at CES 2012, that The Kinect for Windows sensor and software development kit will be out in early 2012 is, indeed, on its way.

I think that the Kinect has industry and life altering potential, akin to the Mac or iPhone.  Imagine sitting in front of your computer and having the computer recognize your gestures without touching the screen.  Potentially, no more need for a mouse.  The potential is limitless.

Now for those in the real estate industry, if only we can imagine how to apply this technology to our business.

From a Business Perspective, are Women Different from Men?

In early October, I was fortunate enough to be invited to attend The Final Frontier, A Seminar On Women As Entrepreneurs In Commercial Real Estate, held in San Francisco, the second of an annual seminar on the topic. Well, to be more accurate, I asked Leslie Lundin to invite me, which she kindly did.

I was fascinated by the general subject matter and I walked away from the seminar with one overwhelming question in my mind:

From a business perspective, are women different from men?

This question was not a direct topic of presentation or conversation at the seminar. I believe the main focus of the seminar was to encourage women to be entrepreneurs in businesses related to commercial real estate and identify the entrepreneurial opportunities that are available.

Many of the speakers included accomplished women in commercial real estate and many of those who have looked to break the mold and venture out on their own. There was lots of discussion by those of experience with the many obstacles and difficulties faced by women entrepreneurs and start-up executives. There was much encouragement and many warnings.

Presentations and numbers were provided evidencing the distinct shortage of women entrepreneurs and women in the top echelons of the commercial real estate executive suites and the fact that the pipeline of women heading to the top is considerably disproportionately low in comparison to the general population. I don’t recall the exact numbers but I recall hearing percentages in the teens for the pipeline of women in executive positions that are likely to move to the upper echelons of commercial real estate, whether in a corporate environment or on their own.

While the topics varied and while I can’t say that the speakers intended for me or anyone else to walk away with this understanding, there seemed to be two distinct, differing and underlying perspectives expressed by the speakers:

• Women are no different from men and should not be treated differently; and

• Women are different from men and bring a different perspective than their male counter-parts. Therefore, commercial real estate companies would greatly benefit from having more women in the upper echelons of their business.

There I was, one of about three men, sitting in a conference room filled with about 200 women and there didn’t seem to be a clear consensus among the women whether they should be treated the same or differently than men. It was an epiphany for me and confusing, to say the least. You have to understand that I was brought up in a family with a strong dominating mother who had a 189 I.Q. and who insisted that she didn’t want to lower her standards by being an equal to men. In reality, few people were her equal, at least from an intelligence perspective, but I don’t think the fact that she was a woman had anything to do with it. She simply was the type of person who could accomplish whatever she wanted and neither man nor woman would be wise to get in her way. As far as my mother and I were concerned, from a business perspective, there was nothing significantly different between men and women, at least nothing that should promote or prohibit their success in life or business other than the quality of their character and their individual intelligence, skills and abilities.

So what am I supposed to do now, hire women because they have a different perspective that is derived from the mere fact that they are women? I am having as difficult a time rationalizing this concept as I would if I were to insist on hiring a man because he might have a slightly different perspective on business, merely because he was a man.

I think that women are doing a disservice to themselves by arguing or promoting the concept that they should be hired or promoted based upon the fact that they bring a decidedly female perspective to business or that women as a class have an advantage because of that perspective. While women may have a decidedly female perspective on things, which may at times prove to be beneficial to business, men and women tend to earn my respect based upon their character, intelligence, ability to communicate well, experience, trustworthiness and good humor. None of these traits seem to be exclusive or predominate in either sex, as far as I am concerned.

I will be having a special radio show on this topic, hopefully sometime in February or March 2012 and hope to have Faith Hope Consolo, Chairman, Retail Leasing and Sales Division Prudential Douglas Elliman Real Estate, Leslie Lundin, Managing Partner, LBG Realty Advisors, LLC, and two other special guests whose names I prefer not to announce until after I have confirmed their appearance and the date of the show.

Commercial Real Estate War Story Ideas & Kindle Fire Giveaway to the Most Interesting Story

On January 11, 2012, CRE Radio will host our annual "Best Of Commercial Real Estate War Stories, 2011",  at 12 noon Pacific Standard Time.  This is going to be a special show in which listeners get to re-live some of their most interesting commercial real estate stories. 

The stories can be about "interesting" "funny" or "stupid" deals.  Terrible or great buyers, sellers or landlords. Miracles or so they seemed, like Tim Tebow.  Great accomplishments.  Something that you are proud or ashamed of.  Any anecdotal story that you think would be of significant interest to our commercial real estate listeners.  We are not interested though, in hurtful or cruel stories.

To top off the show, we are going to give away a brand, spanking new Kindle Fire, a combination of color e-reader and Android tablet to the person who provides the best story.

Since the radio show will be no longer than 1 1/2 hours, we have limited time to air stories so we request that you send to me a brief written synopsis of your story along with your contact information and we will choose the top 10 stories to be included on the show.  If your story is chosen, we will either have you tell the story, live on the radio or pre-record it for airing during the show.  Only listeners registered at our website, www.creradio.com will be eligible to receive the Kindle Fire.

So have I told you the story about the time, 36 years ago when I took a retainer check from a client who had been arrested for writing bad checks?  Do I need to say more.

Send your story to me by leaving a comment on this blog or by writing to me at:

Twitter:  @creradio

LinkedIn: http://www.linkedin.com/in/howardkline

email: howard@creradio.com

 

Are Insurers Going to Take the Lead on Commercial Real Estate Lending?

The Wall Street Journal writes that in Europe, insurers are influencing terms and making credit both easier and cheaper.

I can recall in the 90's do a great deal of post-foreclosure work for some of the larger insurance companies that had made numerous commercial loans earlier in the decade and in the 80's.  If my recollection serves me correctly, at this time, before the CMBS market, insurance companies were a very significant source of finance for the commercial real estate market. 

Is it possible that insurers are coming back to the market and to how influential will they be?