Commercial Property Herald

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: [email protected]

 

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?

Starbuck's General Counsel Retires to Join Obama Campaign

Ok, I really couldn't help myself on this one.  Consider it a lack of self control, I suppose.  

I just read that the Starbuck's General Counsel is retiring to join the Obama for President 2012 campaign.  While the article doesn't mention this, I am absolutely certain that Obama has asked Paula Boggs to join the campaign due to her expertise dealing with "Tea Parties." :)

So you ask, what does this have to do with commercial real estate?  Grounds, of course.

Alright, maybe I ought to keep my day job.  I am obviously not a stand up comedian, I am sitting down!

Do Real Estate Brokers Owe a Minimum Wage to Their Agents

At least one court and now the California Labor Commissioner thinks that agents are owed a minimum wage despite the traditional practice of paying agents as outside sales people on a commission only basis.

California's Labor commissioner recently has filed a lawsuit seeing back wages, unpaid overtime and damages and penalties exceeding $17,000,000 against ZipRealty.  The suit seeks enforcement of California's minimum wage law. ZipRealty has denied the minimum wage claims arguing that minimum wages and overtime were not owed, due to the fact that the people involved were not employees, but outside salespeople.

To be fair, I don't know enough of the facts to give a clear analysis of, not only what has been alleged, but what the key legal issues are.  However, at first glance from the news articles, the actions taken by the labor commissioner and a recent September court ruling in a Kern County Superior Court has the potential of putting the entire real estate industry on its ear.

Before all you brokers out there start running in a panic though, you should double check with you own legal counsel in your own state to make sure that your payment practices are in accordance with your own state law and you are not trying to cut corners with your agents. Remember, laws do vary from state to state.  Additionally, upon further review, I may discover that the allegations of the insurance commissioner are limited to the particular facts and acts of ZipRealty and not a wholesale attempt to change a common payment practice within our industry.

At this point, this is a story that seems worth following and which I will be reporting on in coming weeks and months.

CMBS Delinquencies Decrease for Third Month in Past Four. Does paying attention to the monthly changes make any sense?

DS News reports that after rising in July, the CMBS delinquencies have again started dropping in July.

That can't be bad news, but is it good news?

Does it make any sense to pay attention to the month-to-month changes to anything if you are looking for trends?  I say no.  Just as I say no to a day or two days of ups or downs on the stock market although, admittedly, monthly trends in in the CMBS delinquency rate is more indicative of where the economy is goiong than the stock market.

This news does not encourage me because I know that there are a lot more defaults coming our way over the next two years.  But defaults alone are not determinative of the health of the commercial real estate market.  What I want to see is a steady and growing decrease in delinquency rates over at least 6 months for me to see an encouraging trend.

Changes to Prop 13 - help or hinderance to commercial properties?

Bloomberg reports that Los Angeles Mayor, Antonio Villaraigosa has recommended revisions to California's Proposition 13 to increase property taxes on commercial properties.

I could write all day in response to this article and will probably post several posts over the next week. However, the first questions that came to my mind after hearing about the honorable mayor's suggestion was:

• Wouldn't this greatly increase costs of everything in California? and
• At this time, how many properties and tenant's are really going to be affected by a change like this?

But first, a little primer on Proposition 13 or also affectionately known as Prop 13, which I understand, similar laws have been passed in other states:

Prop 13 limits tax reassessments on any property in the state of California except when the property is transfered or a 2% annual increase when there is no transfer .  There are some exclusions.  For the most part, Prop 13 applies to both residential and commercial property.

My knee jerk conclusions are as follows, (knee jerk because I think that this really requires a lot more analysis):

1. It will increase spending and employment by counties due to the immediate need for qualified appraisers.  Of course there will be further increased costs due to a flood of appeals and problems with the appraisals because there will likely be a great shortage of qualified appraisers so the reassessments will probably be done in a hurry and by unqualified appraisers and "just because";

1. A significant increase in compensation for qualified appraisers, who will be hired by the smart and deep pocket commercial property owners, which higher paid appraisers will beet up on the lesser qualified, lower paid public employee appraisers, (this is meant as no disrespect to public employees, but the economics of the situation and shortage of qualified people will likely cause this disparity, at least on a temporary basis);
2. There will also be an increase in business for some tax lawyers and accountants;
3. Taxes will increase dramatically for commercial property owners, whose leases probably require, to a great extent, for the tax increase to be passed on to the tenant, who may be forced to go out of business, but first try to pass on the tax increase to their  customers and clients.

But then I asked, will the change suggested by Mayor Villaraigosa really have the immediate devastating effect on Californians, that I first thought?  Well, maybe no.

Commercial property values have dropped significantly over the past 2 years and during that time, many commercial landlords, who had purchased their properties at the higher assessed values should have been seeking lower assessments more in line with current market conditions.  This should be true, particularly for those landlords who pass on their tax liabillity to their tenants. So, for the shorter term landlords, a reassesment, probably will have little or no effect nor will there be an effect on their tenants.  The greatest effect will be on those landlords who have held onto their property, long term, and currently hold their property at lower assessed values, for tax purposes.  My guess is that these will be the smaller owners.

Nordstroms to open store for charity

Robert Roth, a real estate attorney in New York, has sent me two articles from the New York Times about the fact that Nordstroms has not had a full service store in New York City for years.  The latest article, "Nordstrom in New York to Use an Alias", written by Stephanie Clifford headlines that not only are they opening a high end store in Manhattan soon, they are not going to use their branded Nordstroms name.  It's going to be called Treasure & Bond.

My first thought was why would they go out and do that?  Nordstroms is a great name and a very valuable brand.  Then as I read further into the article, I learned that the "profits have been committed to charity".  Now that is a big bold move.  

My second thought was why would they do that.  We are not talking here about a sale where part of the proceeds are going to charity.  We are talking about all of the profits from the whole store, or so it is described in Ms. Clifford's article. By the way . Sure, it builds good will, but this move seems so much more than just good will building.  It smells of genuine altruism.  Now this is a concept that I can get behind and I want to know more about it. If it is as good as it seems, I want to see what I can do to help.

I get so stoked working with good people who are willing to make bold moves.

What Congress can learn from real estate professionals

Last Wednesday we aired our radio show on the topic of CAM Charges & Building Operating Expenses.  It was an "open forum" born from a discussion topic that I started on LinkedIn.  The "open forum" concept for the radio show was a new format that I wanted to try out and in essence was and open invitation to anyone who wanted to participate in the conversation.  We had 7 highly knowledgeable, intelligent and articulate featured guests and a number of equally intelligent listeners called in to participate.

The point of this post is not to discuss the substance of the radio discussion and CAM charges, but to focus on the interaction between everyone who participated in the show, despite some clear and vigorous disagreement.

So far, every comment about the show from guests and listeners focused on how great the open forum format was, in great part as a result of the courtesy, maturity and intelligence of all who participated in the discussion.  Some vociferously disagreed with statements made by others, but there was no apparent animosity and very little if any "stepping on toes," or shouting over others.  As a matter of fact, at times during the show, when two people started talking at the same time, they both stopped and there was a moment of silence while each stopped talking to allow the other to speak.  Imagine that?  Imagine that kind of courtesy in Congress.

I might add that every comment included the word, "fun".  How much fun is it to participate in a conversation with other people who are every bit as smart and experienced as you, if not more and can disagree without attacking each other personally.  I dare say that each one of us walked away from  the show a little bit smarter and knowledgeable than when we started the show.

So what does all of this have to do with congress?  Well, from my perspective, Congress and the electorate would benefit from respectfull and intelligent discourse on very complicated social and economic issues without visciouis attacks on others and without blamming each other for everything that has gone wrong in our lifetime.  It seems that our energy would be much better spent trying to solve problems with a healthy repect for the opinions, attitudes and paradigms of others even though they might disagree.  I think that you would better understand what I am saying if you listened to the radio show.  Click the above link or go to www.creradio.com.

Tics another seemingly good idea gone south

Jonathan Lanser & Jeff Collins report in the Orange County Register that Daymark Realty Advisors, a subsidiary of Grubb & Ellis, has been sold to a joint venture controlled by Sovereign Capital Management Group of San Diego and New York-based Infinity Urban Century, an investment affiliate of The Infinity Group.

I can remember getting a call from Aaron Weiner sometime between 2001 and 2005 asking me if I knew much about Tics, Tenant-in-Common investmenets,  Although I obviously knew what a tenant-in-common was, I didn't know much of the term as it was used as an investment vehicle rather than simply a way of holding title to property.

I immediatly began doing some research on the matter and discovered what seemed to be an incredibly smart way to get smaller investors into real estate and serve as an incredibly useful vehicle to develop business for real estate developers and brokers.  Instead of selling real estate, you sell shares.  Sounded like a security to me so I stayed out of it. Thank goodness I did.

I have this conservative, fatallist attitude that is, if I have heard of it, it is already to late to invest in it.  So it turns out that TICs turned out to be a bad idea, whcih flaws were not exposed until the real estate market starting going bad, catching a lot of small, mom & pop investors in the crash and ruining their retirement.  I don't think that, for the most part, there was anything malicious or conniving about it, just a good idea that didn't turn out as well as everyone hoped.

So what is the next big investment vehicle on the horizon?