Black Friday is among us!

For those of us, yes, myself included, who like to get great deals during the holidays while we shop for loved ones, Black Friday seems like the ultimate time to cash in and find the best deal around.

The great trend that I’ve noticed over the past few years is that Black Friday sales are starting to happen earlier as time goes on, allowing deal seekers to shop prior to the true Black Friday and avoid getting trampled (literally) by overbearing shoppers.

But what does that all mean for the retail market?

An article in Time’s Money section explains that the early sales shouldn’t come as a surprise, considering the overarching trend of retailers attempting to expand the holiday shopping season and grab consumers’ limited gift-purchasing dollars before their competitors can. The article does warn that not all of these early deals are worth getting excited about.

And for a list of when the big sales start, check out this list put together by The Washington Post.

Be on the lookout for a post–Black Friday holiday retail spending forecast. Happy holidays!

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DenisewebfinalDenise DeChaine is special projects editor at Institutional Real Estate, Inc.

Leadership lessons they don’t teach in business school

It is what they didn’t teach us in school — and the things we cannot control — that always seem to foil us.

Take leadership programs, of which there is a proliferation these days at institutions of higher learning. Their curriculums are devoid of some of the very things that drive people to the top, or cause them to fall short — literally.

It was research by Malcolm Gladwell for his book Blink that observed a disproportionate 30 percent of U.S. chief executives are six feet, two inches in stature or taller. Yet just 3.9 percent of U.S. citizens measure up.

Height isn’t the only non-cognitive characteristic that is advantageous to aspiring CEOs and other C-level executives. A sonorous voice also commands the room. Business professors from Duke University and U.C. San Diego listened to presentations from 800 CEOs and found that those with deep voices earned almost $200,000 more per year than tenors and other up-scale vocal pitches.

By the way, how is your posture? Here are a few suggestions. Stand tall. Part your legs a bit. Pull your shoulders back. Expand that chest. Harvard Business School professor Amy Cuddy has done a good deal of research on body language and found that the mere act of embracing that priceless advice I just shared with you introduces a bracing dose of testosterone to the bloodstream while reducing cortisol, the steroid associated with stress.

One more thing: Is your gym membership up to date? Yes, physical fitness counts. So does trimness. It shows discipline. People respect that. Then they promote the people who embody it.

As for the rest of us — who weren’t endowed with Liam Neeson’s bearing or Barry White’s intonations — we will just have to out-think everybody.

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MikeCfinalwebMike Consol is editor of The Institutional Real Estate Letter – Americas.

The news keeps expanding

The year is almost over. IREN, our exclusive, premium news service only available to subscribers, has published 815 original stories. Here are some IREN headlines you may have missed on our NewsCloud, which provides breaking commercial real estate and infrastructure news from around the globe, along with podcasts and videos.

Last month, Institutional Real Estate, Inc. launched a real assets news service and its daily newsfeed emails. The news feed, which supports IREI’s new Real Assets Adviser publication, covers infrastructure, energy, real estate, commodities, investment products, people and trends of the real assets sectors. To subscribe to the real assets news feed, click here.

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AndreafinalwebAndrea Waitrovich is editor of IREN and web content editor of Institutional Real Estate, Inc.

A revolution with little fanfare

As reported by the New York Times, a shipment of 400,000 barrels of oil from the Port of Galveston, Texas, July 30 might have seemed unremarkable to anyone watching it leave the harbor, but “the export shipment symbolizes a new era in U.S. energy and U.S. energy relations with the rest of the world,” Daniel Yergin, energy historian and co-founder of Cambridge Energy Research Associates, told the New York Times.

According to the article, the shipment “was another critical turning point in what has been a half-decade change for the American oil industry.”

The shipment of oil to South Korea by Singaporean tanker BW Zambesi was the first unrestricted export of U.S. oil to a country outside North America in nearly 40 years. And it was made possible thanks to its relatively low-profile launch, which avoided a lot of the thorny politics associated with the United States’ ban on such exports since the mid-1970s.

There is debate as to what these exports might do to oil prices. Some think they will increase prices in the United States, while others believing global prices, including within the United States, will decline because of the added supply, but everyone agrees the issue comes with very difficult political decisions.

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DrewWebsiteDrew Campbell is senior editor of Institutional Investing in Infrastructure.

Remember them

First published in November 2009 on the occasion of the 20th anniversary of the fall of the Berlin Wall, and even more appropriate in 2014, the 25th anniversary and also the 100th anniversary of the start of the First World War.

It wasn’t just the Berlin Wall that fell in 1989, 25 years ago this week. It was also the inner-German border, with its barbed wire, electric fences, no-man’s land, trip wires, floodlights, minefields, watchtowers, razor wire fencing, patrols, dogs and self-shooting guns; it was also the other less well guarded but nevertheless fortified east-west borders along the Iron Curtain from the Arctic to the Black Sea.

There was a human cost to the Berlin Wall and the inner-German border. You weren’t allowed out, but that didn’t stop people trying. Some made it, many not.

Real estate investing is about finance and economics, about deals, but it’s politics that makes it happen; it was certainly politics that brought down the Berlin Wall and it was politics that brought about the rebirth and renewal of central and eastern Europe.

Václav Havel, president first of Czechoslovakia from 1989 to 1992 and then of the Czech Republic from 1993 to 2003 following the country’s split with Slovakia, was a dissident in the 1970s and 1980s and a thorn in the side of Czechoslovakia’s communist rulers. With others, Havel did much to help bring about the terminal decline in the communist system that ultimately led to the fall of the Berlin Wall and his country’s rejection of communism.

In The Lost World of Communism, a BBC TV documentary series, Havel made a telling comment about the legacy of the communist way of life, the impact that it had on society and people — “Two more generations will have to grow up,” he said, “before communism is forgotten.”

Berlin celebrated the 10th anniversary of the fall of the Wall in 1999 and the 20th anniversary in 2009. But it is Havel’s comment about the generations that strikes a chord. It takes 25 years to grow a generation, and that is why this year’s celebrations may have a deeper meaning for many, a resonant reminder of how things were and will not be again. There are now very few people alive who experienced the horrors of the First World War, the numbers who remember the Second World War are diminishing rapidly, and one day there will be no one left to remember communism and the Berlin Wall.

Communism is not forgotten. Those who lived under its harsh yoke will never forget it. But the passage of time means that the number of people who know what it was like is reducing all the time; “as we that are left grow old,” to quote Laurence Binyon. The crowds gathered in Berlin on 9 November and they celebrated, young and old.

But it is undeniable that those under age 25 today — the new generation — will not really know or understand what they are celebrating, just as many of those who are under age 70 today do not really know what it is like to suffer war, loss and deprivation.

The military activities, with significant losses, that NATO troops have been involved in around the world, notably in Iraq and Afghanistan, are a continuing reminder of the human cost of war but these activities are not part of total war on the European doorstep. Perhaps that’s part of the problem; if that fighting had been closer to home and more threatening to civilian populations, maybe governments would have taken more account of the negative public opinion.

Most people never got near the Cold War, never suffered its depredations. But the Berlin Wall was synonymous with the Cold War, a war that was fought largely in oppression, fear and secrecy. Binyon’s famous war memorial poem is apposite, even for the end of the Cold War that the fall of the Berlin Wall in effect represents.

Part of the Berlin celebrations — just two days before Armistice Day, the annual celebration of the coming into effect of the Armistice Treaty that marked the end of the First World War, on the eleventh hour of the eleventh day of the eleventh month — was devoted to remembrance services in commemoration of those 1,200 or so citizens of the German Democratic Republic (sadly, the exact number is not known as the GDR government was icily assiduous in not keeping such records) who lost their lives trying to cross the Berlin Wall or the inner-German border in search of freedom and a better life:

They shall grow not old,
as we that are left grow old.
Age shall not weary them,
nor the years condemn.
At the going down of the sun
and in the morning
We will remember them.

Commercial real estate is part of the fabric of modern society. Real estate investing doesn’t get more important than being part of the modern, multi-asset approach to asset management and wealth generation, even if we know that this asset management — whether undertaken by us as individuals or on our behalf by investment managers — isn’t at present providing the kind of positive returns that we need for a prosperous future.

This is also a reminder that what the real estate investment industry does in generating wealth, development and transaction activity isn’t just for itself, it is for the people who invest in the industry. Despite the recovery of world markets since the Lehman Bros collapse and the global financial crisis, maybe the future won’t be as prosperous as we would wish; are you prepared for that?

For the many millions of individuals across Europe, east and west, who are members of pension plans and insurance schemes, real estate investing is part of their efforts — whether they know it or not — to ensure financial security, part of their retirement income aspirations. Some people didn’t get to aspire to financial security or retirement income. They are the ones, two World Wars and a Cold War later, whom we now remember.

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RichardFlemingRichard Fleming is editor of The Institutional Real Estate Letter – Europe.

QE takes a hike … abroad

As expected, the U.S. Federal Open Markets Committee ended its asset purchasing program — you know, “quantitative easing” — at the end of October, ending its six-year effort to prop up the economy and hold off deflation, a fate that “would have been a terrible death for the [commercial real estate] industry,” in the words of Ray Torto, GCE and current lecturer at Harvard, Graduate School of Design.

And, with unemployment under 6 percent for the first time since 2008, and GDP growth expected to hit the hallowed 3 percent mark in 2015 and 2016, according to the OECD, the timing might be just right — for commercial real estate and the greater economy. As Torto notes:

“QE ending takes the wind from our backs, but commercial real estate has some self momentum now, and the end of QE will, in a few years, lead to higher interest rates as a reflection of a growing economy. All asset classes that discount future cash flow will be affected by higher rates, but with NOI growing, commercial real estate is in a sweeter spot than any fixed income asset. The rising NOI will offset some — or all — of the effects of higher discount rates.”

But QE’s reign hasn’t ended everywhere — the Bank of Japan, for example, decided to extend and expand its QE program just two days after the U.S. ended its own, following recommendations from the OECD to do just that amid meager growth projections as low as 0.9 percent for 2014 and 1.1 percent for 2015.

And similar measures have been recommended for the struggling euro area, where the OECD projects growth as low as 0.8 percent for 2014 and 1.1 percent for 2015, despite “positive steps” taken this summer by the European Central Bank, which include the introduction of a negative interest rate.

“With euro area inflation far below target and drifting downward, the European Central Bank should expand its monetary policy stimulus — even beyond measures already announced — building on the positive steps taken to date,” the OECD said in a statement released Nov. 6.

QE-ville may no longer be located in the United States, but it is easing its way off the world stage amid the baby-stepping global recovery.

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ReggieClodfelter91x119Reg Clodfelter is a reporter with Institutional Real Estate, Inc.

Texas two-step

As the story goes, it was on the eighth day that God created Texas. On the ninth day, Texans started bragging.

According to some, everything in Texas is bigger and better. While at one time many of these claims may have been just a lot of hot air, today the Lone Star state does indeed have some facts to back up its boasts.

Texans Map

The Texas economy, boosted by the shale oil revolution, is a shining star on the national level, outpacing the rest of the country in job growth and economic growth. Unemployment in the state is at a low 5.2 percent compared with the national average of 5.9 percent. In 2013 the state’s GDP represented 17 percent of the total U.S. GDP.

Of course, commercial real estate investors have taken note of the state’s economic boom and improving real estate fundamentals. In the annual Emerging Trends in Real Estate report produced by PwC and Urban Land Institute and based on a survey of more than 1,000 real estate experts, Houston was voted the number one major U.S. market for investment and development opportunities. Austin ranked second overall based on investment, development and home building prospects, and Dallas/Fort Worth ranked fifth overall.

However, it hasn’t always been days of wine and roses for the state of Texas. Those of us with a little more seasoning will remember the oil and gas booms and busts of the 1970s and 1980s. During the bust of the 1980s that sent the Texas economy plunging, locals had to endure their share of ribbing. For example:

  • How do you make a small fortune in Texas oil? Start with a big one.
  • What do you call a petroleum geologist? Hey, waiter!
  • A Texas bank is giving away a toaster or an oil well if you open a new account. Everybody’s taking the toasters.

But that was then. While the oil and gas industry remains a major driver of growth, Texas now has a much more diverse economy that includes manufacturing, finance and technology. In 2013, for the 12th consecutive year, Texas was ranked the number one exporting state in the nation. A recent survey ranked Texas as the number one state in technology job growth. In an annual survey of CEOs conducted by Chief Executive magazine, Texas was rated the best state in which to do business for the 10th consecutive year. And the Milken Institute named Austin the best performing city — based on a number of criteria that measure economic success — in its annual ranking of metropolitan areas, and recognized Dallas and Houston in the top 10. Seven of the report’s top 25 best-performing cities in 2013 are in Texas.

As Texans are quick to point out, it’s not bragging if it’s true.

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LarryFinalwebv2Larry Gray is editorial director of Institutional Real Estate, Inc.

Moving at a high rate of speed

dv617062Humans are social animals. We need to be with other humans. We need to share information and collaborate. We need to be connected.

Despite the fear that technology would isolate us, it is actually doing the opposite. We can now be connected all the time. It won’t be long before being “offline” will cease to exist as everything we own from thermostats to cars to communication devices are virtually (and literally) connected.

Being able to stay connected day and night has changed how firms are doing business, and particularly changed how they view advertising.

David Rowan, editor of WIRED, spoke at the recent annual conference of EPRA (the European Public Real Estate Association) in London. He provided example after example of how collaboration and connectivity have exponentially accelerated the growth of companies and changed how they market and advertise.

For example, WhatsApp spent zero dollars on marketing and advertising. Instead, it relied solely on social media and word of mouth to grow its user pool, which was paid subscription-based because the founders didn’t want to rely on ad sales to fund the app. Within four years of its founding, WhatsApp had more than 400 million monthly users. (And to reiterate — this wasn’t a free app. Users had to pay to become subscribers.) In early 2014 it was sold to Facebook for $19 billion, and its monthly usage has grown exponentially to 600 million.

Other examples of the speed at which businesses are evolving:

  • Deepmind is an artificial intelligence company founded in 2011. Its goal is to understand the human mind and how intelligence works. Despite not having a product, Deepmind was bought by Google in early 2014 for $650 million. (I’m sure Google, which isn’t opposed to paid ads, sees the economic advantage of understanding how people think.)
  • It took Hilton four decades to grow to 650,000 hotel rooms under management. Using social media, Airbnb grew its rental network to 650,000 units in just four years.
  • What used to be the prerogative of governments has also changed in the blink of an eye. For example, Bangkok protestors used their own drones to override the government Internet blackout and broadcast what was happening to social networks worldwide.
  • Funding projects is no longer centered in the hands of a few. Kickstarter has taken the funding power and introduced democracy.

Rowan was pretty clear. Change is now exponential, not linear. Business owners must learn to work faster, smarter and more collaboratively. If they don’t, they’ll be left behind. Netflix has derailed Blockbuster. The failure of management to embrace smartphone technology has proved to be Nokia’s Achilles heel. When Facebook was paying $13 billion for Instagram, Kodak was filing for bankruptcy. The examples are endless.

Rowan ended his presentation with four principles for success:

  • Design for connectivity
  • Collaborate to add value
  • Move quickly
  • Don’t get in the way of customer expectations (have frictionless interface)

Of course, if all one had to do was adhere to four principles to succeed, we’d all be selling billion-dollar businesses to Google and Facebook (though it would probably also help if we were all 20-somethings who are able to work day and night with five other people in an old warehouse for a couple of years).

So we can probably agree that following these four principles will not guarantee you a successful business. But in today’s world, not following them will probably pretty much guarantee you an unsuccessful business. That makes the decision on what to do pretty easy.

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SheilaWebSheila Hopkins is managing director – Europe and infrastructure with Institutional Real Estate, Inc.