A new way to use Skype

As many of you know, Institutional Real Estate, Inc. started conducting video interviews at our board meetings and conferences back in the beginning of 2013 to provide another platform for sharing industry insights and analysis.

Now, in addition to those videos, we have started to interview industry professionals via Skype, similar to what you see in mainstream media. This allows us to provide viewers with timely commentary and analysis at a more frequent rate.

In our latest video, Richard Kleinman, managing director of research and strategy and LaSalle Investment Management, discusses the current state of the U.S. marketplace.

Enjoy!


DenisewebfinalThe views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Denise DeChaine is special projects editor and video production specialist of Institutional Real Estate, Inc.

Positioning your message, positioning your fund

Real estate investment managers can learn a lesson from the use of music in television commercials when developing a strategy to bring a new fund to market.

For example, it is not uncommon to watch television or listen to the radio (for those of us who still do that) and hear an old song that accompanies the merchandise being marketed. The purpose of choosing these “oldies” is to connect us with a time we consider nostalgic and bring us back to our respective youthful times. It’s a tried and true method of creating a mood in the 30 to 60 seconds of airtime that have been purchased.

However, so often when listening to the music soundtracks and the products offered at the moment, the messages can often be classified as mixed at best and completely off the wall at the worst.

Two companies whose musical choices create the biggest question marks are Royal Caribbean Cruise Lines, which chose “Lust for Life” by Iggy Pop for an entire campaign a few years ago, and automobile manufacturer Kia, which recently chose “Dueling Banjos” by Eric Weissberg for its Kia Soul line.

As a reminder, the Iggy Pop punk classic refers to drug use, liquor and many physical acts that some may consider inappropriate, especially when promoting a family cruise vacation. And “Dueling Banjos” gained huge popularity as the main theme for the very dark 1970s canoe and camping trip movie Deliverance. (Nothing more needs to be said about this particular contribution to the wonders of cinema.)

One might ask, how does this happen? Who is control of matching this music to what may be considered wholesome family fare? My guess is the creative teams at these company’s advertising agencies were only children sitting in the backseats of their parent’s cars, remembering these songs but having absolutely no recollection of what they’re connected to.

This is something to think about when positioning your fund strategy when attempting to connect with your audience. One question to ask is, “Who in our organization has a true understanding of our product line? And who understands how to bring this message forward? Is this person or team able to succinctly describe that message to marketing and public relations professionals, whether internal or external?” In truth, it’s not an easy task at all.

There are certainly examples of funds that got hammered by the global financial crisis, and quite possibly properties from these funds might end up in your brochure a few years from now because the marketing team didn’t do their proper research when developing the creative collateral materials for the new strategy.

Innocent enough, yet this is where keeping your eyes and ears on the marketing message can get completely lost. You rarely get a second chance to capture a potential customer’s buy-in, and not being completely clear about your message can do immeasurable damage to your brand.

A company needs to be on point in all aspects of its message and the medium it is using to get this message across. Without it, you might find yourself at the end of a very bad camping trip, or worse.


Jonathan_Schein-NEWThe views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Jonathan Schein is senior vice president and managing director of global business development at Institutional Real Estate, Inc.

Guess which esteemed Big Apple address is suffering corporate defections

Park Avenue, New York

A series of upcoming departures by some of Park Avenue’s largest office occupants has real estate observers wondering if New York City’s premiere business address is losing its luster. Citigroup and Major League Baseball are moving, and the giant investment firm BlackRock is weighing an exit in the coming years, according to a report in Crain’s New York Business. Those moves and several others could leave more than 2 million square feet vacant, almost 10 percent of Park Avenue’s office market, as defined by its expanse between East 45th to East 59th streets. Mary Ann Tighe, CEO of CBRE’s New York office told Crain’s:

“We’ve always looked at Park Avenue as the No. 1 location for office space in all of Manhattan. But what you’re seeing is a migration to newer product. The age of these buildings is catching up to them.”

If you want to know more, click here for the full article.


MikeCfinalwebThe views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Mike Consol is editor of Real Assets Adviser.

The world’s best and worst places to live

The Melbourne skyline looking across the Yarra River

If you live in Melbourne, Australia, congratulations! For the fifth consecutive year, your city ranks No. 1 on The Economist Intelligence Unit’s Global Livability Ranking, which scores 140 cities across the globe on livability.

Livability scores are based on weightings for the lifestyle challenges of Stability (25 percent), Healthcare (20 percent), Culture & Environment (25 percent), Education (10 percent) and Infrastructure (20 percent). With Stability, threats of terrorism and social unrest were key to the decline in livability rankings for 29 of the 140 cities surveyed, a drop of 20 percent during the past 12 months.

Cities in Australia and Canada grabbed six of the 10 top spots for livability. Here are lists of the top 10 most and least livable cities, according to the report:

Top 10 most livable cities
1. Melbourne, Australia
2. Vienna, Austria
3. Vancouver, Canada
4. Toronto, Canada
5. Calgary, Canada (tie)
5. Adelaide, Australia (tie)
7. Perth, Australia
8. Auckland, New Zealand
9. Helsinki, Finland
10. Hamburg, Germany

Top 10 least livable cities
1. Damascus, Syria
2. Tripoli, Libya
3. Lagos, Nigeria
4. Dhaka, Bangladesh
5. Port Moresby, Papua New Guinea
6. Algiers, Algeria (tie)
6. Karachi, Pakistan (tie)
8. Harare, Zimbabwe
9. Douala, Cameroon
10. Kiev, Ukraine

The report also looks at the cities with the biggest five-year livability score gains (Dubai, Warsaw and Honolulu) and declines (Detroit, Moscow, Paris and Athens).


Jennifer-Molloy91x119The views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Jennifer Molloy is senior editor of Institutional Real Estate Asia Pacific.

Star power

Every year, Institutional Real Estate, Inc. teams up with Property Funds Research to survey real estate investment managers from around the globe for a Global Investment Managers report. We survey them on their assets under management, how many vehicles they have, where they invest globally and so forth.

This year’s survey showed a number of managers enjoyed double-digit growth in AUM during the past year. The industry’s top two largest investment managers, Brookfield Asset Management, with $149.8 billion in AUM as of year-end 2015, and The Blackstone Group, with $147.6 billion in AUM, recorded growth of 19 percent and 22 percent, respectively, based on figures reported in the prior year’s survey. The two behemoths continue to outpace others in the industry, as there is a growing and sizable gap between them and the other largest investment management firms.

This year’s report captures data on 194 real estate investment managers around the globe. As a group, they control nearly $2.8 trillion of real estate assets. Also indicative of the jump in AUM, the top 10 largest managers, as a group, experienced a 12 percent increase from the previous year; the top 100 managers recorded a 14 percent increase.

Similar to years past, the data shows a strong concentration of assets held by the industry’s largest firms. The Big Two — Brookfield and Blackstone — account for 10.6 percent of the collective AUM reported by the 194 firms in the survey. The top 10 firms represent 33 percent of aggregate AUM, while the top 20 investment managers account for 53 percent.

For more trends and a more in-depth look into the report, click here. There is also a version that tracks assets in euros, available here.


DenisewebfinalThe views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Denise DeChaine is special projects editor and video production specialist with Institutional Real Estate, Inc.

A very hot apartment market

The Intersection

The October issue of Institutional Real Estate Americas will take a look at development risk and where we are in the cycle. Those risks can include anything from construction cost overruns to difficulties leasing or selling the completed building. One of those risks: Fire.

Last month, The Intersection, a 105-unit apartment building under construction at 3800 San Pablo Ave. in Emeryville, Calif., caught fire in the middle of the night and burned down to its concrete parking garage, leaving nothing but twisted scaffolding behind. Months of labor and materials went up in smoke, putting the development behind schedule. According to the San Francisco Business Times, the $40 million construction project by Holliday Development is being set back six to nine months, shifting its opening from the beginning of 2017 to end of the year.

While catching fire is a bit on-the-nose, metaphorically, the San Francisco Bay Area residential market has been blazing hot, and apartment developers have been working hard to take advantage of the strong rental market. The Intersection is one of several projects under construction or planned in the Emeryville neighborhood bordering Oakland.


LorettawebfinalThe views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Loretta Clodfelter is senior editor of Institutional Real Estate Americas.

More is less?

Short Attention SpanIn developed countries such as the United States and the United Kingdom, mobile technology is omnipresent. And that’s the problem, at least according to some who believe too much of a good thing can be a bad thing.

If you use the Internet, are familiar with texting or chatting, and have not been living in a one-room log cabin in the remote woods of Idaho, then you probably know NetLingo acronyms such as LOL (laugh out loud), OMG (oh my god), JK (just kidding) and YOLO (you only live once). But do you know FOMO? How about IAD?

FOMO is the acronym for “fear of missing out,” thus the desire to always be “connected.” IAD stands for “Internet addiction disorder,” which is pretty self-explanatory. And with the pervasiveness of technology, personal devices and the Internet, you can add to the lexicon other technology-related disorders, such as “nomophobia” (fear of being without your mobile phone) and “NetBrain, ” a disorder characterized by increased levels of narcissism, poor attention span, a fear of missing out and antisocial behavior.

So what’s the problem? Recent studies have reported an “alarming rate of technology dependence.” This can result in a loss of productivity in the workplace, stunted development of social skills, increased narcissistic behavior, and health issues including social anxiety, insomnia, hearing damage and repetitive stress injuries.

For example, in an April 2015 journal entry in JAMA Internal Medicine, doctors discuss the case of a 29-year-old man who approached physicians after his left thumb became painful and he lost active motion. It turns out the patient had been playing the matching game Candy Crush on his cell phone “all day for six to eight weeks.” (It’s unclear whether or not the man had a job, but I’m thinking probably not.)

The tendon that controlled his ability to extend his thumb had to be surgically repaired. (OMG, LOL)

However, the main contention and concern espoused by many researchers is people are spending so much time online cultivating their virtual relationships that they are missing out on developing deeper, personal “real world” relationships.

Because of mobile technology dependence and the widespread use of social networking, some employers complain millennials in the workplace lack social skills, including appropriate phone skills, conversation skills and eye contact. Not to mention that they need constant feedback and immediate gratification. (JK)

But then again, maybe it’s a case of the old generation trying to apply dated ideas and principles to a changing new-world order.

As a young intern might comment on the office chatter, “WTBD?” (What’s the big deal?)


LarryFinalwebv2The views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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

Back to the communes

The commune. Many claimed “commune” was short for “communism” when it rose to prominence in the 1960s and became popular among hippies, yippies and beatniks. Those libertines seemed more interested in smoking weed, growing long hair and partaking in the sexual revolution than becoming contributing members of traditional society.

That was then. Now that cohort is the aging baby boom generation, and they are retiring at a clip of 10,000 per day. Actually, it’s more accurate to say 10,000 per day are turning age 65, which we have long considered retirement age.

Here’s the problem: 57 percent of American workers have saved less than $25,000 for retirement, and 28 percent have saved less than $1,000, according to statistics compiled by the Employee Benefit Research Institute. Good luck retiring on that paltry serving of cheddar.

Those financial straits are why conversations among the retirement-age set so often include notions of taking Social Security checks overseas to places such as Ecuador, Mexico, Panama, the Philippines and other Latin American and Asian countries where the lifestyle is good and the strong American dollar stretches two or three times as far. The reality check that so often puts the brakes on that notion is the dismal prospect of being so distant from children and grandchildren, as well as extended family members and a lifetime of accumulated friends.

And now we begin to understand why the commune is coming back into vogue — albeit without the weed, “free love” and iconoclastic visions. Now we’re talking about a small group of people sharing living quarters, chores and expenses with different motivations in mind than during their first iteration of the commune experience. They are looking for companionship, assistance during times of infirmity and, of course, the opportunity to combine financial resources in a way that amplifies the power of those modest Social Security checks and retirement savings.

Heck, maybe we can even team up with some lifelong friends and family members, people we know, like and get along with. It could even be a multi-generational commune. Young people (yes, millennials) are already living with their parents in near-record numbers, and not just because they cannot find jobs. Many do have jobs, and they actually like their parents. Attitudes have changed since we baby boomers were kids. When attitudes change, so do lifestyles. Millennials see value in teaming up (and it’s a great way to stuff the mattress with greenbacks, so they don’t end up old and broke like their parents).

There is another factor at work here. When boomers think about the prospect of finishing their lives in a nursing home, their mouths pucker like they just bit into a lemon. No thank you. Unless you have a ton of loot to carry yourself through those so-called Golden Years, that nursing home isn’t exactly going to be the Taj Mahal. Creamed corn and fruit cocktail is not appetizing at any age.

Assuming the communal living trend gains real momentum, it could even be a great real estate development opportunity.

Consider that we used to live in groups. They were called “extended families.” As wealthy societies flourished, though, we decided we wanted our own space. We wanted privacy — even solitude. The property construction business was happy to balkanize our living situations, ushering in the era of single-family homes occupied by nuclear families and with backyards fenced-off from our neighbors. Little wonder so many Americans feel isolated and even alienated from their societies.

Since those days, the economics have changed. Families, even extended families, have started to aggregate under the same roofs again. Hence, group living is back in style, and the benefits of connectedness are becoming apparent to many. Human beings are social animals, after all.

Communal living is back for young and old, albeit in modified form. It is even the subject of feature stories in The Atlantic, the Huffington Post and The New York Times.

Some baby boomers have come full circle and are back to communal-style living. Others are sure to follow, out of economic necessity if nothing else. They are sharing their financial resources, their labor, their talents and their companionship. Heck, with the way marijuana laws are changing in this country, they might even have some flashbacks and burn a little weed. Just for old time’s sake.


MikeCfinalwebThe views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Mike Consol is editor of Real Assets Adviser.

California developers look ahead

California commercial real estate continues to strive, but hints of slowing economic growth are a possible concern, according to the Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey. The biannual survey projects a three-year-ahead outlook for California’s commercial real estate industry and forecasts potential opportunities and challenges affecting office, multifamily, retail and industrial sectors.

For each of the six markets surveyed (San Francisco, the East Bay, Silicon Valley, Los Angeles, Orange County and San Diego), the trend in office developer sentiment has declined since its peak in 2014. This downward trend occurs as developers become more pessimistic about the growth of real rental rates and vacancy rates.

Mulitfamily developer optimism has remained strong and consistent over the previous four years that it has been included in the survey. The demand for multifamily housing tends to follow job growth in the more densely populated regions of California. Overall, the survey anticipates a 25-year high in multifamily construction during the next three years. Unlike office space, there is no evidence of a slowdown in new multifamily development.

For more on the survey, see “California developers show signs of pessimistic concerns.”


AndreafinalwebThe views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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

Embracing cool streets

Investors are keeping a keen eye on trends for millennials, a growing population often viewed as ultra-cool that is becoming a significant consumer group. Cushman & Wakefield stresses the importance of looking beyond malls, high streets and main streets to Cool streets: Explore the hottest urban retail markets across North America in its 2016 inaugural report:

“If retailers live and die by cool, the same also holds true of retail properties, shopping centers and entire neighborhoods. Whenever we speak about real estate, the issue of location and a number of other factors come into play, but the reality is that cool matters. In an age of frugal consumers, e-commerce encroachment, and vast gaps in performance between trophy malls and Class B and C centers, cool matters now more than ever.”

While a neighborhood’s urban renewal process often took decades to achieve, now “troubled” neighborhoods can reach “prime hipness” within a few years, and then move from “prime hipness” to “gone mainstream” even more quickly.

For example, the report suggests Brooklyn’s Williamsburg neighborhood could be considered the poster child for the cool streets movement. Once in decay in the 1990s and seemingly a world away from the prestige of Manhattan, an influx of “creatives, artists, musicians, hipsters and the LGBT community” began taking a chance on the “edgy,” at best, Williamsburg neighborhood starting about 1999, after being priced out of Manhattan’s residential market.

“They brought with them a counterculture philosophy that infused Williamsburg’s commercial corridors. New bars, music venues, art galleries and boutiques catering to their tastes sprang up in the area. The cool street cycle was set in motion, and Williamsburg’s appeal grew — as did its rents. Within just a few years, residential rents in Williamsburg were on par with top Manhattan apartment rates. National chain retailers engaged in bidding wars over prime corner shop space while quirky independents were priced out.”

In evaluating the top 100 cool streets of North America, the report sports a “Hip-O-Meter” for at-a-glace viewing of where neighborhoods are in the cool street cycle: edgy/cool; up and coming; prime hipness; still cool, but going mainstream; and gone mainstream. Also examined are: livability and retail flavor, residential rents, retail rents and demographics.

If you want your finger on the pulse on what’s likely to be hot in retail in the future, look no further than the “incubator” of cool streets, states the report.


Jennifer-Molloy91x119The views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Jennifer Molloy is senior editor of Institutional Real Estate Asia Pacific.