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Monthly Archive for: ‘August, 2011’

  • Electric Cars in Atlanta

    If electronic cars truly are the future of transportation, then this seems like good news for ATL.

    – Duke

  • Best Practices: Don’t Complain About the Market

    This may seem a little harsh, but I am going to say it anyway.

    Besides, this is just my opinion and I will readily admit that I may be wrong.

    So, having prefaced my theory with that warning, here is my advice:

     

    Stop complaining about the market.

     

    I know it’s tough. You know it’s tough. Anyone who reads the paper knows it’s tough. My grandma even knows it’s tough and she is a 90 year old homemaker.

    So, by telling me how bad the market is you don’t really add any value or knowledge to the conversation.

    Maybe you are looking for sympathy or commiseration. Well, I am in the same market you are, so sympathy will be tough to come by. And like I just said, we all know how tough the market is and that this is a once-in-a-lifetime type of recession. I don’t need to hear it from you and I don’t really want to commiserate.

    I’m the kind of stubborn guy that wants to find a way to make money in spite of the market. Any fool can make money when the market is blistering hot. It takes creativity and inventiveness to make it when the chips are down.

    Another way to say it, is I don’t want to focus on the problem. Let’s focus on the solution.

     

    Let me tell you a little secret:

    Lots of people are still making lots of money. Even in this tough economy, people are still KILLING it.

    So when you tell me that you haven’t closed a deal or that all of your deals are falling through because of the tough market, what you are really saying is “I haven’t figured out a way to make money in this market.” Fundamentally, there is opportunity in every market cycle. It isn’t always obvious or easy, but it is always there.

    Just look around. Several of the companies in Atlanta and elsewhere are still actively pursuing deals and are closing. Developers are developing. Properties are selling.

    The world is still moving. What you have to do is figure how to move with it.

    That may mean you shift strategies slightly. Or, you may change directions completely. You may have to change property types or location. Whatever you do, get in the way of the money.

    In fact, most people would say that is the main difference between this recession and the S&L crisis. There is still a ton of capital chasing deals today. There was none in 1991.

    So, deals are closing. Money is chasing property. There is still a fortune to be had in this market.

     

    Don’t tell me how bad the market is. Tell me how you are going to shift your strategy in order to get involved with the deals are happening.

    That type of creativity and resilience will distinguish you from your competitors and I will be calling you first when the market returns to full strength.

    – Duke

     

  • 10 Random Thoughts

    Courtesy of the Orlando Sentinel

    IT’S FOOTBALL SEASON!

    Let’s Get Random . . . .

    1. Speed, Accuracy, and Cost-Control. Those are the three aspects of deal-making and you can have two of the three on any given deal. Which two matter most?

    2. Don’t whine about the market. More on that tomorrow. . .

    3. There is a special buzz around this fair city when football season starts. I dig the energy.

    4. Read this article: http://www.fastcompany.com/magazine/158/world-trade-center-construction

    5. Trader Joe’s > Publix > CostCo > Whole Foods >  Aldi > Fresh Market > Kroger

    6. Girly voice or not, Justin Timberlake is darn talented and I like him more than I care to admit.

    7. What is the point of a roundabout instead of a light or stop sign? What does that accomplish that the other two do not?

    8. Perhaps my biggest frustration with any commercial development right now is the lack of EASY parking. If I have to be careful not to touch the car next to me with my car door, then your parking spot is too small. Keep in mind, 99 times out of 100 my first footstep on your property is in a parking spot. If my first experience is with cramped or far away spots, then you are already down a strike.

    9. Tim Burton’s movies weird me out in the best way possible.

    10. Maybe I am the only one, but I think that Dobbins AFB needs to be turned into Atlanta’s second airport. Don’t tell me about the current cost unless you have conducted EXTENSIVE research on the long-term cost of only having one airport in a city of almost 6 million people (and counting . . .).

     

    Stay random and look for an article about the bad market tomorrow!

    – Duke

  • Networking Notes: Office Acquisitions

    Since I have committed to writing a book about careers in CRE, I have started to work pointed research questions into my networking meetings.

    Other authors may call these research interviews, but I prefer to think of them as just well-directed questions between friends.

     

    So, from time to time, I will post these interviews on here for your reference. I will be keeping the interviewee confidential unless he or she specifically requests otherwise.

    Check back daily to see the updates.

     

    Today’s meeting was with a senior officer with a local office acquisitions firm. His responses are below.

    Three crucial characteristics to possess in order to be successful in CRE are: Work Ethic, A Small Ego, and Vision (with Luck).

    The best learning and training grounds for CRE are: anywhere that allows you to run numbers and do analytical work and anywhere you can find a good mentor. Work-outs are great experience.

    Generalists can be successful in our business, but focus is always better.

    Three things that the best in office acquisitions do that no one else does: Work with speed, make the sell easy for the seller, and execute with “laser” focus.

    The one habit young people should pick up in their career: hard work.

    The people you respect the most are: well-liked, well-respected, disciplined in the buy AND the sell, and are understated.

    A word of caution to beginners: be patient! Have high career expectations, but don’t set them to high too soon.

    A great book to read for CRE pros: Good to Great by Jim Collins.

    Favorite part of the CRE business: the people and the fact that I can get out of the office and see property.

     

    – Duke

     

  • Careers in CRE – Know Yourself (Part III)

    This is what happens if your force yourself into development!

    Don’t chase the Money!

    Sounds simple enough, right? Don’t chase the money.

    Simply put, developers have the POTENTIAL to make the most money in our business. I say “potential” to make money because I have found that while they can make heaps of money, they don’t always succeed in doing so. Quite the opposite, they usually end up losing the most money.

    Anyone who has been around the block for a while will tell you this. It’s no big secret. Developers win big and lose big.

    I once heard of a developer who went to a convention in Vegas. All of his contemporaries were at the blackjack tables, slots, and roulette wheels while he stayed aside and sipped his cocktail. A friend came up and asked “Jim, why aren’t you gambling. We’re in Vegas buddy!” Jim looked at the guy and said “Son, I’m a developer. I gamble every single day of the year with my money. I don’t need any more gambling in my life.”

    While this anecdote may be a slight exaggeration, the basic point rings forcefully true.

    Developers can bet the farm and come up with gold or come up with lead. Even the best of the best have struck lead a time or two.

    So, how does this apply to you and your career in CRE?

    Well, young fella, as you are deciding which direction your career path will take you, I am sure you will end up considering development at one point or another. I don’t blame you. The money is great, the lifestyle is good, and the deals are interesting and fun.

    But a word of caution from the front lines: Don’t chase the money.

    Just because developers make the most money doesn’t mean that everyone in CRE should aspire to be a developer. Development isn’t the pinnacle of CRE transactions. It is a crucial piece of the pie, but it isn’t necessarily the biggest or most important piece. Certain people are cut out for it and others are not.

    As I mentioned in Part I and Part II, you have to decide for yourself what fulfills you and what your skills most directly support. For instance, if you are risk averse, dislike networking, and thinks SALES is a four-letter word, then development probably isn’t for you.

    I know, I know. The paychecks can be huge and it certainly seems like all the best developers have Aston Martins and G6s. But for every one developer who has achieved great success, there are 5 who tried to be something they weren’t, chased the big paycheck, and ended up losing tons of their money and their client’s money. Frankly, several of the big name developers in our city have had to give up their G6 and file for bankruptcy. And these guys have been doing it for 30 years!

    So put it out of your head that commercial property development is some walk-in-the-park with huge paychecks, a fast lifestyle, and your name in the paper. It is tough work with high rewards that is suited for a certain type of person with a certain personality.

    We will get into the specific skill set of the developer later, but for now just look around. Are the best developers in the city similar to you in terms of personality and inherent skill? Do they walk, talk, and act like you do?

    If not, don’t chase the money. Do something else that you enjoy and that you can be exceptional at. That really is the only way to a truly rewarding career.

    This is a huge industry and there is room for all of us. We just can’t all be developers.

    So, know yourself and what motivates you. If you find that your talents are uniquely suited to development, go for it. If not, don’t force it.

    Trust me. You will thank me later.

    – Duke

     

  • 10 Random Thoughts

    Random Thoughts to start the week:

    1. I purposefully avoid Midtown and Downtown for lunch meetings because of the hassle (and cost) of parking.

    2. If I could only buy one office building in the city, it would probably be 191 Peachtree. That building is just beautiful. Then I would make parking free . . . .

    3. Has anyone else noticed the pick up in investment sales activity across the board? Property is moving regardless of debt and market concerns. That seems like great news to me. Investors are less skiddish.

    4. I like that John Portman is being honored with a street name. His projects truly defined the Atlanta skyline and he deserves some recognition.

    5. The Atlanta police never make me feel safe. Instead, they make me feel watched. It’s not like I am some major felon or criminal on the rampage. I have gotten two speeding tickets in my entire life and they were both on the last day of the month (aka quota day).

    6. If Cobb and Gwinnett will not vote for rapid transit, then I will have no sympathy when their housing markets and local economies are in shambles in 20 years when all the boomers retire and move to their condo in Florida. Of all the people I know under the age of 35 who own their own home, less than 2% live in the suburbs. My generation lives in the city and if you want access from the suburbs, you need rapid (mass) transit. Figure it out or pay the price in 2035.

    7. Is there any way other than CoStar to find out who owns a particular piece of property? I mean the true owner and not the LLC that holds title who you find through the Fulton/Dekalb Sec of State website.

    8. What is the greatest innovation in the last 20 years in commercial real estate? Don’t say sustainability because it hasn’t affected a large enough proportion of commercial buildings, yet.

    9. If he is anything like he seems, I bet I would like Jason Bateman.

    10. Every man I meet is my superior in some way. He may know more than me about fly fishing, taxidermy, or martian terrain, but every man I meet knows more than me about at least one thing. Keeping that in mind, it is difficult to develop too strong of an ego or sense of self-importance.

    Happy Monday and look for another article on careers in CRE tomorrow.

    – Duke

  • Careers in CRE: Know Yourself (Part II)

    He is smarter than he looks.

    In my last post, we discussed the importance of knowing yourself and what truly fulfills you. If you aren’t doing something that fulfills you, then you probably won’t be very good at it.

    Today let’s talk about (what Jim Collins calls) your hedgehog concept. In Good to Great, Collins tells the story of a proverbial fox stalking a hedgehog. The fox is very clever and sneaky. He is stealthy and silent as he eyes the tasty hedgehog. Without warning, the fox sprints out into the open and speeds toward the innocent hedgehog.

    Sensing danger, the hedgehog does what hedgehogs do. It rolls itself into a tightly-wound little ball of spikes. When the fox arrives at the “ball,” he pokes and prods, kicks and snaps, but no matter what he does he cannot force the hedgehog to unroll. The fox can’t fit the ball in its mouth and could only get a bite out of the sensitive hedgehog flesh enclosed inside the “ball.” So, after several minutes of frustration, the fox gives up and trots away looking  for an easier meal. Realizing that the danger has passed, the simple hedgehog unrolls itself and waddles away unharmed.

    In Collins analogy, we want to be the hedgehog, but to many people try and be the fox. People who are the fox are a little too clever for their own good, try and outguess the market, always dart back and forth trying this and that, always trying to be the smartest, quickest, and best around.

    Hedgehogs are people who know what they are best at and stick to THAT. The hedgehog didn’t try to outrun the fox. He didn’t try and fight the fox. He didn’t dig a hole. He just did what he does best, curled into an impenetrable ball.

    That is what you want to be.

    In CRE, if you try and be all things to all people, attempt to outguess the market, try and out-quick or out-think everyone else, you will end up chasing your tail and biting yourself often.

    If, on the other hand, you stick to what you are best at and focus on staying great at that, then you will find as much success as you need in this business.

    Maybe you are best at salesmanship and need to find your career in investment sales.

    Maybe you are best at handling tenants and need to pursue property management.

    Maybe you are best at recognizing value and how to add it and need to own property.

    Maybe you are best at creation and vision and need to develop properties.

    Maybe you are best at solving problems for clients and need to become an asset manager.

     

    I should mention that you can be talented at more than one thing. You may be very skilled at several things, but chances are fairly high that you are GREAT at one thing. You are better than anyone else you know at __________.

    Whatever that _______ is, do that. That is your “hedgehog” concept. You don’t have to out-quick or out-smart everyone. You just need to play to your strengths.

    It sounds simple, but you would be surprised how long it takes most people to figure out what they are best at.

    Think about it: How many people do you know who have set their career path and are currently working in the field that they will retire in?

    OK.

    Now, how many of those people would you say have figured out exactly what their greatest strength in business is and have used that skill in all of their business deals?

    What percentage of your contacts is that?

    10% maybe . . . .?

    Whatever the number is, it probably isn’t very high, right?

    So do you see what a HUGE advantage you will have if you just figure out 1) Your hedgehog concept or skill and 2) how to best use that in every deal? You will be light years ahead of your competition.

    And I would bet that you will find your career more fulfilling and rewarding. People who are trying to be something that they are not will always struggle and feel as if they are swimming upstream. People who are doing what they were made to do will find that deals and relationships come quickly and easily.

    So, again I say that you have to know yourself before you even start in CRE. You should not only know what you find to be personally fulfilling, but you should also what you are uniquely capable of doing better than anyone else.

    If you can figure those two concepts out, all that’s left is the application. Put those two concepts into motion and watch your career take off in ways you never imagined.

    – Duke

     

  • 10 Random Thoughts

    I like doing Random Thoughts on Monday. It focuses me to start the week by clearing my feeble mind of its clutter.

    I also like quotes:

    “In my walks, every man I meet is my superior in some way, and in that I learn from him.”
    Ralph Waldo Emerson

    1. I’m not sure that I am patient enough to deal with residential real estate. I don’t want to hear some homeowner tell me how her property is worth $500k when it is really worth $200k. That only happens in residential. Right?

    2. If you haven’t ever cooked on the salt block at Park Tavern, then you should do so as soon as possible. Make sure and get a seat overlooking the park as well.

    3. I am finally getting my license online and this course material makes me want to kick a defenseless kitten.(I’m just kidding. Don’t call PETA please.)

    4. I think the College Football Hall of Fame is a perfect fit for Atlanta. I can’t think of another major metro in the entire country that comes close to Atlanta in terms of CFB fervor. Fall in our city is a great (and terrible) time of year.

    5. I don’t care what you say. I like Katy Perry.

    6. Why is North American the only team in town buying all the “sexy” deals. Yes, I know the artist-formerly-known-as Prospect Park is a broken deal, but I would still call that a sexy project. Well done, Team Toro.

    7. The best retailer in Atlanta is . . . . CostCo. I don’t think I have ever left there without spending $50-$100 and I don’t like spending $10. They are so crafty. Why would I get 1 watermelon for $5 when I could get 15 watermelons for $1 each?!!??!!!

    8. If I were just out of college and wanted to mingle with like minds, I would live in VA Highlands. It is a little safer than W Midtown and there are more unique, established business there. At any other stage of life, I don’t think I could deal with the traffic, tiny roads, and RE prices.

    9. I think I have just about made up my mind to offer my help (whatever that accounts for) on the Beltline. If it works out, it could be the most significant change in the landscape of our city during our lifetime. I would love to look back and feel like I was a part of that. Is that vain or altruistic?

    10. There are two types of people in this world: 1. People who enjoy Harry Potter and 2. Idiots. Pick a side.

     

    Have a wonderful Monday.

    – Duke

     

     

  • HAPPY FRIDAY!

    La Bouche – Sweet Dreams

    Because it’s Friday

    Because I can

    Here is a 90s music video. Go crazy!

    – Duke

  • Careers in CRE: Know Yourself (Part I)

    I mentioned a couple days ago that there is serious lack (in my experience) of writing on careers in commercial real estate.

    I should mention that I like The Real Estate Game by James Poorvu. Check it out on APJ Recommends.

    Like tREG, most CRE books focus on the idea of “how I did it” or “how the landscape is changing with green-building.” That isn’t really what I am looking for. I want a comprehensive guide on the industry, how to get started, where to focus, how to build a skill set, how to become the best in your field, etc.

    So, here is my shot at it.

    Let’s start with where you should start if you are considering a career in commercial real estate.

    Fundamental Success Principal 1: If you are going to excel in the field of commercial real estate, you have to know yourself.

    When I say “know yourself,” I don’t mean that you should know your height, weight, and eye color. I am talking more about your core motivations, goals, and fulfillment.

    I want you to think about what excites you most about business. What is the most exciting thing you could think of to get you out of bed at 6 am?

    Is it money? If it is, that’s ok because you can make plenty of that in CRE. But allow me to offer an opinion.

    If you make $100 million tomorrow, you will have plenty of money right? Then what? Then do you buy a house on Bora Bora and live on the beach? Ok. I bet you go 6 months MAX before you are bored out of your mind and need to find something fulfilling to do with your time.

    That’s why I ask about your motivation. You need to figure out what type of business venture will be most fulfilling to you.

    Extreme competitors can often end up in brokerage in our business because they love the rush of the deal and the challenge of competing against rivals for listings, sales, leases, etc. These “deal junkies” find fulfillment in the rush of the deal process and like closing as many deals as possible as often as possible.

    The down side to this part of our business is painfully evident right now. Brokerage is the ultimate “eat what you kill” compensation plan, and if closings are light and deal flow is a mere trickle, you may be hungry for a couple years.

    Some people feed off of that tension. They NEED that sense of urgency every morning to get them up before dawn. Sometimes the idea of your family going hungry if you don’t bust your butt today is the greatest motivation anyone could ask for.

    Other people prefer to have a steady income every month and a predictable schedule. They want to know they will be home for dinner with their family every night and that they will have steady income for years to come.

    These types off people tend toward lending and asset management roles.

    Lenders are a unique breed and tend to be fairly conservative. They always try and find ways to mitigate risk on the loans they originate but also tend to like doing deals. They too enjoy the rush of the deal, but don’t need the compensation as much as the broker. Lending is a good career for anyone looking for (relatively) stable income, average compensation, no deal risk, and a predictable schedule.

    Asset managers are similar, but tend to be more “contract-deal” personalities. That is, asset managers are always handling deals and portfolios of deals. They handle the issues and help guide the owners toward to best solutions for their property. Since deal lives are finite, every asset manager is essentially working herself out of a job. But, like bankers, they have no deal risk, have a relatively steady flow of income, and tend to have a fairly predictable schedule.

    The most risk tolerant among us tend toward ownership and development. Owners and developers tend to be good problem-solvers and risk managers. They are always going to have hurdles to overcome, fires to put out, and risk to deal with. They need to be skilled in acting on imperfect information and need to have solid leadership to guide a team through each transaction. These men and women are putting their own money on the line and need to be able to deal with the personal risk involved in each transaction.

    I will touch on service-providers (appraisers, engineers, etc) later and I consider architecture and construction to be separate fields from CRE.

    So, for now, let’s just assume that CRE pros include brokers, owners/investors, developers, and lenders. Given those four main categories, I say that the only person who can tell you where you best fit in is YOU.

    If you are a deal-junkie extrovert, brokerage may be your best move.

    If you are a gambler and salesman, I’d recommend ownership or development.

    If you highly value your schedule and a steady paycheck, asset management or banking is probably right for you.

    Whatever the punchline is, you have to know what your core motivations are. If you do not know who you are, what you like, and what priorities you have, how can you expect to have any direction in your career?

    So, back to my advice.

    Before you have a single networking meeting or start a single deal, sit down and figure out what type of person you are and what your core motivations are.

    We’ll go from there.

    – Duke

     

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