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Monthly Archive for: ‘June, 2012’

  • APJ Morning Links 6.29.12

    Atlanta’s real estate market has faired better than many southern cities. Globest.com names some real estate icons that have helped the Atlanta market.

    According to the most recent census information, Atlanta is the 15th largest growing city. See how other cities matched up at BizJournals.com

    A recent analysis by Forbes found that Atlanta is #21 for business and careers. Forbes crunched the numbers for 200 cities based on job metrics, income growth, costs, quality of life and more.

    Commercial real estate properties with contamination will have to follow a new law on June 14th. If the buyer knows of a problem, they cannot rely on Third Party Defense to safe them from liability.

    Although recovery is slow, several development activities are helping Atlanta’s market to rise up out of recession.

  • APJ Morning Links 6.28.12

    Commercial Real Estate is transforming with new technology. “America’s Real Estate Show” spotlights some of the best tech tools.

    The recovery of Atlanta’s commercial real estate is slow but steady. Many still think that the pace is too slow and that the “market is still fragmented” .

    AFIRE has released the Top 10 U.S Cities for International Investment. The list includes New York City, Miami, and Chicago.

    A federal grant is allowing the Atlanta Police Department to assign officers to protect the Beltline.  The grant is $1.8 million dollars which is matched by over $900,000 from the city.

    Mckinsey Global Institute Report ranks the country’s most recovered cities. Where does Atlanta lie?

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  • APJ Morning Links 6.27.12

    Buckhead Atlanta

    Buckhead Atlanta (Photo credit: adactio)

    Six months are left in the year. What is in store for real estate for the rest of 2012? The Philadelphia Real Estate Council has some ideas.

    Sage Equities, an Israeli foreign equity fund, has purchased three multifamily units. The price tag? A mere $6.75 million. The units are located in Atlanta and Stone Mountain.

    Shopping and retail experiences are changing daily with technology. Companies like GoldRun specialize in interactive apps for retailers. Esquire Magazine, H&M, and New York Giants fans are just some of the recent campaigns launched.

    Buckhead Trail, a path along 400 in Buckhead, is closer to fruition. Governor Deal and the GDOT have announced that the state will provide $750,000 to create the trail.

    Sandy Springs wants a “City Center”. Goody Clancy, a Boston based architecture and planning firm, has made its recommendations. Now citizens will meet this week for the planning and design process.

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  • APJ Morning Links 6.26.12

    Georgia ranks 17th in economic growth last year. North Dakota comes in at number one. The report used the data from the U.S Bureau of Economic Analysis.

    Atlanta based Smart Numbers released its report on Atlanta’s housing market. The good news is that the housing market is showing improvement.

    The demographics are changing in Atlanta. The percentage of white students in the inner city schools are increasing in many areas of Atlanta.

    Sporting good stores are looking to grow, in Atlanta and beyond.

    Looking for a vacant building? [Im]possible Living is a map site that lists vacant properties in hopes that people will revive them.

  • APJ Morning Links 6.25.12

    Georgia Tech’s plan to transform a 1920’s building may not play out the way it was intended. Groups in Midtown and Inman Park have a lot to say.

    Prudential’s plan to save cities includes having regional offices in every major city. Elihu Rubin looks back at Prudential’s ideas.

    CNBC has ranked the Top Ten International Cities for Retail. Paris, Los Angeles, and London have all made the list.

    In Denver, Bill Hoffman’s business fluctuates with the flow of commercial real estate. From his experience, commercial real estate recovery is far from complete.

    PFK Hospitality Research, LLC, affirms that forecasts for the nation’s lodging industry are positive. PVK-HR estimates a growth of 5.8% in 2012 alone.

  • Weekly Financial Markets Update – June 22nd

    Equity markets: The S&P 500 fell 0.6% on the week. Initial relief over the status quo New Democracy party winning in Greece and optimism about a fresh round of stimulus from the Federal Reserve lifted stocks early in the week. However, when the Fed meeting on Wednesday led to little more than an extension of “Operation Twist” — the Fed working to keep interest rates low by swapping some short-term treasuries for longer-term treasuries — sentiment became more negative.

    Rumors that Moody’s would lower the credit rating of many large banks along with a weaker than expected Philadelphia Fed manufacturing survey, combined with a bearish trading call from Goldman Sachs, knocked stocks down on Thursday, from which they bounced back somewhat on Friday.

    Bond markets: The 10-year treasury yield rose 0.03% this week, from 1.64% to 1.67%. 10-year German bond yields rose 0.14% this week, from 1.44% to 1.58%. The “fear bid” in US and German government bonds was so intense in May and the early part of June that some of this impact is still being unwound. For the time being the intensity of the European crisis has diminished, though all parties agree that no long-term solution is on the near-term horizon.

    Currency markets: The dollar rose 0.8% on the week. The Federal Reserve’s extension of Operation Twist was less than the market expected, giving the dollar a bid, and Thursday’s pummeling of equities along with fears over US bank ratings led to a flight to the greenback.

    Interbank markets: 12-month LIBOR was unchanged on the week at 1.07%.

    Next week: Summer has begun, which generally means less liquidity and the potential for more volatility if news breaks while investors are away from their desks on the beach. As mentioned last week, the news flow should be quiet, with the highlights of the US economic calendar being new home sales on Monday, consumer confidence on Tuesday, another revision of Q1 GDP on Thursday, and the Chicago purchasing manufacturers index on Friday.

    It’s also the last week of the month and the quarter, so there could be some position squaring going on. The following month will be busy as Q2 earnings season kicks off and concern about how much the slowdowns in Europe, China, and the US have impacted corporate profits, so this should be a great week to get some rest before the real fun begins.

    – Earl

  • The Transportation Referendum from a Capitalist Planner’s Perspective

    The Transportation Referendum from a Capitalist Planner’s Perspective

     

    Can a 1 penny tax fix congestion in Atlanta?

     Georgia voters are apparently being asked this question for the upcoming transportation referendum vote on July 31st.  Asking voters that question infuriates me for two reasons.  One, congestion isn’t a problem that can be fixed.  And two, the perceived problem of congestion is shrouding the real issue, which is a question about the long term economic viability of Atlanta’s development patterns, i.e. how we build stuff.

     

    Congestion is not a problem that can be fixed.

     …At least not in the traditional sense.  Congestion is unavoidable with dense urban development.  Ask drivers in London, Paris, New York, San Francisco, and Tokyo.  All of these cities have world renowned public transportation systems, yet they all suffer from horrendous traffic.  Recently London introduced congestion pricing in an attempt to price drivers off the road during peak hours.  It’s not a solution, but it’s a way to make it better.  I repeat that you cannot ‘fix’ congestion.

    If you’re looking for a problem to fix, consider mobility.  Mobility is what a transportation planner is really concerned with, even though they can’t always say that correctly.  What I described above, the London congestion pricing model, addresses mobility directly.  Officials in London were concerned that mobility through the city was stifled during rush hour and they identified a solution.  Price motorists off the road and onto alternate modes of transportation (rail, bus, bike, etc.) to improve everyone’s ability to get around.  Not everyone is 100% happy, but, like solving congestion, that’s impossible.

    I ask you not to vote for or against the Transportation Special Purpose Local Option Sales Tax (TSPLOST) based on whether or not you think it will fix congestion.  It won’t.  Atlanta will always be congested unless its overall economy collapses making it a city more like Detroit.  What you should consider is whether or not you think it will improve mobility for residents and visitors of Atlanta.  Easier mobility means everyone can get around cheaper and faster than before.  Cheaper and faster transportation means more consumers.  I’ll let you proceed to your nearest economics book to learn about demand side versus supply side economics to decide if you think more consumers is a good thing.

     

    If the problem is mobility, how do we fix that?

     …very simply.  A long term shift, say 30 to 50 years, toward transit oriented development should do the trick.

    Atlanta’s lack of mobility is derived from is history of leap frog development, which led to a massive amount of poorly connected suburban neighborhoods.  If you’re curious about what leap frog development looks like you can drive North on SR 400 starting at Lenox road all the way up to Cumming.  This style of development has happened in nearly every direction out of Atlanta, but North 400 is a prime specimen of the leapfrog effect.

    Easily accessible land and low transportation costs made it easy to move suburban development farther away from the city center.  It made for short term, easy profits so long as people kept moving outward.  This type of development started post World War II and has been the American standard for how cities grow.  Demand for transit oriented development has waxed and waned over the last half century.  Over the last 2 decades, both baby boomers and younger professionals have started demanding well connected walkable developments.  City governments are responding to the demands from developers to make it easier to create such places.  Cities like Portland have introduced growth limits and Nashville has enacted a form based zoning code to guide density and require less zoning approval.

    Let me take you back to a simpler time.

    A transportation package isn’t the solution for the problems created by leap frog development.  Any public transportation will be vastly underused and underfunded.  As is the case with MARTA, low funding and wavering demand make for a very, very underutilized system that is a perpetual downward spiral.  Public transportation doesn’t work with the low density.  Low density suburban neighborhoods can’t create the ridership volume or the necessary tax dollars to support it.  That is, unless special taxes are enacted to specifically address transportation needs.  Using taxes to front the origination cost of the transportation projects will help guide development and create a better connected city.  It’s what Washington D.C. did.  While it’s not the perfect city, the downtown is revived from ghost town status and it’s drawing in talented professionals like moths to a porch light.

    A combination of transportation funding and relaxed zoning codes regarding density and mixed uses can spur such a turn around.  One alone won’t be successful.

    I won’t delve into each project and how they could affect long term mobility and development opportunities. But, I’d suggest you do so.  If you’d like to please visit The Atlanta Regional Roundtable to get a great look at what’s actually on the list.

     

    After reviewing the projects on the list, sit down and consider whether or not they will improve safe, cheap, and easily accessible mobility around the Atlanta region.  If you think it will help, vote yes, if not, vote no.  Just try to avoid using congestion as your measuring stick because no one can answer that impossible question.

    – Hunter

  • APJ Morning Links 6.22.12

    Curious about where all the TSPLOST projects are? Check out this MAP of the locations.

    Although the CRE market is in recovery, it is still very fragile. CoStar readers identify the threats to the CRE market that could hold back the recovery.

    Military members often have no choice but to move when told. Now Fannie Mae and Freddie Mac will allow those who serve our country to short sale their homes more easily.

    In a little over a month, Atlanta residents will vote on T-SPLOST projects that total over $8.5 million. Former Atlanta Mayor, Sam Massel, sees the program as an opportunity to ease traffic congestion.

    Hong Kong is a continally changing city, politically and economically. Hong Kong makes “one country, two systems” work.

  • APJ Morning Links 6.21.12

    Commercial real estate can be an international business. Now there are schools to help teach international real estate.

    IDI breaks ground in Lithia Springs. The 653,000-square-foot Riverside Business Center Building will tailor to data center.

    Forbes magazine releases it’s latest list. Atlanta ranks in the top 25 for the best places to retire!

    SNL Financial ranks the Top 10 U.S REIT’s with the highest regional mall exposure. The top 10 list includes Simon Property Group and DDR Corp.

    Atlanta’s office market shows improvememt. Refinances and and trades are increasing. Investors are searching for low-risk investments that have a higher yield.

     

  • 5 Lessons I’ve Learned After 5 Years in Commercial Real Estate

     

    This is me in the office. Quite the grizzled veteran, yes?

    I just got back last week from my 5 year reunion at my alma mater. Apparently that’s a rare event as some of my colleagues who went to UGA, Auburn, Tech, etc couldn’t imagine pulling together 10,000 people for a reunion.

    Luckily for us there were only 400 in my graduating class.

    As nice as it was to catch up with my old teammates and classmates, it got me thinking. I realized how much I had learned in my first 5 years in commercial real estate that I hadn’t anticipated when I charged into the world with my Bachelor of Arts in Economics.

    So, allow me to share 5 lessons I have learned in my 5 years in commercial real estate:

     

    1. He with the best habits wins

    I know I’ve touched on this before, but it really is true. Yes, there are big deals and huge strides made in every career, but I am convinced that the guy who sets out to create great habits for himself will end up “on top” on the long run. Your habits will catch up to you sooner or later. Will they boost you up or drag you down?

     

    2. Financial success and intelligence are only loosely related

    I’m using financial success as my measurement for success for the purposes of this point. It is amazing to me how much money was made between 2002 and 2007 by people I wouldn’t trust to handle $50. I know THAT time in our financial history may turn out to be an aberration, but it is staggering at times the amount of money made by stupid people. And commercial real estate is a self-proclaimed “B-student’s paradise.” Not that B-students are stupid by any means, but an industry that doesn’t claim to have A-students is, by definition, claiming not to have the tip of the academic sword (for better and for worse).

    All of that is to say: intelligence isn’t as highly correlated with success in commercial real estate as I had thought. The richest people aren’t always the smartest people. Intelligence certainly helps to distinguish yourself and there is a certain baseline level of intelligence that everyone in the industry must have. But this ain’t rocket surgery.

     

    3. There are very few truly creative people in ANY industry

    I want to keep this statement broad because I have noticed that this phenomenon isn’t unique to CRE. I find that there are only a handful of truly innovative and creative people in any industry.

    Taking a concept that worked well in Dallas and bringing it to Atlanta isn’t all that creative. It’s highly logical, but I would consider it par for the course. Even taking a concept from Dubai and bringing it here isn’t all that creative. All you’re doing is copying someone else’s great idea. True innovators create new products, reinvent best practices, and can reshape the entire CRE community. People like that are rare.

     

    4. There is almost never black and white – only grey

    I learned this from my time in private equity as we go through foreclosure and bankruptcy proceeding in GA and FL. According to the loan documents, our case is almost always cut-and-dry and in our favor. The borrower almost never has a strong case, legally. But borrowers do sometime win these cases.

    If they get a borrower-friendly judge or jury and argue their sob-story well, they CAN win. In my mind, this is ludicrous because I can plainly read the loan documents that said “I will pay you back or you can take everything I own no mater what.” I don’t see room in there for much interpretation, but apparently I’m wrong.

    This idea also plays into the “gut” or “art” part of our business. Anybody can run good numbers and spot a decently located property. The best of the best have this “gut” instinct to know when to pursue a property that is in that grey area between the black of “no” and the white of “yes.” They buy or sell when others are hesitant and they make a killing doing so. That is the grey area that I need to get comfortable playing in or I will be surpassed by those who are.

     

    5. The best people in the business love what they do and would probably do it for free

    You know these men and women. They love leasing retail space or building hotels or buying shopping centers. If they didn’t get paid to do it, they’d do it anyway. Their career is fun and fulfilling to them.

    I think I covet that feeling more than any other in business. To know that you enjoy your role and look forward to performing every day is a gift that few of us receive. It has been my mission since shortly after leaving college to find that role for myself. As I mentioned in the header, people who find that role are not only the most fulfilled, but also are often the most successful. Work doesn’t seem like work to them. They are just having fun and happen to make money doing so. I hope you can find that role for yourself. Otherwise, you’re just getting up early every morning to collect a paycheck and you will have a perpetual feeling of swimming against the tide.

     

     

    Those are just the 5 that stand out to me. Obviously, I have learned a great deal more about the financial and technical side of our business, but those 5 stand out to me as particularly poignant and meaningful to my career.

    Has your experience been different? Did you learn different lessons than I did? Feel free to share in the comments.

    – Duke

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