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  • Sunrise on Chattahoochee River, Atlanta

    What to Expect in 2013

    One lesson I took away from Microeconomics is that when you are presented with a tremendous amount of information you should take your time, absorb it, and then repackage it and then you will truly retain it. In that vein, I wanted to take a little time to let the flood of information from the Morris Manning event on Thursday October 4th sink in before I shared it with you.

    What follows is the series of notes I took in the Morris, Manning & Martin/France Media event on What to Expect in 2013. It was basically 6 panels that related to all things CRE in the southeast. I think it’s a testament to MMM that most of the heavy-hitters in Atlanta CRE were either in attendance or actually on one of the panels.

    As a note, my favorite panels were the first (State of the Market) and last (Development) panels. Be sure to pay special attention to Dr. Linneman’s comments in the first section. He was very good. Also, I put some disclaimer language at the bottom to delineate that none of these opinions have anything to do with MMM or France Media.

    Sunrise on Chattahoochee River, Atlanta

    A new dawn in Atlanta is just around the corner

    State of the Market: Where are we in the Cycle?

    Dean Adler (CEO/Founder Lubert-Adler Group) – Biggest single risk in the CRE business is interest rate volatility. The thirst for yield has pushed yields down. Investments are being made because rates are cheap. Real estate still has the same amount of risks and obstacles as ever, but adding IR volatility to the equation is increasing risk. Always asking the question of what type of debt to place on property depending on disposition strategy. As loan sale market winds down, buyers now have the opportunity to buy properties that have had no investments dollars or cap ex for 4 years (zombie assets). Real estate is really back to local execution and returns are going to be made through execution. Why would you go to a closing dinner when you buy something? Operate it, sell it, then celebrate it. In retail, there are winners and losers today. Unlike the past, when A, B, and C centers will all survive. C now has huge risk. There are strong submarkets and “gateway” submarkets in every major metro in the country.

    Larry Gellerstedt (CEO Cousins Properties) – Doesn’t think the election is having much of an effect on either investors or customers other than the fact that it feels like everyone is tapping the brakes. Very attractive market for sellers. Taking advantages of a good market so they can redeploy capital elsewhere. Our expertise should be picking assets and knowing how to operate those assets. We get caught up in proforma analysis and manipulating yield (“pencil whipping”). New development is going to be a much smaller part of the sector as a percentage and even apartments will cycle back down. Development opportunities are very geographically focused and urban mixed-use is very attractive.  Generally sellers of suburban office and generally buyers of urban office. Urban play is more appealing and is driven by demographic trends. “Like fish, we will eat until we blow up.” So when the market comes back, products get hot, and everyone is pitching their deal, we will overbuild. It will happen again. “The economy is better than most people think it is. “

    Mark Grinis (Head of RE North America E&Y) – As a service provider, only the new tax law is effecting their business from a governmental perspective. In isolation, our asset classes look like there is a mismatch for allocating capital. Distress has been redefined in this cycle. Europe is that part of the market that is suffering the most. Asia is having annual growth around 5 to 6%. us is still the engine of the global market place and will continue to be as such. You cannot have one particular strategy and say “I am going to do this one thing.”

    Tom Roberts (Head RE Investments Cole) – Election will have very little effect on Cole’s business, but they are vulnerable to the Fed raising rates. Very conservative investment strategy and generally 45 to 50% LTV. Investors are looking for monthly dividends. If they can make 20% on appreciation of that, home run. One way to deal with downsizing tenants is cutting the box into a smaller box and renting the remainder. Always want to be aware of concentration risk, to Dean’s comments about stronger or gateway submarkets in every major metro.

    Peter Linneman (Linneman Associates) – Real GDP, since 1970, has continued along the same trend line until 2008. GDP has not “bounced back” and is, in fact, falling farther behind. The between “where we should be”  and “where we are” is $2.5 Trillion (US GDP is $15 Trillion). We are growing well below our long term historical growth rate.

    Since the bottom of the recession, we have added 4.2 Million jobs, but we have lost 9 Million. Atlanta has been one of the slowest MSAa to recover, but has picked up speed over the last 6 months (more than any other major metro in the US).

    Retail sales have recovered in spots. Manufacturing has recovered to a degree. US exports have never been higher in American history (in real terms). Corporate profits are at all time highs, but have dipped in the last quarter. Productivity growth is growing at about 20% of its normal growth rate. Commercial construction is at its all time lowest rate, since ’63, with most of it in Texas, NYC, and DC.

    Monetary base: In the last 50 years, grew by $600 Billion. At QE1, it grew by $1 Trillion. QE2 it grew another $1 Trillion. QE3 is going to grow it by AT LEAST another $1 Trillion.  “The Fed’s policy is destroying the economy is two ways: 1) No one has ever seen this investment landscape. 2) money is being created like never before.”

    “When people are in a situation they have  never seen before, they do less. When government is in a situation they have never seen before, they do more.”

    “If you don’t need money, you can borrow a bunch of it at minuscule rates.”

    Loan volume in CRE has slightly ticked up over the last quarter, all due to multifamily. You are going to have to depend on not much debt being available outside of multifamily. Don’t count on debt. Count on equity as your salvation.

    Debt: Who is getting money and why?

    Michael Hartman (Managing Director Reznick Capital Markets) – Moderator

    Paige Hood (MD Prudential Mortgage) – Most mortgage companies are looking at stabilized acquisitions deals. Pru will look at ground up development, but there needs to be a proven demand for demand. Multifamily has proven demand and Pru will look at construction-perm debt on deal by deal basis. Focused on primary markets. Deals are be underwritten on untrended rents and expenses that are justifiable. Looking for 8% debt yield on MF.

    Kurt Schwarz (Client Executive JPMorgan Chase) – At the very least, assets are beginning to trade. Top located assets are going to be rewarded on the valuation side with lenders. Credit decisions are being driven be equal part optimism and pessimism. When it come to recourse, guarantors need to show liquidity much more than simple net worth. Bankers do value the cross-sold products and want the treasury management

    Matt Donnelly (SVP Cole RE) – Debt structure depends almost completely on investment strategy. Projects with lease up will go to local commercial banks and keep on floating debt to allow for flexibility in refinance. Larger, more leased properties will go to the LifeCos on a longer term. Investors are a fixed income play allocated to CRE. They look for stable investments and that means core, long-term investments.

    Dave Gahagan (SVP Walker Dunlop) – All underwriting depends on property type. Agencies will go to 80% LTV governed by 1.25x DSCR. Somewhere around 3.75% for a 10-year rate. CMBS spreads have come in dramatically over the past 45 days and p[ricing is landing in the 4.5% range. LifeCos are a little more selective of properties, but will lend around 3.75% on floor rates. Level of due diligence done on sponsors is significantly higher than 5 years ago. Sponsor quality is high on everyone’s list. How are your other assets performing? Where will our sponsor be when the deal drops?

    Joel Stephens (MD Regions) – Rally in CMBS has allowed almost all property types to obtain debt finance. MF is leading the pack and continues to go to agencies and LifeCos. Commercial properties in gateway cities and going more toward LifeCos. CMBS looks close to $50 Billion for this year. 20% of CMBS is hospitality and 33% is retail (down from 50% at peak). Retail continues to be a challenge for debt financing, but trophy and grocery-anchored can get debt placed.

    Capital – Where is it being invested? What markets and asset classes?

    Chris Marshall (MD JLL) – Moderator.

    Neill Faucett (Principal Lubert-Adler) – Invest through local operating partners. If you can maximize current yield, you can take some pressure off the exit strategy. Will consider development, but it has to be very deal specific.
    Atlanta lags behind its competitors in terms of jobs regained. Investment thesis shifts to discount to replacement cost.

    Will McIntosh (Head of Research USAA RE) – Generally, investors are conservative capital looking for core and core-plus returns. Top markets are gateway markets, but they are looking at secondary markets (especially for industrial). Looking for growth in employment and population where it is available and while it isn’t abundant, there is some. Atlanta is still on the institutional radar, but investors need to find deals that make sense. People are focusing on economies that are focused on tech, energy, or medicine.

    Tom Coakley (Director MetLife) – Met has roughly $7 Billion out in debt and almost all of it was in gateway markets. Invests for general account and doesn’t have interest in venturing out on risk spectrum. Atlanta is an opportunistic market.

     Loretta Cockrum (CEO Foram Group) – Diversification is an absolute mandate for clients because all are from outside of the U.S. substantial amount of capital is coming from outside of the country and all of the gateway cities are experiencing that same trend. With no natural barriers, there is nothing to stop people from moving out. With 60 year investment horizons, you need to look at where the long term value will hold.

    Chip Davidson (CEO Brookdale Group) – Had success in Dallas and in Texas because of the demand driver of the energy industry. Primary investment target is suburban office with identifiable demand drivers. Looking primarily for value-add assets. Investors have become considerably more cautious and more informed. Can’t count on cap rate compression in a couple years because the fed will adjust 10-year rates. Atlanta has become a big city with a great airport. Public schools is a big problem and will not attract corporate relocations. Tech and energy are the main demand drivers in larger markets and Atlanta is behind other markets in those games.

    To Fund or Not to Fund? And What to do when you do.

    Brad Lenox (Morris, Manning, & Martin) – Moderator

    Thomas Boytinck (Founder Allegro Advisors) – 600 funds in the market right now. The big guys are taking maybe 80% of the available capital. When you start a fund, you are becoming an investment manager. You are going to be judged against Fidelity. Track record has become more and more of a focus. Take on a full time staff member whose sole responsibility is raising debt and equity capital.

    Mit Shah (Principal Noble Investment Group) – There is nothing more frustrating than finding opportunities and then having to patch together capital. shifting from a deal by deal promote to a fund level promote, hasn’t made investors shy away in the past. Today, finding investors at the fund level has become much more of a challenge. Blackstone has become the index for the private CRE investor industry. There has become a hard hurdle you must hit in order to get to the preferred return.

    Amachie Ackah (MP Argosy Capital) – There is capital for individual deals. You might be better off doing deal by deal raising right now because of the scarcity of fund-level capital.  Most first time funds lose money.

    Pike Aloian (Partner Almanac Realty Advisors) – Fund structure can provide speed. If the marketplace is dynamic, you may need speed to close. Raising capital deal by deal is very time consuming. Deal by deal is the best way to structure the deal currently. Trying to put together programmatic JV with institutional capital is another way to slice it but funding is not guaranteed. Limited partners are concerned with governance, reporting, and stability.

    Michael Reiter (SVP American Realty Capital) – Capital is predominantly raised through the independent broker-dealer channels.  Investors look at team, theme, and track record.

    Real Estate Tax: Facing the Fiscal Cliff

    Michael Frankel (Global Head RE Tax E&Y) – Moderator

    Chuck Beaudrot (Partner Morris, Manning) – We have 3 types of federal income tax on our income. If we head into a higher tax environment, the ability to defer and transfer tax burden becomes paramount. Basing selling decisions on the tax benefits is a distorted economic activity.

    Robert Rozen (Partner E&Y) – Powerpoint = The Fiscal Cliff. This year we have a deficit of $1.2 Trillion. Beware of Buch tax cuts that are going to cease in Jan 2013. Accelerated depreciation, carried interest, and 1031 exchanges will all be affected.

    Ricky Novak (President Strategic 1031 XC Advisors) – People are beginning to plan for being forced to become active investors vs passive investors. Many clients are attempting to close this year due to the uncertainty of next year. They will be sitting on that liquidity until the dust settles and they can decide how to deploy it.

    Development: What? Where? By Whom?

    Mike McDonald (MD Eastdil Secured) – Moderator

    Reid Freeman (President Regent Partners) -Underwrote to 9.8% constant on Sovereign. Had to allocate between office and condos. when construction started, LIBOR was at 5%. Currently developing hospitality project in Charleston. 4.5 acres with 200 unit apartment project and 2.3 acres on upper King Street. 304 room hotel with 30k sf retail/office. Leveraged IRR at 60% LTC is 24%. Partnered with Bay North from Boston.

    Charlie Tickle (CEO Daniel Corp) – Daniel came to Atlanta about 10 years ago. Decided to partner with Selig and started to assemble large portfolio and decided Midtown was the market of choice. Multifamily was underwritten to 7.5% development constant. Hotel and office were underwritten separately and hotel underwrites better today. Reynolds Plantation is a long term investment. Probably going to add 100 rooms to Ritz Carlton. Potential for seniors housing and multifamily and golf amenity.

    Chad Weaver  (VP Camden) – Great time to be in the apartment business. Mid 2010, finally saw improving occupancy and rent and therefore began to start developing. Leasing has been around 50 units per month and rents have been 10% better than proforma. People are, perhaps, finally getting more comfortable that they are not going to be losing their jobs. So they are moving back into apartments.

    Jay Jacobson (Director Wood Partners) – One of the largest MF developers in the country. Actively developing in 22 markets. Currently building 4,000 – 5,000 units. Best apartment development market in career. Will build to a 5 cap if they think they can sell to a 3 cap. Equity has been flooding to super core product in urban infill markets.   Everyone seems to be getting filled up with MF deals. May hit 220k units in starts this year.

    Jim Jacoby (CEO Jacoby Development) – Atlantic Station site worked for retail. Leased and sold office at sub-6 cap rate. Always looking for smart growth type projects. Ford Motor Plant and Porsche project are creating hundreds of jobs on the south side. Trying to bring a little gentrification to that area.

    The information presented (above/below) is provided by The Atlanta Property Journal and was taken, in whole or in part, from the October 4, 2012 “What to Expect in 2013?” Commercial Real Estate Development and Finance Conference, sponsored by InterFace Conference Group and Morris, Manning & Martin, LLP (“MMM”).  The above is general information and not intended to constitute legal advice.  Any opinion expressed at the conference by a speaker is solely the opinion of the individual and may not reflect the opinion(s) of MMM, its individual attorneys, personnel or the opinions of MMM clients.  It should not be distributed or repurposed without the approval of MMM by contacting rleplattenier@mmmlaw.com

  • AWNM

    Book Review: A Whole New Mind

    A Whole New Mind by Daniel Pink

     Image Courtesy DanPink.com
     

    As I have mentioned before, I think the age of the American analyst is ending. Daniel Pink agrees with me. Sort of. His book, A Whole New Mind, argues that creativity and innovation are the American exports of the future and right-brain thinking will be the key to our future. He says that we are leaving the Information Age and entering the Conceptual Age.

    Pink’s book is an intriguing (and well-written) argument that the proliferation of MBAs and “Quants” in recent American business has run its course. The ability to analyze and quantify are skills that can be replicated more cheaply abroad.

    Pink uses the terms Asia, Abundance, and Automation to explain why our left-brained, analytic business model is headed overseas. They are each pretty self-explanatory, but I like the way he argues for abundance.

    My favorite example is the toilet brush. He claims that because of the recent astronomical rise in standards of living across the planet, most people can afford the necessities to survive. Most people even have enough income to have a choice in how to allocate their disposable income.

    Enter the toilet brush. Pink describes his recent trip to Target where he headed to pick up a few things and noticed the bathroom aisle. He saw no fewer that twenty different toilet brushes. Martha Stewart had one. Allen + Roth had one. Some were sleek and sexy. Yep. Sexy toilet brushes. Think about that . . .

    Because the toilet brushes were all less than $10 and all did the EXACT same thing, Pink had to choose the toilet brush that appealed most to him aesthetically. He went with the coolest toilet brush and Allen + Roth got his hard-earned dollars. Or, put another way, the most creative company earned the sale.

    And that, I think, is the entire premise of the book. If we have all we will ever need to survive, then we make our decisions based on taste. And taste is a very right-brained, creative activity and has very little to do with our analytical skills.

    I wouldn’t do it justice to describe all of the examples and analogies that Pink uses to prove his point, but I will say that he is very thorough and convincing. He goes as far as scanning his brain, exploring labyrinths, learning to see the world differently through painting, attending laughing classes, and about a half dozen other exercises that flex the creative muscle of the mind.

    Through Pink’s eyes, you can see how the truly innovative and inspirational companies in the world really put a premium on creativity and R-directed thinking.

    One of the most important keys of the book is what I will leave you with. Pink argues that, with the impending end of the Information Age, the vast majority of American jobs in the future will be held by people who create something. There will be no need for data interpretation or management, and no need for the ability to organize or present information. That will be done for pennies in Pakistan.

    The American job of the future will be creation.

    So, what I recommend you ask yourself is: What am I creating?

    If it can be done cheaper by someone else . . . watch out.

     

    Whole New Mind in Two Sentences: Analytical skills, data processing, and data management can all be replicated abroad. The future of our country will depend on our ability to create and innovate rather than our ability to analyze and interpret.

    Pros: Interesting analogies, well-reasoned examples of creativity trumping analytics

    Cons: Perhaps overly simplistic or generalizing (but not offensively so)

    Target Audience: Anyone under the age of 80 and over the age of 10

    This book is best for: The reader looking for an interesting introduction into the world of creativity and how the right side of our brains will become our economic engine

    Overall Rating: ♦♦♦♦ (out of 5)

    Here is the Amazon link to buy this book:

     

    Ratings Guide

    ♦ = Not worth your time

    ♦♦ = May be worth your time if it is specific to your industry or interests

    ♦♦♦ = A decent book and worthy addition to your library depending on your interests

    ♦♦♦♦ = A great book and an excellent addition to your library.

    ♦♦♦♦♦ = One of the all time classics. A must-read for anyone and everyone.

     

  • 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

  • Book Review: The Power of Habit

    The Power of Habit: Why We Do What We Do in Life and Business

    Image courtesy Amazon.com

    If you’ve read any of our past reviews, you will know that I’m a big fan of habit formation and business psychology. So it shouldn’t come as any surprise that a book called “The Power of Habit” would catch my eye.

    I bought and listened to the audio version a couple weeks ago and I really enjoyed it.

    The basic premise is that there are certain patterns that have been scrutinized surrounding both positive and negative habits. You can imagine that this is a blossoming branch of science as habitual smokers are desperate to quit, over-eaters crave self control, and habitual gamblers try to walk away from the slots. Intuitively, the business of habits, both how to form the good ones and how to break the bad ones, is potentially worth billions of dollars.

    The book, by Charles Duhigg, walks through a dozen stories that illustrate the newest and most innovative thinking on habit formation and deconstruction. Duhigg has a gift for navigating controversial issues with science. Much like Gladwell claimed that Japanese children were good at math because of ancestral rice-farming and Levitt claimed that abortion led a decreases in crime, Duhigg uses facts and science to avoid moral debates on habitual gambling or other socially questionable addictions.

    One basic take-away from the book is the basic routine of any habit. Duhigg delves deeply into the brain and it’s functions in the various steps of the process, but for my purposes I was really only interested in the process itself. It is as follows:

    Queue – Response – Reward

    Something will queue your action. According to that queue you take some action. Because of that action, you get a reward.

    Let’s use smoking as a quick example. Say you start smoking when you feel stressed. In that habit cycle, your queue would be stress. You feel stressed and your trained response to that would be to grab a cigarette. After lighting up, you would get the brief buzz of the nicotine. So the stress queues the action of smoking which delivers the reward of the buzz.

    Interesting right?

    Try to apply that to your life or your customers . . .

    Better yet, let Duhigg do it.

    My favorite example from the book actually involves a retailer in a mall setting. Cinnabon is a national purveyor of molten, gooey cinnamon rolls that seem to melt in your mouth. They may be one of the most unhealthy foods on the planet, but they are just plain fantastic. Cinnabon knows this and uses habit to bring in customers. In their case, they know that the queue for someone buying their naughty treats is the smell of a fresh baked cinnamon roll. That enticing aroma of doughy cinnamon can bring a man to his knees. So, Cinnabon tries to maximize that aroma for its potential customers. They will actually pick their location within a mall to maximize the delivery of that aroma.

    That’s why you will see Cinnabon a good bit away from the food court. Amidst the odors of teriyaki chicken and beef burritos, the alluring cinnamon can be lost. So Cinnabon will locate a good bit away from the food court and put their ovens close to the window. That way the maximum amount of smell is wafting out of their store front and it isn’t muddied by other smells.

    It’s half evil and half genius. They are tapping into the queue of the smell to get the action of purchasing the roll for your reward of the taste.

    Beyond the implications of retail, I think habits are what make our daily lives. As the saying goes: You are what you repeatedly do. In the end, our actions are just a collection of habits. And all of us have some habits we would like to correct. So, you can use the Queue-Action-Reward process, alter any one of the three, and create newer, better habits. Or, if you are perfect, use the knowledge to help your customers or clients (as Cinnabon did, kinda).

    This book and its concepts may not be a life-changer like Compound Effect or Win Friends, but I think it’s a great read full of interesting anecdotes and well worth your time.

     

    Power of Habit in Two Sentences: All habits, both positive and negative, can be broken down into three steps: Queue – Action – Reward. If you wish to change a habit (i.e. the “Action”), then tweak the queue or the reward and watch your habit either improve or disappear.

    Pros: Interesting read with good anecdotes to illustrate points. Very good personal and professional applications if you chose to use the information that way.

    Cons: A bit scientific and cerebral. May be be a little overwhelming for those uninterested in brain biology and cognitive habits.

    Target Audience: Anyone who has habits, I suppose.

    This book is best for: Those stuck in the grip of bad habits (or a single bad habit), those looking to cater to or manipulate the habits or others (retailers), or those ambitious to improve their habits

    Overall Rating: ♦♦♦♦ (out of 5)

    Here is the Amazon link to buy this book:

    Ratings Guide

    ♦ = Not worth your time

    ♦♦ = May be worth your time if it is specific to your industry or interests

    ♦♦♦ = A decent book and worthy addition to your library depending on your interests

    ♦♦♦♦ = A great book and an excellent addition to your library.

    ♦♦♦♦♦ = One of the all time classics. A must-read for anyone and everyone.

     

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  • Your CRE Site – WordPress & Themes

     

    Clouds part. Angels sing. WordPress cometh . . .

    I have been asked several times over the last few weeks about the setup of my site and how someone else could do it. So let me take a few minutes to let you know what I did and how you can do it for yourself.

     

    Step 1 – Choose a Name

    The first step for me was choosing the name of my site. Even before I started deciding whether to use WordPress.com, WordPress.org, Blogger, Google Sites, or any one of a half dozen other website platforms, I needed to decide what to call the site. I chose AtlantaPropertyJournal.com because it was easy to remember, broad enough to cover anything that interested CRE pros, and, most importantly, available for purchase. I will take you through the specifics of domain names and hosting elsewhere, but for now I just want you to know that I chose the name of my site before I ever considered a platform.

    A Good Place to Start

     

    Step 2 – Choose a host

    Maybe I should have done more research into blogging platforms before this step, but I wanted to make sure I had a place to buy my domain name and host all of the security and warranty stuff. I happened to choose Bluehost for mine (they have been great), but I could just as easily gone with 1-and-1 or iPage or any of about 1000 other hosts. Almost all of them integrate well with a WordPress blog.

    My Saving Grace

     

    Step 3 – Install WordPress

    The nice thing about Bluehost is that they have a control panel with software called “SimpleScripts” that allows you to customize and install things into your site. I simply ran the WordPress simple script and Bluehost installed it for me. I was then given a login page and asked to create a WordPress account. That took about 30 seconds. Once I confirmed my account through email, I was up and running with my new and secure WordPress Site.

    So easy, a realtor could do it!

     

    Step 4 – Customize

    This is by far the most difficult and time-consuming part of the process. I created the site in about 15 minutes. I have been customizing it for more than a year. WordPress comes with a default “theme” and some goodies, but I wanted to make mine look customized. There have been volumes written about how to customize WordPress sites and I would recommend this one as one of my favorites. But, for the scope of this post, let me just talk about themes.

    WordPress' Default Free Theme Last Year

    A theme is basically just a way to tweak the appearance of your site. You can change the color scheme, site layout, text display, fonts, and pretty much anything else that has to do with the appearance of your site. This is extremely important because, as CRE pros know, layout and aesthetics matter. If the site is too “busy” or sloppy or confusing, no one is going to hang around and discover your brilliance. So you want to find a theme that fits your content, is nice to look at, stays simple, and displays your content well. In fact, that could be a good little checklist for you.

    When looking at a theme for your WordPress CRE site ask yourself:

    1) Does this site fit my content? Pink bunnies don’t jive with retail leasing trends. Make sure it is professional.

    2) Is it nice to look at? Pretty straight forward. People don’t like looking at ugly stuff and if it caught your eye it will catches someone else’s.

    3) Is it simple? If you throw too much on there, people will get distracted and the thrust of your content will be lost. I am guilty of this from time to time, so don’t think I’m preaching.

    4) Does it display your content well? Since the content is the most important part of your site, make sure that it is well-displayed. Don’t let it be dominated by headers, links, or photographers. People will come to your site and stay there based on your content. Make it pop.

     

    You can tear your hair out over how many columns to have, where to display your RSS feeds, and a dozen other minor tweaks. But if you get the theme right, you will have a step on the competition.

    Where do you find themes? Great question.

    As I get into customizing your site, I will explain more. For now, just know that there are literally thousands of themes to choose from. Some are free and some cost $20- $50. A good place to start is WordPress.org’s Free Theme Directory. There are 1500 free themes here for you to compare and answer the questions above.

    My favorite paid themes (or “Premium” themes) are on ThemeForest.com and WooThemes.com. Both have thousands of great themes that make your site look more professional and improve its performance. If I had to recommend one premium theme, I would point you toward the Standard Theme by 8bit.io. I know the head of 8bit. He is a stud and so is his product. Check it out.

    So that’s my quick and dirty WordPress and themes intro for all of you who are looking to build your own CRE site. I will follow up with a series of more in-depth discussions on customizing and optimizing WordPress and its themes. For now, hit me up in the comments!

    – Duke

  • Why You Should Write About CRE

    A peaceful spot to write something . . .

    I find that I get a little push-back on writing (see: blogging) about commercial real estate. I hear excuses about “not enough time”, “nothing to write about”, “preserving intellectual property”, blah blah blah.

    Ok. Maybe those are true, but I doubt it.

    I won’t say that every other industry has embraced the blog as a viable form of information delivery, but several very mature industries have not only embraced but even openly encouraged blogs centered around the industry’s trends, challenges, and news.

    Take MotleyFool as an example. Or The Street. Both are content-rich, blog-centered sites that report and opine on the high-finance industry. It doesn’t get much more white-collar than that.

    And I would argue that the industry is the better for it. The constant flow of information and ideas from these two sites alone can change the way a person or firm operates and interacts with the financial industry.

    So, let’s bring it back home.

    Writing is wonderful and beneficial. Neato. But why should you write about CRE?

    Here are five (not-so-obvious) reasons why (and I am going to assume that you are a commercial real estate professional):

     

    1. Connectivity

    This may be obvious to you, but when I first started writing online I didn’t realize how much I would need to connect with the online CRE community. Through research for articles and building my social media profiles, I ran across some tremendous resources. Learning from people like Coy Davidson, Duke Long, The CRE-Apps Team, and the 42 Floors guys has VASTLY increased my knowledge base on the fundamentals of global CRE. I can’t imagine any other way that I would have been able to grow my tool kit as quickly or thoroughly as I have through gaining connections with the online CRE community.

     

    2. Knowledge

    This plays heavily into Connectivity, but I want to point out that through my direct research for articles I have been forced to understand concepts that I may have glossed over in business. Just taking the time to research bankruptcy has made me decently knowledgeable on the differences between Chapters 7, 11, and 13 in US bankruptcy court. It has been both fascinating and rewarding and I’m not sure I would have taken the time to study it if I hadn’t wanted to present it clearly and concisely on my site. Maybe the best way to say it is that directed research for an article is the best way I know to gain depth (as opposed to width) of knowledge in a subject.

     

    Tempted? I am.

    3. Retention

    One concept I have come to understand is that true thought leaders on the web don’t repackage information. They aren’t just regurgitating news from the local paper. Thought leaders create new, original, and interesting content in a palatable, concise format. To do so, they have to read, interpret, and understand the news and information that crosses in front of them. They need to gain an applicable understanding of the subject in order to present it well. I think that leads to retention (it has for me). It’s very similar to school. Remember, those advanced statistical questions you had to memorize for calculus? Yeah, me neither. What I do remember is the papers I wrote and studies I did that forced me to take the info, interpret it, and bend it to my thesis. I retained that knowledge and could discuss it today. Memorization is intellectual junk food. You don’t retain knowledge that you memorize or redeliver. You retain knowledge that you interpret and apply. So I have found that creating original content will make unique concepts stick with me for substantially longer than news stories that I retweet.

     

    4. Clarity

    This one goes hand-in-hand with brevity. Web-based articles shouldn’t be novels. They are brief, fact-filled, and to-the-point. The web isn’t a friendly place for rambling. So to create good content, you need to develop the ability to present ideas clearly in as few words as possible. That forces you to think clearly about the concept and find a creative way to present it with brevity. What you will find is that you will start forming opinions and thoughts through this process that are clear and concise. Think of the brightest people you know. Do they drone on and on about subjects they discuss with you? Probably not. They have clear, pithy truisms that they dispense quickly and sharply. I aspire to that. I want to present quick sharp thoughts eloquently and I find that the more I wrote and opine on my site, the clearer and sharper my opinions become. I want you to have that as well.

     

    5. Control

    This is an open forum. Write about what you want to write about. As long as you aren’t bad-mouthing anyone or being overly profane, spread your wings. I’m not your momma. Do what you want. As long as it pertains to CRE, rock on. How many other forums in your career allow that type of freedom and creativity? Not many, I’m betting. I find it very satisfying to know that there is a forum with very few rules where I can create new ideas, projects, or concepts for my industry. It’s a lot of fun.

     

    So, there it is. My 5 not-so-obvious reasons why you should write about CRE. Can you think of any others? Think I am off my rocker? Let me know in the comments!

    – Duke

    photo Courtesy SXC user Ydiot

  • Book Review: Execution: The Discipline of Getting Things Done

    Image Courtesy Amazon.com

    Image Courtesy Amazon.com

    Big plans are easy. Grandiose schemes and strategies can be put together by anyone. What separates the great leaders from everyone else is their ability to execute on those plans and effectively implement strategy.

    That is the central thesis of Execution: The Discipline of Getting Things Done by Larry Bossidy and Ram Charan. Bossidy was an executive at GE, CEO of Allied Signal and CEO of Honeywell. Charan is basically a CEO “Coach” and expert on corporate governance. Together they argue that great companies and great leaders have a knack for execution and they attempt to identify tactics used by those leaders.

    One of the best aspects of Execution is the authors’ use of real life examples. Charan will take the reader through real life examples of billion dollar companies and how their CEOs have had both resounding successes and catastrophic failures. All of them seem to start out with great plans, solid resumes, and a firm grasp of the business, but the great ones have a knack for execution and accountability.

    Bossidy does the same thing with his tenures at GE, Allied Signal, and Honeywell. He gives real, quantifiable examples of business issues that he and the executive teams faced and how they executed a strategy around maximizing value for shareholders.

    I love that they used real life examples, with real people, and included numbers and names. Too many business books use theory and hypothetical situations. Bossidy and Charan tell it like it happened and I find it easier to wrap my brain around real events and people that just a hypothetical.

    If I could summarize the main thesis of the book it would be

    Be intentional with every aspect of corporate strategy. Anyone can create aggressive goals and create impressive growth plans. Great business leaders create aggressive, realistic, quantifiable goals for each business unit and then create a corporate culture in which every employee both takes ownership of those goals and is held accountable for reaching those goals.

    I would highly recommend this book for anyone who plans on pursuing a career in commercial real estate. Sooner or later, we will all be part of a strategic planning or growth meeting (you may even run the meeting). Execution will give you a useful road map for creating goals, milestones, and action plans and it can help ensure you get them accomplished.

    Execution in Two Sentences: Every executive can make aggressive plans and impressive growth strategies. The greatest corporate leaders create plans that give employees a sense of ownership in the goals and create an environment where all employees are held accountable for reaching the quantifiable milestones necessary to achieve those goals.

    Pros: Very interesting real-life examples, good ideas for business leaders, decently well written

    Cons: You could argue that the authors are tooting their own horn a bit and bragging about their business success (I don’t feel that way, but others have argued that on Amazon).

    Target Audience: Anybody who aspires to a role in business leadership or who wants to be a part of a business

    This book is best for: Executives

    Overall Rating: ♦♦♦♦ (out of 5)

     

    Ratings Guide
    ♦ = Not worth your time
    ♦♦ = May be worth your time if it is specific to your industry or interests
    ♦♦♦ = A decent book and worthy addition to your library depending on your interests
    ♦♦♦♦ = A great book and an excellent addition to your library.
    ♦♦♦♦♦ = One of the all time classics. A must-read for anyone and everyone.
  • Book Review: Atlas Shrugged

    Image Courtesy Amazon.com

    You may ask why a site about commercial real estate would need a review of a book by Ayn Rand. Fair question.

    I would argue that Ayn Rand is not really an author. She is a philosopher, and, more specifically, an economic philosopher. She happened to write a few books in her career, but her main occupation was philosopher. Her magnum opus, Atlas Shrugged, is essentially a treatise on economic theory and the free market economy. Therefore, this book is extremely relevant to commercial real estate and all of the industries interconnected with it.

    Let me begin my review by saying that I think Rand is an exceptional philosopher and an amazing woman. I have written about her before and I hope that I conveyed how exceptional she truly was while she lived. Whatever I may say about her book, she was one of the more gifted philosophers of the past century and deserves credit.

    Having said that, I’m not sure I would ever read Atlas Shrugged again. It was interesting and entertaining . . . for the first 500 pages or so. Actually, I listened to it in my car on 50 CDs. So I should say that it was interesting for the first 25 CDs.

    I read my fair share of books. Last year I finished more than 20 different titles. So I have learned over time that there are certain writing styles I prefer. For example, all of the books that I read not named “Harry Potter” are non-fiction and business books. So I tend to enjoy a writing style that is heavily factual and balances interesting anecdotes and facts (think Michael Lewis and Malcolm Gladwell).

    Therein lies my problem with Rand.

    Atlas Shrugged (and The Fountainhead) is a work of fiction. All of the characters and situations came from Rand’s vivid imagination. She has an exceptional talent for detail and description. She can take your breath away with her knowledge of the steel industry down to the grittiest detail of bolt sizes on industrial smelters.

    But I don’t really care about the bolts.

    I just want to know what Francisco and Hank Reardon are doing at the mill when one of the smelters over-heats and threatens the entire mill. Just tell me what happened, what they did, and why. That’s all I need. All of the superfluous details are . . . superfluous. Remember, I’m a business book reader. I want a quick anecdote, lessons learned, and how to apply it to my life. If Dagney’s lapels match the bluest hydangea on a wet spring day . . . I don’t really care. I want facts and lessons and I want them in as few words as possible. I highly value brevity and, as a writer, appreciate the skill it takes to develop the balance between description and brevity.

    Maybe the simplest way I can critique her is as follows: Rand is an exceptional philosopher and an average writer.

    You can probably tell that this isn’t necessarily a problem with Rand. It’s just my preference. I simply don’t prefer her writing style.  As I said, I value brevity and concision. She doesn’t. I only need Jim Taggert to speak a few times to know that he is an idiot and a dangerous man. Rand has him speak 200 times and beats that dead horse. To each her own.

    So, while I may not prefer her writing style, I strongly admire her philosophical reach and wisdom. She ardently promotes individual achievement while vehemently condemning those who would bring down the achievers around them. She abhors people like Jim Taggert who believe they are entitled to success and money and need only bring giants down to make themselves feel tall. I agree with her.

    She would hate that the top 5% of income earners in the US pay 60% of all taxes. She hates Robin Hood.

    Frankly, I can understand where she is coming from. As an aspiring high-achiever, I would be pretty peeved if I worked my hands to the bone to make a small fortune and then was made to feel guilty for my success, called greedy, called privileged, or called lucky. That would probably piss me off. I’m not trying to make a political stance or anything, but I can see how you would be upset if you worked that hard only to be called “lucky.”

    I can also see how it would be frustrating to have Uncle Sam take a disproportionately large chunk out of my income apple. The country is telling me:

    Hey! You! Successful rich guy/girl! You owe us a big piece of those huge paychecks you are bringing in! That’s our money! We know how to use it better than you would anyway!

    Yeah, it’s safe to say that would make me pretty unhappy. Rand gets that. And the whole premise of her book is: What if those high achievers and successful leaders refuse to cooperate? What if they just all walked away? What if the best and brightest people on the planet all quit and walked away because they were tired of the government taking their money and then changing the rules of the game they play? What would you do then? Who would you tax to pay your government bills?

    Interesting concept, right?

    I thought so too. And Rand does a fine job of taking that question to its most extreme conclusion. To ruin the ending for you: they all do quit, the world “stops”, many people die, and then the do-ers have a clean slate to start over with. You know they will build something great, because that’s what do-ers do.

    Rand has recently seen a burst in popularity as the current political party in the White House has been promoting regulations and ideas that tout “social benefit” or “the greater good” or “helping the less-privileged” while seemingly hampering individual achievement (cough, rights, cough). Rand uses weasels like Jim Taggert and Orin Boyle as the hideous underbelly of “social responsibility” and uses Dagney Taggert, Hank Reardon, and John Galt as her ideal men and women who value achievement and individualism above all else. When you learn the difference between these two groups of people, it’s easy to see why her popularity is peaking.

    So, in that sense, I’m glad I read the book. There are some deep philosophical waters to wade through in Atlas Shrugged and I enjoy discussing them with others who have read it. The $29.99 question is: Should you read it?

    Maybe.

    If you have more patience than I do, enjoy ornate descriptions, or just have an unhealthy obsession with philosophy, Atlas Shrugged is probably worth the price. If not, take this review and other reviews, get the main point, and apply it to your own life however you please.

    Either way, beware of Robin Hood and those who wish to punish the successful.

     

    Atlas Shrugged in Two Sentences: What if all of the achievers and brilliant men and women of the world went on strike? What would happen if they stopped the engine of the world and left it to people who make a living off the greatness of others or off the guilt of the successful?

    Pros: Very interesting philosophy on economics and free market capitalism, very detailed descriptions of industries like railroads and steel, well written dialogue

    Cons: Loooooooooooooooooooooooooooong, at times redundant

    Target Audience: Anybody in any country over the age of 16, I suppose

    This book is best for: Readers interested in philosophy and economics and who have the patience to learn about it through the medium of business fiction

    Overall Rating: ♦♦ (out of 5)

     

    Ratings Guide
    ♦ = Not worth your time
    ♦♦ = May be worth your time if it is specific to your industry or interests
    ♦♦♦ = A decent book and worthy addition to your library depending on your interests
    ♦♦♦♦ = A great book and an excellent addition to your library.
    ♦♦♦♦♦ = One of the all time classics. A must-read for anyone and everyone.
  • Goal Setting: The Ideal Day

    flickr-user-wolfgang-staudt-3

    This may be unique to me, but I think an integral part of setting goals for yourself should include your time.

    That is, I think you should plan for what you want your ideal day to look like in addition to what you want to accomplish or who you want to be.

    Most of us focus on deals we want to do, money we want to make, or roles we want to acquire as our career progresses. But, how many of us plan for how we want to spend our time in an ideal work setting?

    Maybe the simplest way I could ask it is as follows: Suppose I were to give you $100 Million, no strings attached, and you realize that you still want to have a career. How would you spend your time in those work days?

    For this thought exercise, let’s assume that careers have more intrinsic value than the basic need to make money. People like you and I are accomplishment-oriented and, as the great JoePa noted, there is only one major life event after retirement. We don’t stop being achievers when we have a bunch of money. Think about it. Think of all the start-up and business success stories you have heard about the entrepreneur who struck it rich and made so much money that they never had to work again. How many of them actually never worked again?

    Maybe 5%? Maybe less?

    Most of us love the rush of working and accomplishing things. That basic desire may change slightly, but it doesn’t fade when we get rich. It is still there and even the one-hundred-millionaire will want to work toward some goal every day.

    So, for this exercise, let’s assume you have enough money to do whatever you want whenever you want to, but you still yearn for accomplishment and efficiency. How will you spend your day?

    Do you see why this is a crucial question to ask of yourself? If you only focus on deals, money, and titles, you will work yourself to death and ruin your health and your relationships. I think you need to build some time into every day working on your life plan, not just your business plan.

    Consequently, what are the things you would like to do every day to have an ideal life? If your life were “perfect”, what would you spend your time doing every day? I’m not trying to dig too deep philosophically, but if you don’t think about what the perfect version of your life would look like, then how do you know what to aim for?

    So, back on point, what would your perfect work day look like?

    Here are a few questions to consider . . .

    What types of things would you accomplish?

    What time would you wake up every morning?

    How many hours of sleep would you get?

    How would you spend the majority of your time?

    How much of the day would you spend in the office vs your home?

    How often would you be on the phone?

    How much time would you spend meeting with people?

    How much time would you spend with family?

    How would you fit in your exercise?

    What else would you like to spend your time doing?

    How many days per week would you work?

     

    All of these answers are unique to each person and no one can tell you what you “should” be doing. You have to figure that out for yourself and I can almost guarantee that these answers will change over time as your temples gray. But you MUST have a plan on how to spend your time.

    When the shadows creep in, all we have is a collection of moments in our life. The greatest regret of a dying man may be to look back at his life and realize he wasn’t intentional with the way he used his moments. Those are the times when you hear men talk about “wasting their life.” That’s just a way of saying they wasted the time they were given on this earth since they didn’t intentionally plan how to spend those moments.

    Don’t you be like that. Have a plan for your time and how you want to spend it. I bet that you will realize that there are changes you can make today in your current life stage to get you closer to that ideal day. You certainly don’t need $100 Million to make the first steps in that direction.

    Take a few baby steps today and every year for the next 5 years and I am betting that you will find yourself much closer to that ideal day than you ever imagined you could be. You may just find that the $100 Million is an irrelevant consideration and that control of your time is more valuable to you than a huge paycheck.

    Lest I be accused of being a philosopher, here is my practical application. My ideal work day and week is below. Take note of how much time I spend doing each of my activities and how I answered the above questions. That should tell you more about my priorities and lifestyle desires than any long-winded rant could. I put a few notes at the end of the schedule.

    And here it is (click to enlarge) . . .

    Notes –

    7.5 hours of sleep every night. Reading at least twice a day. Running everyday. Goal time at the beginning and end of every week. Answer emails ONLY 3 times per day. Plenty of practice on delegating tasks and organizing. Three networking lunches every week. Three afternoon lifts every week. Mentoring or coaching every single weekday. Two bible study/small group sessions every week. Date with the wifey every week. About 11 hours every week with the family in the evenings. 40 1/2 hour work week with most of my time spent on making deals, driving markets, and visiting properties.

     

    Seems like a fun week and, frankly, a very efficient one. Notice how my goals conform to this ideal schedule. I need to find a role in which I am a deal-maker by phone and in person. I need to develop my organizational and delegation skills. I need an office that is close to a gym and close to my home. I need outlets through which I can coach and mentor young men (or my children). I need to stick to my networking in order to know the right people to call and visit property with during my day. And on and on and on. I can glean crucial data points to aim for now that I have this written down and recorded. If this is how I want to spend my days, I can now figure out what skills I should acquire and what contacts I need to make in order to get there.

    Anyway, that’s what my ideal day and week look like. What does yours look like?

    Visit this site and download the printable hourly calendar (I downloaded it to Word for editing). Fill out what your ideal week would look like and then take notes on what you are spending your time doing. How does that align with your priorities? Can you implement any of these changes right now? As I said above, start working toward that goal little by little and you may find that you have an ideal schedule before you ever become a high-powered executive. You may even want to show this to your boss. If he or she is a good boss, they will understand what you are doing, why you are doing it, and they will help you move toward your goal.

    Use this tool and these ideas in any way you please. Let us know what you come up with in the comments and remember that your time is your most precious resource and if you don’t plan how you are using it you may look back and wonder what might have been.

    Happy planning.

    – Duke

    (Hat tip to StudentHandouts.com for the great, free resource)

  • The Millenial Manifesto: Motivation

    aj-brustein-2

    I’ve said it before and I’ll say it again: I don’t speak for everyone.

    I only know myself and my own issues. So any comments I make about my generation are simply an extrapolation of my own thoughts on my struggles, strengths, and style. So, please read my comments with a cautious eye.

    Today, let’s discuss motivation. Last time we discussed the Millenial Generation, we talked about loyalty and employers. To distill the message: If you can find out what motivates us, we will be just as loyal as any other generation. The $1 Trillion questions is: What motivates a Millenial?

    Allow me to shed some light . . .

    1. Meaning – I know it has been said a million times, but I am just as interested in “making a difference” as anyone else. Now, that phrase is certainly over-worked, but to me it means that I look back at my career and see that what I did improved the lives of others and improved the place I lived.

    Exploiting the arbitrage opportunities in the widget market in Southeast Asia’s developing economies can be extremely lucrative as a career, but that career would never allow me to go to sleep at night feeling like I truly accomplished something important or meaningful. I wouldn’t look back on that career with satisfaction knowing that I effectively traded the put options of textile conglomerates in Jakarta. Maybe that’s just me, but huge paychecks aren’t what I think will cause me to look back on a career with a sense of accomplishment.

    I have to make sure that what I am doing is a meaningful endeavor and not simply a job that pays well.

    2. Creativity – I need to have a certain level of creativity in my role. That isn’t to say that I need to be able to paint or write poetry. I just need an outlet in my day-to-day activities in which I am encouraged to think creatively, challenge the status quo, and invent new products or processes. That was probably the worst part of my job as an analyst.

    When I worked as an analyst, my basic role was as follows:

    Duke, here is a model. Here are some numbers. Put those numbers into that model. When you are finished, bring it to me and I will tell you how you input those numbers incorrectly.

    Does that sound like an environment that offers ample opportunity for creativity and inventiveness?

    There are certain time-honored traditions, battle-tested best practices, and hard-learned lessons that every member of my generation should try to adopt from previous generations. But every role should have an opportunity in which the employee can think creatively and dynamically about a problem that needs solving. All I really want is an environment in which I can approach a “boss” and say: What if we tried it this way? or Can I run an idea by you?

    If I am in an environment that fosters those types of discussions, then I will have all of the creativity that I need.

    3. Flexibility – If you measure my output, work-ethic, or effectiveness by the number of hours I sit at my desk, then you and I have a huge fundamental disagreement on what constitutes an effective employee. Life happens. People get sick, relatives pass away, friends get married, tires blow, lunches run long. If you micromanage the number of hours I sit at my desk, the vacation days I take, the phone calls I make, or any other way I spend my time, then I will try and find a way to leave your employment as soon as possible.

    Here’s why:

    You may think that you are paying me for my time. You’re not. In most CRE professions, we are paid for our output. Yes, attorneys and accountants are paid by the hour and need to log some hours, but for all of us who are deal-makers, we get paid by . . . making deals.

    Since I am not an accountant or attorney, my hours worked is irrelevant. My output is the only effective measurement against which I can be judged. If I can accomplish in 5 hours what others can accomplish in 10, why do you want me to work 10? Maybe your theory is that “the most successful people in our business are the ones who work the most.” If that theory is true, then I will choose “moderate” success in business and will have a collection of fun hobbies that I enjoy and a wonderful home life that I can experience to the fullest degree.

    This is a deep topic and we can discuss the ramifications of time management and our generation later, but the bottom line is: I want to feel like I am trusted with my time. If an employer tells me what hours I have to work, how many vacation days I can have, and how long my lunch meetings can be, they are essentially saying “We don’t trust you with your time, so you have to adhere to OUR time policy.”

    Why would I want to work for an employer who doesn’t trust me with my own time?

    4. Balance – I touched on it briefly in Flexibility, but a sense of balance in my life is extremely important. Every person defines “balance” differently, but I can tell you a little bit about what it means to me.

    I am not my job. We all ask someone “What do you do?” when we first meet them, but I never want to be defined by my occupation. If all I am to this world is a commercial real estate deal-maker, then I will have failed to live up to the expectations I have set for myself.

    One example that is unique to me is coaching. I coach travel baseball around Atlanta and I really find a sense of purpose and fulfillment through mentoring these young men via the game of baseball. That is a hobby of mine that I cherish and would not give up easily for any paycheck. Any job that asked my to give it up would have to be truly exceptional and I’m not sure that opportunity even exists.

    Another example is my wonderful wife. She is the most important thing on this planet to me and having dinner with her every evening is important to me. Occasions arise where I have to chose between my job and my wife. My wife will win every time. No matter what. Fire me if you don’t like it. I’ll be fine. If I can only be great at one thing in my life, then it had better be as a great husband. If you want me to chose work over her, then you and I are going to have issues.

    That is what I mean by balance. I have more than one passion in my life and I need to be able to pursue those passions without reproach or condescension from an employer.

    5. Autonomy – I’ll admit up front that this is a tough one. The proper level of autonomy and decision-making-power to assign to each employee is an extremely difficult target to hit. I have never felt like I had too much responsibility or autonomy. I always feel like I have had too little autonomy, but I understand how companies want to limit down-side risk by having decisions funnel up through senior management. I get that and it makes sense, but consider human psychology.

    Psychology 101 says every human everywhere wants to feel important. MMFI (Make Me Feel Important) is one of the oldest and truest leadership maxims in business. If you want loyalty, make people feel like they matter and are important to you. Make them feel like you trust them enough to make some decisions. For me, that means trusting me with a certain level of decision authority. If I feel like I have a reasonable level of autonomy to decide certain issues that arise, then I’m happy.

    I am not asking for the keys to the castle or to park in the CEO’s parking spot. I just want some freedom to make decisions. I want to feel trusted and respected enough to decide on issues that matter to my employer. I would pass on a higher salary position if I had to sacrifice autonomy. The company that makes me FEEL  powerful and important will have little trouble convincing me to stick around.

    6. Compensation – I want to feel like I am appreciated through my compensation. I DO NOT need to be the highest-paid guy around town. Let me say that again:  I DO NOT NEED TO BE THE HIGHEST-PAID GUY AROUND TOWN. But I do need to feel like I am treated fairly by my employer. The definition of “fairly” is totally subjective and dependent upon a number of conditions, but I will give you a numerical example.

    Let’s say I make $50,000 per year. Cool. Everything is hunky-dory.

    Now let’s say I find out that my friends who work in the exact same role make $70,000 per year. Not cool. My peers make 40% more than I do in almost the exact same position. All else being equal, I may start looking for employment opportunities at their company.

    On the other hand, if I found out that most of my peers made $55,000 per year or even $60,000 per year in the same role, I would be MUCH less tempted to look around. That extra $10,000 is important to me, but it isn’t THAT important to me. In fact, notice where this motivation falls on my little list. I found five other aspects of motivation that came to my mind BEFORE compensation. If 1 through 5 are checked off of my list, then this one becomes much less important.

    The bottom line to me is as follows:

    If I can pay my bills, take my wife to dinner once in while, buy a couple books for myself, and not feel like all of my peers are egregiously above my level of pay, then my compensation is  fine.

    I have plenty of time to make large paychecks and increase my income. For now, let me keep the lights on, take her to Buckhead Diner, have a copy of Man in Full, and not be the laughing stock of my peer network. Then you won’t hear complaints from me about my paycheck.

    7. Education & Networking – This one may be a little more specific to me, but the two best ways that I know to advance in a career are through learning and meeting people. I am a knowledge-junkie and a network-aholic. I am always learning. I can never meet enough interesting people. I would love for an employer to pay my memberships dues to networking organizations and to reimburse me for my CCIM or CRE continuing eduction classes. I’m going to pay them either way because I love learning and meeting people.

    It would certainly build some loyalty if an employer said “Duke, we think you’re important enough that we want to pay for your eduction and networking”. In that scenario, don’t you think I would want to say nice things about that employer at my networking meetings? (Hint: I would!)

     

    So there you have it. There are 7 main factors that motivate me in my business life. Other members of the Millenial Generation may feel differently, but I would guess that some of the above points are universal.

    Reviewing the above list, it strikes me that there are really just two common themes: trust and respect. Let me abbreviate the list according to those two themes:

    1. I RESPECT myself for my chosen profession. 2. My employer TRUSTS me enough to allow me some creativity in my role. 3. My employer TRUSTS my ability to manage my own time. 4. My employer RESPECTS my personal life enough to allow me to attain balance. 5. My employer TRUSTS me enough to allow me to make decisions. 6. My employer RESPECTS me enough to compensate me fairly. 7. My employer RESPECTS me enough to pay for the things that help me advance in my career.

    I can break down these two aspects on a deeper level in later articles. For now, consider your own motivation in the workplace. Do you have any to add to my list? Any of mine that are unfair or unreasonable? Leave a comment below and let me know what you think.

    – Duke

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