A Statement On Ukraine from Kevin Maggiacomo, SVN President and CEO

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Kevin Maggiacomo Kicks Off SVN Annual Conference

“Leverage … the SVN culture to take market share in this era of change.” That’s what SVN President & CEO Kevin Maggiacomo encouraged the 400+ attendees to the 2019 SVN Annual Conference in Miami to do.  These attendees, who hail from 38 states and five foreign countries, learned from Kevin during the opening session about the CRE industry in general, how SVN did in 2018, and where SVN is headed this year and beyond.

Kevin Maggiacomo, President & CEO

CRE is being disrupted

Technology is disrupting the CRE space, as is “disintermediation,”  forcing a major transformation in the way we do business. Collaboration, trust and transparency will become more important to success, and that dovetails with the unique SVN Culture and core covenants. Trust and the collaborative culture are integral to the SVN business model.

A banner year for SVN

In 2018, SVN experienced its best year ever. There are now over 1600 advisors and staff across the United States and eight countries. There are 21 new domestic offices, and SVN continues to expand internationally, with a recent addition in Romania. SVN Advisors are handling larger properties (in value) and closing bigger deals.

Growth ahead

SVN is positioned for more growth in 2019. SVN is aggressively pursuing minority investments in strong brokerage firms, and recently signed agreements in Los Angeles through the SVN Partnership Program. Kevin also believes that time spent hiring the best new advisors, those who are driven and value cooperation, will fuel organic growth.

Some advice

“Do one more deal, take one more step,” says Kevin Maggiacomo. “Specialize more, network more, become more efficient and results will follow.”

Kevin Maggiacomo featured in GlobeST.com article, “Why Brokers Can’t Sleep on Tech”

Why Brokers Can’t Sleep on Tech





“What’s missing from most of the disintermediation questions posed to me is an appreciation for the wide range of possibilities and scale at which technology can impact CRE brokerage,” said Maggiacomo“Instead the discussion quickly turns to the more remarkable topic of if and when the traditional role of the broker will be rendered obsolete. That’s the biggest misconception out there.”

CRE owners appreciate the positive impact that technology-enabled brokerage can have on property values, Maggiacomo maintains. Sellers are capitalizing on syndication modules and to reach a critical mass of brokers and investors through tech platforms like Buildout and CREXi.

“Brokers need to get on the train before it leaves the station and harness the power of this category tech and abandon the hyper-focused practice of working to identify the buyers on their own,” said Maggiacomo.


Read the full article here.

SVN International Corp. Launches New Capital-Powered Expansion Plans

SVN International Corp. announced its new capital investment based growth strategy plans with the launch of two new partner firms in Southern California: the merger of ECP Commercial into the San Diego office of SVN | Vanguard; and separately, the acquisition of a team from Advisors Real Estate, to form SVN | Commercial-DTLA located in Downtown Los Angeles. This expansion represents the first phase of SVN®’s new Partnership Strategy. Through this new structure, SVN is acquiring minority interests in established companies and high growth teams in strategic markets that will operate under the SVN brand and franchise structure.

Kevin Maggiacomo, president & CEO of SVN International Corp. recently spoke with Kelsi Maree Borland, a freelance writer for GlobeSt.com. The following is an excerpt from the article that was featured on GlobeSt.com on January 23, 2019.

 


“As a growth accelerator for the brand, these minority acquisitions not only provide SVN with immediate market share but also provides a foundation on which we can aggressively reinvest in markets on an ongoing basis for future growth,” Kevin Maggiacomo, president and CEO of SVN International Corp., tells GlobeSt.com. “These key markets are also the most active in terms of volume and velocity and serve as hubs for inbound and outbound opportunities.”

 

Kevin Maggiacomo
President CEO, SVN International Corp.

This is the first part of a two-pronged growth strategy. The second part will focus on the growing interest in alternative consolidation options. “We believe that the evolving competitive landscape and wave of consolidation has created demand for firms to be part of a larger platform but who also seek an alternative to traditional franchising or a straight, 100% acquisition,” adds Maggiacomo. “Our partnership strategy provides a bit of both, affiliating with one of the most recognized brands in CRE while simultaneously realizing some liquidity.”

The new partnership model doesn’t mean that SVN is planning to abandon the franchise model, however. Maggiacomo says the firm will continue to be a “pure” franchisor, as he describes. “We’re making minority investments here and not reverting back to the corporate stores of old,” he adds. “The agility, flexibility and stability that franchising provides is a core tenet of our business.  Our partnership investments are a supplemental strategy designed to accelerate and affect exponential growth in key markets where firms are looking for a structure that was previously unavailable through our traditional franchise model.”

In fact, the firm’s success with the franchise model has enabled them to adopt this new partnership model. Maggiacomo sees it has a new opportunity for growth. “Like any organization, we are constantly assessing our business model to in order to ascertain our best opportunities for growth,” he explains. “Last year we saw the 200th office open under the SVN brand.  We’re pleased with our market coverage, but we determined that our greatest opportunity for growth was in increasing our market share in key US markets. Doing that—quickly and in targeted form—requires a unique solution to the desires of the marketplace. A capital powered partnership strategy combined with the SVN systems for growth yields a product that is appealing to a bevy of high growth firms who fit the SVN mold.”

Specifically, Maggiacomo is looking for companies that are sizable and on the brink of obtaining significant market share, especially with access to support. “While the owners could sell all or a majority of their firm’s stock, most believe that they would be selling short or too early and further don’t want to relinquish control of their businesses,” he says. “The SVN Partnership Program provides for immediate liquidity to firm shareholders. This, coupled with growth capital for bolt-on acquisitions as well as SVN’s technology stack, systems and resources puts each partnership firm on their own “ten times” path to growth.”

The two firms SVN has purchased include ECP Commercial in San Diego, which will merge into SVN | Vanguard, and a team from Advisors Real Estate, which will form SVN | Commercial-DTLA in Los Angeles. These two firms perfectly fit the bill, aligning with both the growth strategy and the firm’s company culture. “For us, the SVN culture is everything—our culture is our business model, and so ensuring that prospective partner firms believe in and practice fee sharing and broker cooperation, as an example, is paramount,” Maggiacomo explains.


 

To read the entire GlobeSt.com article, CLICK HERE.

To find out more about franchising with SVN, CLICK HERE.

 

SVN CEO Recognized as Top Commercial Real Estate Leader

Kevin Maggiacomo Named as a Best CRE Boss for Promoting Diversity

Kevin Maggiacomo Best CRE BossIn case you missed the July issue of Real Estate Forumthe magazine recently announced SVN International Corp. President and CEO Kevin Maggiacomo has been named a 2016 Best CRE Boss for his efforts promoting diversity throughout the commercial real estate industry. The annual awards recognize inspirational and innovative CRE company leaders who exhibit ambition, financial prowess and people skills while also leading by example.

Chosen from over 100 highly qualified nominees, each featured leader was given a title that best corresponds with the individual’s leadership qualities, professional reputation and presence in the industry. Maggiacomo was selected as a 2016 Best CRE Boss in “The Diversifier” category for his continued dedication to improving gender and ethnic diversity in both SVN and the industry overall.

“We place a very high importance on diverse thought at SVN; it is a message we consistently communicate loud and clear,” says SVN President and CEO Kevin Maggiacomo. “Being recognized as a diversifier shows me that the industry is listening, and that a much-needed shift toward gender-balanced leadership and empowerment is underway.”

One of Maggiacomo’s main passions is spreading the message of diversity in leadership. Starting with his own company, Maggiacomo gender-balanced the SVN leadership team in 2014, has testified in front of the Massachusetts legislature on behalf of a Women on Boards bill, spoke on “Awakening the American Dream,” in his highly viewed TedX talk and most recently joined former British Prime Minster Tony Blair at the Closing the Gap conference speaking on the importance of diversifying leadership boards.

To learn more about diversity’s role in the innovative SVN platform, visit our Franchise Opportunities page.

[bctt tweet=”We place a very high importance on diverse thought at SVN; it is a message we consistently communicate loud and clear #CRE” username=”svnic”]

Happy 4th of July from Kevin Maggiacomo

Celebrating Our Nation’s Independence

Independence Day is one of my favorite holidays. It celebrates the birth of a great nation founded by men and women who understood the meaning and value of disruptive thinking, service, honor, leadership and above all, freedom.

As we approach this 4th of July holiday, I can’t help but think of our founders and framers, and the sacrifices they made when they fought to establish our nation’s independence. Those thoughts of respect and admiration in turn led me to think about of our troops overseas currently fighting to protect our way of life and preserve our freedom.

Enjoy this special weekend, relish in the blessings of freedom and independence, but also do your part and work hard to appreciate it.

For those clients, colleagues and SVN family members who find themselves working or serving during this holiday, our gratitude and thanks go to you as well on this weekend of remembrance.

I wish each of you a safe and happy 4th of July weekend.

To read more of Kevin Maggiacomo’s blog posts, click here.

[bctt tweet=”Enjoy this special weekend, relish in the blessings of freedom and independence, but also do your part and work hard to appreciate it.” username=”svnic”]

US Commercial Real Estate Markets After BREXIT

Analysis for SVN CRE Colleagues and Clients

Last week the world woke up to the implausible, the United Kingdom voting to leave the European Union. Immediately global and domestic equity markets have been volatile with rapid downside moves while perceived “safe” assets such as gold and US Treasury bonds soared in price. REIT stocks, perhaps a leading indicator of the market reaction and a flight towards the tangibility of commercial real estate, have fallen less than the market averages in the days since the BREXIT. All of these reactions, and most that will occur in the coming weeks, are simply reactions to the uncertainty; as nothing has really happened yet. Here is what is known so far:

  1. The UK will suffer from the uncertainty in the short term and probably the long term, assuming Parliament moves forward with the voters’ wishes. Local and especially multinational firms are undoubtedly going to curtail plans for investments in the UK and may even scale back workforces – or at a minimum – rethink future hiring decisions. This alone can and probably will put the UK into a recession, the severity of which could be high if the uncertainty persists. The main unknown factor is how the European Union will react; if they seek to be punitive and harsh to serve as a warning to other countries considering defection, then this could be an ugly “divorce”. Since the UK did not adopt the Euro, this “divorce” is somewhat analogous to a couple separating who never joined finances – still chaotic but not as bad as it could be.
  2. The British Pound will remain low and the US Dollar high. The currency moves, mainly a flight to Dollars from Pounds and Euros, should persist for some time, with higher volatility of course. This will harm the UK the most, and the US will see some benefits in terms of lower fuel costs and prices of import goods. Conversely, US exports will be more expensive so trade flows could become more imbalanced. According to the Wall Street Journal, the UK only accounted for less than 5% of US export volume, so the direct effect should be minimal. Nevertheless, the commercial real estate sectors serving trade and manufacturing could see decreased demand in some instances.
  3. Interest rates in the US are likely to remain low. The “flight to safety” has made US Treasury bonds of all maturities very popular and thus yields are likely to stay low for some time. Further, it is far less likely that the Federal Reserve will move rates up or take other tightening measures this year. This has broad reaching benefits for the domestic real estate markets all around.

BREXIT May Benefit the US Commercial Real Estate Industry

While the jury is still out on the final impacts to the US economy and real estate markets, most noted economists believe that BREXIT will have relatively minimal impacts directly on the US macroeconomy. Further, the flood of capital will actually provide some benefits and firms may direct investment dollars and expansion plans to the US and away from the UK and Europe. To the downside, the strong dollar will hurt export trade and possibly tourism, which has been facing headwinds from overseas for several quarters already. The large multinational corporations with international revenue could see weaker revenue and profit forecasts in the coming years without question. Still, overall “Mainstreet USA” is not likely to see immediate direct effects. When watching the moves of the stock indices it is important to remember that those firms derive anywhere from 30% to 70% of their revenue from outside the country on average; thus a stock market “crash” does not necessarily mean a domestic calamity.

Commercial real estate in the US is most likely to benefit based on what seems probable at this time. Investors seeking yield and safety will find that our real estate assets are a relatively safe place to park capital. The tangibility and low volatility of commercial real estate – even in low cap rate markets – stands to attract investment into the US property markets. This likely flood of capital and lower interest rates could actually cause prices to increase in many markets, especially the major “24-hour” hubs that foreign investors historically prefer. While the long term is far less certain – and there is undeniable risk that the BREXIT could serve as catalyst for a global recession – US commercial real estate looks to be an attractive investment even in those scenarios.


Follow Kevin Maggiacomo on Twitter: @Maggiacomo.

[bctt tweet=”Commercial real estate in the US is most likely to benefit based on what seems probable at this time. #CRE” username=”svnic”]

SVN President and CEO Kevin Maggiacomo Speaks at "Closing the Gap" Conference

Kevin Maggiacomo on Gender Balance and Shared Value 

In December 2015, Kevin Maggiacomo was invited to speak at the very prestigious Greene Institute “Closing the Gap” conference on achieving gender balance. Other speakers at the conference included New York Times Columnist Tom Friedman and former Prime Minister of the United Kingdom Tony Blair. Kevin used this opportunity to expand upon his earlier TEDx talk about including everyone in the American Dream. In his latest talk, he connects his message of inclusion with a transformative and profitable business strategy based on shared value.

Check out the 6-minute video here.


We believe our success at SVN comes from growing our network by intentionally recruiting women, minorities and millennials as franchisees, Advisors and employees. We believe their proven, innate drive for openness, collaboration and success will give SVN a distinctive competitive advantage.  To view new career opportunities visit our Careers Page. If you are interested in learning more about how your firm can join as a franchise, visit our Franchise Sales Page.

Have Five Real Conversations a Day for CRE Success

Conversations Drive Commercial Real Estate Sales

Last night, I had to turn on my electric snow melting mats. Again. In March. So you’ll understand why I’m spending a lot of time this morning thinking about our Annual Conference in San Diego.

And what I’m thinking about is the challenge that our CEO, Kevin Maggiacomo, issued to everyone in the room: Have five real conversations a day, every day.

real conversations - lady on the phoneMany of you are reading this and thinking that this isn’t a challenge. After all, you talk to 10, 20, 30 people every day, right? As I write this, it isn’t even 7:30 am, I’ve already spoken to 3 people, and I’m not even in a direct sales position anymore!

Let’s look at what Kevin said one more time… “Have five REAL conversations a day, every day.” That one word – real – makes a big difference. A real conversation is one that you have with a person who is truly in a position to sign a listing, lease, or purchase agreement. Real landlords, real owners, real tenants or truly real buyers. To be clear, I define a real buyer as someone who already owns or leases commercial real estate.

And here’s another kicker… If you’re already doing a deal with someone and you have to talk to them anyways, they don’t count.

Now that we’ve narrowed down “real,” THOSE conversations are usually a bit more few and far between. So, if you aren’t talking to five of those people a day, starting to do that will revolutionize your business. And if you can talk to more than five (when I brokered, my goal was 10 and my average was 8!), you’ll do even better.

How to Have Five Real Conversations a Day

If you aren’t having five real conversations a day, you probably have two questions at this point:

  1. How do I find these real people?
  2. What do I talk about when I get them on the phone or in front of me?

First question… The real people are in your database. Anyone that you aren’t working with today is someone that you need to talk to today. And if you don’t have a database, there’s no time like now to get started (take a look at the first couple of lessons in the SVN System for Growth course on “Encyclopedic Market Knowledge” for help getting started). We can give you all kinds of strategies for how to strategically segment your database and build smart call lists.  But for now, here’s a simple three-step rule:

  1. Find someone in your database that you haven’t spoken to in a while.
  2. Call him or her.
  3. Repeat until you’ve spoken to five different people.

Second question… What do you talk about? Dr. Dotzour nailed it at the conference… Owners and landlords care about two things – will my building stay full and will my value go up. Anything that can impact values (or net operating incomes) or occupancy is fair game, and a great way to start a conversation. It’s that simple.

To learn more about how SVN can boost your brokerage skills and business, click here.

[bctt tweet=”Have five real conversations a day, every day. #CRE”]

2016 Commercial Real Estate Market Outlook

As we progress through the start of a new year, I am pleased to share my thoughts on the robust 12 months past and to offer my outlook for the commercial real estate market in 2016. Before I do, I would be remiss if I did not thank the SVN Advisors, staff, and fellow brokers for their contributions to driving our market forward in spite of changing times. I know that I speak for all SVN Advisors and staff when I wish you a prosperous year ahead.

The Year Ahead in the Commercial Real Estate Market

Uncertainty Breeding Opportunity

After several years of increasing domestic economic expansion and an ever-recovering and ever-growing real estate market, 2016 opens with the return of global economic uncertainty as China’s economic growth moderates, energy prices decline significantly, and geopolitical threats such as ISIS, pose a consistent threat to Europe and the rest of the world. While it remains unclear how today’s macroeconomic conditions will impact commercial real estate markets, there are two scenarios. The first is that global market weakness will impact domestic financial markets, the second is that market impacts remain moderate and commercial real estate remains stable and continues to grow due to strengths in core fundamentals. We believe that the second scenario is more probable given the unique opportunities being posed by forces – like demographic shifts – that are proceeding independently of macroeconomic trends.

Manhattan - commercial real estate market
Manhattan, NY

As for the commercial real estate markets themselves, 2015 was an amazing year. Real Capital Analytics reported a total of $533 billion in sales representing a 23% gain over 2014, and the second highest level of investment volume over time behind the peak $573 billion in activity seen in 2007. Further, the Moody’s/RCA CPPI has given an initial estimate of 12% year over year price appreciation in 2015. These trends are more likely than not to persist throughout 2016 for several reasons. First, global pressures will have two effects:  One, keeping interest rates low (despite the best intentions of the Federal Reserve) and keeping foreign money flowing to the United States, a decent amount of which will flow to real estate. Second, fundamentals are strong – in fact, many markets in almost all property type segments experienced rising lease rates and falling occupancies for most of 2015 and are forecast to continue such growth. Third, new supply remains balanced with demand growth and thus oversupply seems unlikely. The lack of increasing new supply given the growth of rental rates amidst falling vacancies can largely be attributed to rising construction costs and relatively tight lending standards for new development.

What happens in the broader United States macro economy is far more difficult to predict. First, the decline in oil and energy prices is absolutely going to cause highly localized and specific harm to those sectors and in turn cause some level of harm to the real estate markets dependent on energy production, such as those in Texas and the Midwest. Historically, oil price declines acted like a tax break or stimulus package for consumers and businesses and the overall economy thus prospered; since the United States has significantly increased its production of oil and energy following the pre-recession oil price spikes, the effect is less certain today. High price markets like those found in the Northeast and California and parts of Florida are likely to benefit the most from energy price declines as it lowers transit and utilities costs and could boost employment via the stimulus effect.

Overall, we expect that the United States economy will grow more slowly in 2016 than 2015 while still remaining positive and thus avoiding recession. Therefore, we do not see any major risks to the commercial real estate markets as long as fundamentals remain relatively strong.

Investment Outlook

commercial real estate market - chicago
Chicago, IL

Commercial real estate investors who made acquisitions during the downturn are now reaping the benefits of taking such risks. Despite, or in fact, because of these significant gains, many investors and market participants are now openly opining on the possibility of a new downturn in the real estate asset cycle. We do not find such arguments to be very compelling for several reasons. First, many of the causal conditions present before the 2008 economic turmoil are not present in 2016 and are not likely to appear in the near-term horizon. The most meaningful indicator of a potential bubble or overpricing of commercial real estate is the spread between cap rates and underlying treasury rates. According to RCA, cap rates averaged 6.5% nationwide during 2015, while the 10-year treasury rate averaged in the low 2% range for most of 2015 and early 2016. This implies a spread of over 4% (or 400 basis points). Today’s spreads are significantly higher than those observed pre-crash where they averaged slightly below 200 basis points and even below 100 basis points for class A assets in top markets according to the commercial real estate economics researchers at the Lakemont Group. In summary, the market is not presenting the same risk/return profile observed before the 2007 peak of pricing. Further, debt availability is far more constrained post crisis with total leverage utilization down significantly (in fact, the percentage of all equity transactions in many markets is staggering) and therefore the risk of default is relatively low for most investors and deals. Thus, we believe pricing in commercial real estate markets does not represent a new bubble or other significant source of risk.

This conclusion is further strengthened by our belief that interest rates will not experience significant upward pressure in 2016. The energy sector declines and overall global pressures will likely start impacting GDP and employment statistics by the end of the first quarter of 2016.  The likely result will be the Federal Reserve slowing or even pausing further rate increases in 2016. Debt markets should remain open and active in 2016 as they did in 2015. If debt costs do not rise and fundamentals remain stable or growing (even if at slower rates than in 2015), it is not logical to expect price declines. In fact, we expect modest price appreciation for most markets.

Top Markets for Property Sales in 2015

(Ranked in terms of total dollar volume)

  1. Manhattan – $55.9B
  2. Los Angeles -$27.6B
  3. Chicago – $22.6B
  4. Dallas – $19.5B
  5. Atlanta – $16.9B
  6. Boston – $16.4B
  7. Seattle – $14.9B
  8. San Francisco – $14.3B
  9. San Jose – $12.5B
  10. Phoenix – $12.1B
Source: Real Capital Analytics

The list of top markets for commercial real estate sales in 2015 appears relatively similar to lists for the past 5 years with the new additions of Phoenix and San Jose. These markets attract institutional capital from private equity, REITs, and foreign buyers and have been the most competitive to find deals, especially with attractive yields. Overall, given the increasing level of global macroeconomic uncertainty, we expect these and related top tier markets to gather an increasing share of commercial real estate investment activity in 2016 as money moves to areas of perceived lowest risk.

Top Growth Markets for Property Sales in 2015

(Ranked in terms of YOY percentage increase in sales volume)

  1. DC/Virginia Burbs – 121%
  2. Baltimore – 71%
  3. Orange County – 70%
  4. Northern New Jersey – 69%
  5. Seattle – 68%
  6. Orlando – 68%
  7. Portland – 61%
  8. Central California – 60%
  9. Inland Empire – 58%
  10. Phoenix – 54%
Source: Real Capital Analytics

The above list of markets may present some of the best opportunities for growth and price appreciation given their relative strength. Capital is starting to rotate to these markets and further price increases may potentially follow. There will likely be expansion in cap rate spreads between primary and secondary markets in 2016, especially if foreign capital flows increase as predicted and those funds seek assets predominantly in only the largest markets. Thus, yield-seeking investors will likely find the best opportunities in the non-top tier markets (such as most of those on the list above).

Miami - commercial real estate market
Miami, FL

Beyond market, property sector is equally important in terms of forecasting investment performance. According to RCA, the apartment sector has been the top performer, up 38% from the peak (defined as Q4 ’07), followed by office, up 18% from the peak. Retail and industrial have lagged at -1% from peak and up 3% from peak respectively but performed well in recent years. We find it impractical to give overall guidance for property sectors on a nationwide basis and encourage investors to work with Advisors who are knowledgeable about each sector in their respective market as finding the best performer can be challenging. Industrial properties offer a prime example of such quandaries – industrial real estate in energy markets should face decreased space demand as that sector contracts in 2016. By contrast, industrial distribution facilities in areas of high population growth (like Florida) may over-perform as retailers shift distribution from stores to warehouses as online sales continue to dominate.

Trends to Watch

Perhaps the most discussed trend in commercial real estate in recent years has been the Millennials, the age cohort who are changing work and living arrangements across the nation. A relatively less covered demographic trend of greater size and perhaps importance is the aging population. According to data from the U.S. Census Bureau and analyses by the Lakemont Group, the overall population in the United States is forecast to grow by 11.55% in the next 15 years while the population above the age of 75 is forecast to grow 69.21%. In fact, those over 75 years old will represent almost 10% of the population by 2030 (those above 65 will be over 20% as well). While many real estate market participants correctly use these statistics to justify the need for more senior housing, there are actually many other real estate  opportunities to service this growing segment of the population. Market rate apartments with features and locations this demographic wants, can use, and can afford is one such example. Properties to house medical services and activity retail is another. We encourage investors to think long-term when making acquisition, disposition, and asset management decisions. This is one long-term trend that could shape demand for many property types for decades into the future.

Concluding Thoughts

2016 has started with higher levels of volatility in United States equity markets as a result of justifiably significant fears of global economic pressures causing falling demand domestically. While some investors are taking a fearful stance, we see a different outcome. It is probable that global uncertainty will serve to keep interest rates low and allow for growth of fundamentals in the commercial real estate markets and in the broader domestic economy. Furthermore, even in the event of a domestic economic slowdown, the global uncertainty could lead to lower interest rates and even greater inflows of foreign capital, supporting the domestic commercial real estate market (the current risk / reward proposition of U.S. investment is unbeatable).

Commercial Real Estate Market - Los Angeles
Los Angeles, CA

If such occurs, it is likely for 2016 to be another strong year for commercial real estate transaction volume, net operating income growth, and even price appreciation; however, expect all to grow at a slower rate in 2016 than in 2015. Investors and property owners should be aware that today’s commercial real estate economy has little in common with previous downturns. As such, we believe that the risk and return profile of commercial real estate is still attractive in 2016 and is likely to remain so for at least the near-term horizon.

 


Follow Kevin Maggiacomo on Twitter: @Maggiacomo.

[bctt tweet=”We believe that the risk and return profile of commercial real estate is still attractive in 2016. #CRE “]

Sperry Van Ness is Now SVN

A Letter From President & CEO Kevin Maggiacomo

 

I have always believed the status quo to be the arch nemesis of great companies. Embracing the status quo breeds mediocrity and as brand leaders, our jobs are to disrupt that mediocrity and to achieve excellence. Along these lines, I am excited to announce an exciting change we are making to our organization.

Time For Change – The world is changing and so are we.

NewSVNLogoTo better reflect the company we are today, we are undergoing a meaningful and powerful change to our brand: Sperry Van Ness® has proudly become SVN®.

This change is built atop the shared value brand pillars — open, collaborative and transparent — that underpin our business model. Our new brand more accurately represents the company’s stakeholders. It also creates a strong opportunity for us to share our story – and what we do that is better and different than the competition.

Companies that seek out and embrace change are healthy, growing and dynamic organizations, while companies that fear change are stagnant entities on their way to a painful demise.  There is tremendous opportunity in this initiative and we are looking forward to continuing to roll it out globally over the next 12-18 months.

To read the full press release on the name change, please click here.

Sincerely,

Kevin

Stock Market Volatility and Commercial Real Estate

Stock Market Fluctuations

As you have probably noticed, the global financial markets have been going through a period of turmoil. The fundamental issues that underlie the stock market corrections haven’t changed and we shouldn’t be surprised with continued stock market swings.  The text that follows will provide a macroeconomic backdrop for these recent market fluctuations and will serve as a reminder of CRE’s importance as a long-term investment, the time for which could not be better.

crash-215512_1280The global economy has encountered powerful headwinds in recent months, buffeted by a wide-ranging onslaught of fiscal and geopolitical challenges. Drags on growth have extended from a near-collapse in Chinese stock markets to the question of a Greek exit from the Eurozone to recessions as far away as Russia and as near as Canada. The United States is hardly immune to these strains on stability and the American stock markets have been prone lately to exaggerated swings.  This is reflective of investors’ rapidly changing assessments of the global outlook and its implications for macroeconomic trends at home.

Popular discourse has credited the current bout of global volatility to the slowdown in the Chinese economy and the difficult correction in its stock markets. In the face of weaker Chinese demand, headwinds may strengthen well beyond its borders, reflecting the importance of the world’s now-largest economy for its trading partners. Concerns about the magnitude of these spillovers has acted as a drag on Asian, European, and North American markets. Even if China has served as the proximate cause, many investors see an overdue market correction at work. In both scenarios, continued uncertainty over the timing of the Federal Reserve’s first interest rate increase – the first such move in nearly nine years – remains an overarching source of uncertainty.

[bctt tweet=”Here’s a reminder of #CRE’s importance as a long-term investment.” @Maggiacomo #CREReport #StockMarket”]

The Long Term Role of Commercial Real Estate

Rather than undermine demand for real estate, the recent vagaries of the global market have largely reinforced the underlying thesis for property investment.  The persistence and stability of cash flow and long-term prospects for appreciation are both indelible characteristics of well-managed and well-tenanted commercial real estate. And while the role of commercial real estate as a defensive investment is highlighted during periods of market uncertainty, neither of these characteristics depends on continued instability or will reverse when conditions improve or nominal interest rates rise.  The long term role of CRE investment is rock solid.

[bctt tweet=”The long term role of #CRE investment is rock solid. @Maggiacomo #CREReport “]

San Francisco: 2015 Multifamily Markets to WatchThe fundamentals performance of real estate and its attractiveness to investors are both tied intrinsically to the health of the recovering American economy and the jobs market in particular. The momentum behind recent job gains in the United States is largely independent of the disruptive forces at work in global capital markets. And there is room for further improvement – a leading indicator of employment trends, there are more job openings in the United States today than we have ever seen. Heading into the Fall, the Bureau of Labor Statistics reports there are a record-high 5.8 million jobs now available.

As Advisors, we serve a critical role in guiding buyers and sellers when broader market conditions are in flux. Some clients will inevitably exhibit greater sensitivity to changes in the global context of US growth. By the same token, some investors will pare down their commercial real estate portfolios because its relative strength has left them overweighted to the sector. Advisors’ market- and asset-specific insights are essential to the success of our clients and partners as they navigate choppy waters. Understanding their needs and how real estate can support their investment objectives is the Sperry Van Ness difference.

In other words, it’s a great time to talk to your clients and to new prospects. In these uncertain times, they need the help and guidance that you, as a Sperry Van Ness Advisor, are so very qualified to provide.

[bctt tweet=”The role of #CRE as a defensive investment is highlighted during periods of market uncertainty.”]

For more strategic insight into office, multifamily, industrial and retail sectors including CRE economic forecasts from SVN’s exclusive relationship with Chandan Economics, see the latest SVN Industry Reports. 

SVNIC CEO Testifies for Gender Diversity on Executive Boards

It’s no secret that the nation’s corporate landscape is lacking in gender diversity. Only 11.8% of executive officer positions in the 100 largest public companies in Massachusetts are held by women. With women occupying just under half of the nation’s workforce and earning over half of the nation’s bachelor’s degrees, this 11.8% is a problem — which is why Sperry Van Ness International Corporation President and CEO Kevin Maggiacomo testified at the Massachusetts State House this past Tuesday, July 21st in support of Bill S1007: Resolutions to encourage equitable and diverse gender representation on the boards of companies in the Commonwealth.

Kevin Gender DiversityAs one of several prominent Massachusetts CEOs testifying at this hearing, Maggiacomo used his own experience in the SVNIC leadership ranks to help illustrate his point that gender diversity should be a priority on all executive boards. Following his 2013 realization that SVNIC needed more diversity in its leadership, Maggiacomo restructured his executive team to include more women. This restructuring was an obvious success, changing the company for the better. “We now operate as a think tank for new ideas… we are engaging in healthy debate, and our profitability has increased by more than 100% and we now rank as one of the largest real estate services firms in the United States,” said Maggiacomo during his testimony.

In his SVNIC example, Maggiacomo proved that gender diversity in corporate leadership is more than just a nice thing to do. “There is irrefutable, verifiable evidence that women in greater proportions in companies improves decision-making and shareholder value,” said Maggiacomo. “It’s not just my opinion. Diversity and gender balance are the engines of innovation, and we’re doing everything in our power to ensure that this structure remains in place; and I encourage the passing of the resolution that encourages companies in the Commonwealth to do the same.”

The resolution, which passed favorably following the hearing, states that all Massachusetts companies will be expected to adopt policies and practices designed to increase the gender diversity in their boards of directors and senior management groups, as well as set goals by which to measure their progress.

Maggiacomo was no stranger to this issue prior to his testimony. As the leader of the 50/50 by 2020 campaign, he advocates for gender balance in corporate leadership. This campaign aims to establish a 50/50 mix of men and women within leadership roles by the year 2020.

Gender diversity and equality will not happen overnight. But we are one step closer thanks to Maggiacomo’s efforts and the favorable outcome of Bill S1007.

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UPDATE: S1007 has passed the Massachusetts senate and is headed to the house.

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To read more about Sperry Van Ness® and diversity, download our report here.

SVN Women Minorities

DTZ/CW merger highlights the need for the SVN Difference

The Cushman & Wakefield/DTZ merger has dominated international commercial real estate headlines since its announcement on May 11th.  During that time, debates around the water cooler have centered on its impact and relevance to competitive firms and individual practitioners.  My staff and I have understandably been asked questions like, “What does this mean?” and “Does this matter to us?”

While the dust is far from settling on this massive merger, and while there exists a multitude of differing opinions on the topic, in the post that follows, I’ll clarify my position on the deal and share what I think it means for the SVN brand and its Advisors.

First, this consolidation is following the “Rule of 3” – over the past several years, the world economy (particularly in the developed, free market economies of Europe and North America), has been characterized by a unique economic phenomena of mergers & acquisitions at unprecedented levels.  As a result, the landscape of just about every major industry has changed in a significant way, moving inexorably toward a block of three companies that enjoy a large market presence, while still leaving a great deal of opportunity for smaller, more nimble and more client focused organizations to continue profiting in the market.  This is now in play in the business of servicing commercial real estate and comes as no surprise to many.

Second, it matters.  It matters because while the CRE brokerage industry remains remarkably fragmented, there are now fewer, bigger players.  This can prove to be tremendously advantageous to those outside of this circle, but will also send a wake-up call to many:

  • The Big 3 are increasing their revenue & profitability through market share growth and by providing a generalized “one stop shop” offering.  The growth models of the Big 3 are rooted in geographic-based market share growth and are backed by private equity or public equity giants. This can make for a disadvantage when compared to smaller firms in their ability to innovate. Much like trying to turn an aircraft carrier, these mega firms are not as nimble and swift as their smaller competitors.
  • The multi-layered firms who comprise the Big 3 will stand in sharp contrast to the more entrepreneurial firms outside of the ring.  As an SVN Managing Director said to me “Remember the commercial brokerage business when YOU determined how much you could earn; not a corporation, public entity or the stockholders?”  “That’s SVN!”  I agree – and while SVN is certainly not the only beneficiary of this dynamic, our point of differentiation just got more distinct.
  • As many have already opined, there will be considerable fallout.  Given the above, meshing the two firm’s corporate cultures is a formidable challenge for the executives involved and a strong recruiting opportunity for competitors.  You will see people moving around and significant attrition within the industry.  This is proving to be the case at SVN with our Managing Directors reporting a flurry of meeting requests from the players involved.
  • The day of the generalist is over. These larger firms are better positioned to provide more highly specialized services in every market they serve.  Regional firm and independent generalists best take heed of their better-resourced, specialized competitors.  Now is the time to focus.
  • The industry just became even more opaque. Collaborating and cooperating on investment sales and leasing transactions has not exactly been a hallmark of the big nationals.  Look for their percentage of “double-ended” deals to increase in the year ahead.

This merger matters to companies and brokerages and at both the local and national levels. Here at home, it makes the SVN Difference more stark — and even more important.  And while the opportunities stemming from the above are significant to us, what’s even more significant is that our clients need the SVN Difference more than ever.

I’ll close by sharing excerpts from an email I sent to the SVN corporate team late last week:

Our industry just went from X firms that don’t collaborate with each other to do the best for their clients to X minus one.  If you’re a seller looking to get the best price — or a tenant looking to be shown everyone’s inventory to find the right site — you won’t get better service than at SVN.

There is still only one firm that practices compensated cooperation – 50% of the fee, 100% of the time.  Only one firm that opens up all of their listings on their website and on an internationally known Monday National Sales Call — SVN. They might have gotten bigger. But, when it comes to representing our clients’ interests, we’re still better.

You can experience an alternate SVN Difference. With the mergers and the movements towards more corporate firms answering to stock markets and large equity investors, entrepreneurs are finding it harder and harder to control their own destinies in Commercial Real Estate. Here at SVN, remember that as an Advisor, you can rise as far as your talent and determination can take you with no one to stop you.

I congratulate DTZ and Cushman on their merger. But I’m even happier for our clients and for all of us.

Why Gender Balanced Leadership is Good for Business

Sperry Van Ness International Corporation (SVNIC) CEO Kevin Maggiacomo recently sat down with the Young Presidents’ Organization (YPO) to discuss why closing the gender gap is so important in commercial real estate and beyond. This is not a new charge for Maggiacomo and SVNIC who not only are founding members of 50/50 by 2020, an organization promoting gender balanced leadership, but also leaders by example after restructuring their executive management team to include more women.

Below find the full interview as it appeared in YPO.

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YPO New England Chapter member Kevin Maggiacomo is a man on a mission to create gender-balanced leadership in all organizations worldwide by the year 2020. He will be the first to tell you, however, that this is not exclusively his mission or his initiative.

He kicked off 50/50 by 2020, a grass roots, web-based movement which sprung out of a recent TEDx talk he delivered. It has evolved into an international conscious leadership in expanded areas, including Maggiacomo’s own company, Sperry Van Ness. He joined YPO in 2010.

Kevin_MaggiacomoQ: What inspired you to create the 5050 By 2020 movement?

A: The movement came about after going from the unconscious to a more conscious way of thinking about leadership and its positive effects on business. Within our own organization, Sperry Van Ness (SVN), there existed a disproportionate number of women who were high performers, yet we weren’t bringing any intentionality to recruiting and developing women. There was a pool of talent not being fully tapped into.

Q: How did you incorporate gender balance at your company?

A: My wake-up call came during one of our SVN executive meetings in 2013. Looking around the conference table I saw that nearly all of our execs were white, male baby boomers. In that meeting we were creating our second wave growth plan, which demanded not only high innovation and creativity, but also healthy debate. I saw the polar opposite. Individual concerns were being set aside for fear of upsetting the group’s balance … sort of a “don’t criticize my ideas and I won’t challenge yours” dynamic. We weren’t getting the job done. This was groupthink at its worst.

It was caused by imbalanced perspective born of a gender-imbalanced executive team. The price was high and obvious. In that moment I recognized that bigger results would follow once I put in place a program which caused our leadership balance to shift.

In the 18 months that followed, we restructured our executive team which is actually now imbalanced at 60 percent women but hitting on all cylinders. We operate as a think tank for new ideas, we aren’t striving for harmony in our meetings, our profitability has increased by more than 100 percent and we’re trending positive across all key performance indicators.

To take things a step further, we restructured our statutory board this past April and it, too, is now gender balanced. Diversity and gender balance are the engines of innovation, and we’re doing everything in our power to ensure that this structure remains in place.

In doing this, we realized that this isn’t just good for our company, but for the world. We wanted to open up the thinking to everyone in order achieve a wider ripple effect, and 5050×2020 was born.

Q: Why do you think it’s important?

A: First, this isn’t solely about giving back or doing the right thing. The business case for gender balance is rock solid. Our company’s category results aside, in the United States, women hold about 14 percent of executive officer positions and 17 percent of board seats. However, research by Catalyst found Fortune 500 companies with the highest percentage of female corporate officers reported, on average, a 35.1 percent higher return on equity and a 34 percent higher return to shareholders than companies with the lowest percentages of female corporate officers. So this is about generating better results as much as anything.

Second, striving for gender balance — and diversity for that matter — is the right thing to do. In 1970, American women were paid 59 cents for every dollar their male counterparts made. In 2010, compensation for women rose to a mere 77 cents for every dollar men made. And if change continues at the same slow pace as it has for the past 40 plus years, it will take almost another 50 (until 2056) for women to finally reach pay parity. It’s important that we work to change that.

Q: What role do men play in gender diversity?

A: Men remain an often untapped resource for affecting gender balance. Men simply haveto play a role if we’re to affect meaningful change. There exists a preponderance of men in leadership positions who have the power to make these changes and position their businesses for better financial results. Yet, there aren’t enough male ambassadors for this change.

The gender balance issue, as I see it, has historically been framed as a women’s problem or burden, but it’s not. It’s a problem which affects all stakeholders. It represents an opportunity which, if properly harnessed, will create better leaders, better products and better results for all involved.

Men have to become gender-balance champions for change, and much of their work has to be pointed towards other men who aren’t yet fully on board with the opportunity.

Lastly, men cannot sit idly on the sidelines waiting for change. The change is coming, and those companies that don’t bring a level of intentionality towards affecting gender balance in their own organizations will be relegated to mediocrity at best or obsolescence at worst.

The Women’s YPO Network brings together nearly 1,000 male and female members dedicated to connecting and empowering female chief executives. Photo from the February 2014 WYN Board Boot Camp in Los Angeles.

5050by2020Q: What are the barriers? How realistic is 50/50 by 2020?

A: It’s naive to think that people will change in six years. However, if you look at past movements in history, meaningful change occurred because there was a vision, an appetite for disruption and a plan to set the course for long-term change. We’ve reached the tipping point where people recognize the need and value.

Not all men will support or even give the movement attention, but I hope those who see the value in having a diverse leadership team will embrace it. The benefits are obvious: It raises value and draws IQ from 100 percent of the population versus 50 percent (of just men). It’s just good for business.

Q: What do you think of some countries’ quotas for women leadership on boards?

A: Legislated gender quotas are controversial and punitive by design. That route is more of a “checkbox effort” where people are assigned positions because of their anatomical differences. Gender quotas in Scandinavian countries have yielded marked growth in the percentage of women on boards. That said, I’m not certain that these companies are better built given their mandated path to gender balance.

I’m a proponent of the free market affecting change through awareness and a better understanding of the powerful business case for gender balance. Show CEOs the money, and action will follow. I’m a firm believer in that.

Q: What can YPO members — male and female — do?

A: Evangelize. Talk about the opportunities which gender balance will create. Discuss the movement inside and outside of your organization, and help people — through all ranks of employment — see that the change will yield a competitive advantage. Talk about the movement in forum. Focus the conversation more on the benefits as opposed to it being a noble cause. Call it conscious capitalism or growing business at a faster rate while simultaneously elevating humanity … but focus on the fact that gender balance is simply good for business.

 

Kevin Maggiacomo's State of the Company Address

The following are the closing words of my State of the Company address at our National Conference in San Antonio on March 13, 2014. I wanted to write them down so that even those who didn’t join us this year could reflect on them. The video of the full speech was circulated to the all Sperry Van Ness® Advisors and Staff on April 7, 2014.

Kevin Maggiacomo, President & CEO
Kevin Maggiacomo, President & CEO

“I want to close out by reminding you of something very special and unique that exists here; something that separates SVN Advisors and the brand from any other firm in the industry, and that’s the SVN culture.  It’s special, almost tangible. It’s real. And as long as we use the Core Covenants to guide everything we do with and for SVN, our unique culture will remain intact.

There are people who don’t fit our culture. Those will always exist. There are advisors who break the rules, and that will happen from time to time.  But from the way in which we collaborate to market properties, to the way in which we clearly place our clients’ interests first, the unique SVN culture is real, is present…and I don’t want to sound like an evangelist but I can feel it in this room.

A company’s culture is one of the only true sustainable advantages SVN or any company has, if you think about it.

Given enough time and money, our competitors can duplicate almost everything we do (they can but they can’t).  They can attempt to hire away some of our best people. They can try to reverse engineer our processes. But the only thing they can’t duplicate is the way in which we live our culture.

The culture to change the industry–we are a company of professionals. Professionals willing to share information and fees, because that’s how we achieve maximum value for our clients.

The SVN brand–synonymous with all of that, and being driven by our firm owners – local ownership – with ties and vested interests in our communities.

Our culture is unique, our culture is brave and I’d like you to give yourselves a round of applause to celebrate each other and company of which you are a part.”

Kevin Maggiacomo
CEO & President
Sperry Van Ness International Corporation

 

*All Sperry Van Ness offices are independently owned and operated.

2014 CRE Market Outlook

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*All Sperry Van Ness® offices are independently owned and operated.

Kevin Maggiacomo Wakes up the American Dream in #TEDx Talk

In September, Kevin Maggiacomo, President and CEO of Sperry Van Ness International Corporation was asked to speak at TEDxOrange Coast. Watch the video below to hear his unique take on why and how we all need to wake up the American Dream.

 

*All Sperry Van Ness offices are independently owned and operated.

Why We Collaborate

Kevin Maggiacomo, President & CEO of Sperry Van Ness Internationa
Kevin Maggiacomo, President & CEO of Sperry Van Ness International Corp.

I’m often asked why we give away some of the (otherwise proprietary) Sperry Van Ness®  systems, tools and resources. I’m further asked why SVN is investing in the development of new tools if only to hand some of them out to the brokerage community at large. “Aren’t we aiding our competitors?” “Are we losing pieces of our differentiated value proposition in doing so?” These are a few of the questions often posed to me. 

While losing market share and eroding gross margin are obviously not the extirpative goals of the aforementioned strategy, in this post I’ll attempt to clarify why we have taken our culture of collaboration up a notch, and how doing so is facilitating growth across all key performance indicators while helping to improve the fractured state of the commercial real estate (CRE) industry. 

By way of background, SVN was founded on the premise that proactively cooperating and collaborating with our brokerage brethren – sharing our fees 50/50 in the process – is the right thing to do for the client and is the only way to ensure maximum value for a property.  Debating the merits of that ethos is a topic for another day, and last month we released the SVN Difference Video, which scrutinized the CRE industry and its asset disposition practices, and was met with strong emotional reaction. 

In terms of opening-up and creating new SVN products for the benefit of the brokerage community, we’ve rolled out the following in the past 12 months, which can be categorized and described as follows:

  • Compensated Cooperation:  The SVN Monday Morning Sales call is now open to the public.  There, we showcase new listings procured by our SVN Advisors over the previous 7 days.  Every listing includes a buy-side commission which is always ½ of what the SVN Advisor stands to earn as a matter of policy.

  • Education:  We collaborated with more than 10 commercial real estate firms and industry organizations to launch www.CREvine.com, an open resource platform for CRE professionals to acquire new skills, gain knowledge, and “level-up” their practices.

  • Marketing:  Lastly, and as a BETA test, we’ve opened up a good portion of our (now retired) OnlinePublisherTM system.  Called CRElaunch, owners and brokers alike can use the tool to create brochures and market their properties (a word of caution here – the product is in BETA and has a long way to go).

But back to the topic at hand.

We collaborate not to merely suggest that “we’re the good guys,” but because we truly believe that making the otherwise dysfunctional commercial real estate market more efficient will benefit all stakeholders, including Sperry Van Ness.

Simply put, collaborating – harnessing the power of broad horizontal networks of participants to achieve a better outcome – will drive market efficiency and liquidity, while simultaneously increasing revenue and profitability to those who collaborate.  At SVN, we’ve aggressively grown our business by subscribing to this ethos and receive direct benefit in the following manner:

  • Recruiting:  As a CRE advisory, one of our biggest economic generators is recruiting talented, ethical and productive advisors.  Our opening-up certain components of SVN has allowed us to create relationships with thousands of brokers and we’ve recruited or awarded a brokerage position or SVN franchise to a small percentage of this new constituency.

  • Retention:  Just as strong as recruiting is a vital key performance indicator of growth, attrition (of producing Advisors) can have devastating consequences for an organization.  Through thought leadership, the contemporary nature of our collaborative growth strategy, and via a transparent business model, our attrition rate is at a 5-year low.

  • Sales:  When one harnesses the power of the entire brokerage community to market a for sale asset, organized competition is generated, multiple offers are posited, the market speaks, and the highest price is achieved.  Our compensated cooperation strategy, coupled with our core covenants, define SVN while moving inventory faster and at a higher price.

  • New Business Development:  It’s tough to argue against the growth strategies of the likes of Google, Skype, and Innocentive in suggesting that their “Freemium” business models don’t create raving fans, loyal customers, and a myriad of cross-selling opportunities (each of these companies offer a free “attraction” product while simultaneously offering paid premium products).  As described above, the SVN story – rooted in harnessing the power of collaboration to affect a better outcome – has been kicked-up a notch, shared with clients/prospects, has enhanced our point of differentiation, increased our “batting average,” and reduced the cost of sales.  We are winning new listings, doing more business – all while putting the clients interests’ first.

Mass collaboration, while not ubiquitous in CRE brokerage, is now a staple of the new economy and it’s here to stay.  As the members of Generation X & Y grow to positions of increasing power and control, collaboration and Freemium business strategies will become the norm in CRE as well.  Until then, I’ll continue to invest in the creation of new products and to share some of those we previously created.

Kevin Maggiacomo is the President and CEO of Sperry Van Ness International Corp.

*All Sperry Van Ness® offices are independently owned and operated.

 

SVN State of the Company: Change or Die by Kevin Maggiacomo

Kevin Maggiacomo, President & CEO of Sperry Van Ness Internationa
Kevin Maggiacomo, President & Chief Executive Officer of Sperry Van Ness International Corporation

As President and CEO of Sperry Van Ness International Corporation, my role, aside from addressing the perennially evolving needs of the organization, is to spend a good percentage of my time on strategy and “second wave growth.” Creating a real estate services platform, scaling-up new offerings like property management and auction, but also on expanding upon the disruption that our compensated cooperation model has had on the industry is where I spent a considerable amount of my time. In this post I’ll share with you why we’ve funded and embraced such an “innovation lab” at SVN, and describe why it’s an important cause.

Inspired by the Motley Fool, whose two founders I recently spent time with at the Conscious Capitalism conference, let us consider the following notion: Becoming a leading company in an industry requires the right people, and I’m not talking about at the executive level, but at every level. An appetite for change has to be in a company’s DNA.  But being an industry leader also requires a tremendous amount of imagination… imagining a different world. A world almost like the one we live in now, but more efficient.  Becoming a laggard in an industry requires a lack of imagination. And just like any industry on the planet, there are forces that will disrupt commercial real estate brokerage and we are not immune.

Change happens to industries. Just ask a newspaper publisher, or anyone who invested in that industry in recent years. We still read newspapers – in fact we read them more today than in previous generations – but we don’t read them in quite the same way. And without a bridge loan from the then richest man on the planet, even the patriarch of the publishers – The New York Times – would have filed for bankruptcy protection. Were there warnings this would happen? You bet.

Back in 1993, a man named Gordy Thompson worked for The New York Times, and his job title was “Internet Services Manager.” Rest assured that in the C-Suite at The Times, no one knew what the role included, much less understood that it was arguably the most important position at the newspaper. As the story goes, Thompson tried – and failed to deliver the following message to The Times execs: “When a 14-year old kid can blow up your business in his spare time, not because he hates you but because he loves you, then you’ve got a problem.”

Thompson was in the habit of hanging out on Internet message boards, if you remember those from back in the day. There, Thompson noticed that fans of the Miami Herald columnist Dave Barry were re-posting Barry’s columns on the 2,000 person strong Usenet so that people who couldn’t read the Herald now could. In other words, the greatest competitive threat for newspapers was the popularity of their own content.  People wanted more of it where and when they wanted – on their terms.

This same trend has occurred in the financial industry when we began facilitating our own trades online – and the list goes on. Did people stop traveling? No, they stopped paying travel agents. And you better believe there was a Gordy Thompson every time, sounding the alarm, telling the corporate executives to use a little imagination. Saying “people want what they want, when they want it, where they want it and how they want it.  And if we don’t figure out a way to give it to them, they are going to get it somewhere else.”

Innovating to develop new methods of providing Commercial Real Estate (CRE) advisory services, working towards making the opaque and antiquated CRE industry more transparent and efficient are a few of the causes which drive the SVN innovation lab’s purpose – embracing the disruptive economic forces inherent in other industries is a big focus of our leadership team. When we talk about opening up parts of SVN – our Monday Morning Sales Calls to anyone who wants to listen or the previous version of our OnlinePublisherTM (www.crelaunch.com) – we’re focusing on increasing our productivity through collaboration with the entire industry, making it more efficient in the process.  This is the Sperry Van Ness® Difference. To learn more check out our SVN Difference Video.


Kevin Maggiacomo is the President and CEO of Sperry Van Ness International Corp.

*All Sperry Van Ness® offices are independently owned and operated.

 

The Sperry Van Ness Difference Animated Video

At this year’s Annual National Conference, Sperry Van Ness International Corporation President & CEO, Kevin Maggiacomo, launched the new Sperry Van Ness Difference video. The SVN Difference Video boils down our core philosophy to it’s simplest form – it’s about going back to the basic fundamentals of supply and demand; and explains how putting the clients interests first is a benefit to everyone involved in a commercial real estate transaction.

*All Sperry Van Ness® offices are independently owned and operated.

 

Technology – Value Add or Brain Suck? by Kevin Maggiacomo

My new iPhone 4s arrived finally arrived this past weekend. My oldest son and I opened the package with much anticipation and we immediately dropped what we were doing to configure the device. Among the many new features made part of the 4s is Siri – the speech recognition device which, as Apple advertises, “Understands what you say, knows what you mean, and takes dictation.” So, gone are the days when I have to manually type a query into Google to search for a nearby Sushi restaurant, find directions, or, get this – type to text or email. From now on, all I have to do is talk. So, over the weekend I dictated and had Siri read aloud roughly 100 text messages sent and received. I quickly grew so accustomed to iPhone dictation that I became annoyed when I had to manually type an email on my Mac later that evening. On one hand, I felt more efficient, on the other hand I questioned if I was simply becoming lazy…

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Separately, as a CEO, I am constantly striving to predict the future and react to it in advance. Not only with respect to positional real estate strategies, but also in terms of adopting (and creating) new intellectual technologies – which extend mental capabilities and enable us to gain more information faster. So as a fan of applications in this category, I’ve researched and adopted as many CRE and non-CRE of these intellectual technologies as anyone. I use Dragan Dictation to dictate most of my laptop writing, regularly use Loopnet to create space surveys, view comps, and get a read on the market. SVN Advisors are LoopNet power users and many are subscribers to CoStar, including their CoStar Go iPad app, which allows you to take real estate data into the field, where you can even view detailed tenant information, including lease expiration dates without having to charm past building security or receptionists. And all of this has me thinking – are the convenience applications mentioned above changing the way I learn, eroding at certain skill sets, and making me less knowledgeable?

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While I can say with reasonable certainty that my IQ remains the same since becoming an early adopter, my ability to easily become immersed in the analysis of raw research data has eroded. In addition, my typing skills aren’t what they used to be and my spelling skills, thanks to auto-correct, have gone from good to average. For those of us in CRE (or any other field for that matter), what role have research products played in the reduction in the amount of market research that we retain? Posed another way, are the CRE practitioners of yesteryear, who had to physically walk building floors, drive every property in their area of focus, conduct live courthouse research, etc., more knowledgeable than we brokers of today?

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Are we becoming dependent upon these resources because we’re lazy, or because we need to in order to remain competitive? I’m not making a value judgment here, I’m just asking you to do a gut check – Do you use technology to advance your learning, or to fill a knowledge gap? The distinction between the two is subtle, yet important.

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The human brain is malleable. It is capable of being reshaped and while I don’t know the answer to the above questions, I do know that my mind now approaches learning a bit differently. My mind now expects to receive information the way that Loopnet feeds it to me – instantly, and with little effort. I have made it a personal challenge to add to my cognitive skills rather than replace them. This has required me to slow down in the short run at times, but in the long run I feel as if I’m expanding my knowledge base, not shrinking it.

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So, I ask – has our “encyclopedic knowledge” of CRE markets and beyond become artificial intelligence? Are Loopnet/Costar and the like making us stupid, or are we better off? I think the answer largely depends on approach and motivation. Thoughts?

Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation

 

*All Sperry Van Ness® offices are independently owned and operated.

 

The Radicalization of the Norm by Kevin Maggiacomo

With less than 100 days remaining in 2011, I want to pose the following question: “What will YOU do differently in 2012?” You cannot simply repeat your 2011 performance in 2012 and expect the outcome to be any different. My message is a rather simple, yet important one – the market doesn’t matter, but YOUR actions do! Accepting the norm accomplishes little more than sentencing yourself to mediocrity, while radicalizing the norm creates opportunity even when markets don’t seem to be sympathetic to your cause.

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While commercial real estate markets are certainly not static, I’m always surprised at the numbers of people who operate as if they were. As the landscape around them changes, rather than understanding and adapting to new market drivers, many just prefer to pretend as if it’s business as usual. However, it is those who adapt to the fluidity of the market who become innovative market leaders, and who thrive during even the toughest of market conditions. Likewise, it is those who refuse to change with the times that push themselves into irrelevancy, and eventually become self-inflicted casualties of the weeding-out process.

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What is not so obvious is that during times of adversity come the greatest opportunities. Those who thrived during the past few years understood this principle, and as a result, they will likely be the ones who lead the way in 2012 as well. Successful companies adapt their business models, re-engineer their business practices, and implement new strategies and tactics while their peers sit on the sidelines wondering what went wrong.

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Rather than talking about constricted capital markets, successful companies seek out the investors and lenders still doing deals, and restructure transactions to fit the changing guidelines of active capital partners. Rather than complain about transaction bottlenecks, the smart players work with institutions and special assets groups to work around and through the logjams. Rather than work with brokers replete with excuses about why they’re not successful, they find brokers who focus on outcomes and not excuses. They key to success in down markets is to participate in the present while looking toward the future, but refusing to allow yourself to live in the past.

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So some chest pounding now – not to advertise, but because I think it’s relevant:

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At Sperry Van Ness we’ve led the charge to radicalize the brokerage industry. Since our inception we’ve done business differently than other brokerage firms. From pioneering an open-source brokerage model, to being the first brokerage firm to mandate 100% social media adoption, to being the first to have an in-house auction firm, to being the first to adopt a cloud-based business platform, we have focused on doing business based upon where the market is headed, not where it’s been.

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At Sperry Van Ness, we realized several years ago that traditional business models could not service non-traditional markets. When our competitors were cutting back as they adopted the bunker mentality of watch and wait, we were growing, and we did it based on a debt-free, profitable business model. It was clear to us that we needed to continue to adapt to the needs of our clients, and that together, we would not only survive the challenges of changing markets, but we would thrive amidst them.

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My encouragement to you as we enter 2012 is to refuse to buy into the negative rhetoric. Don’t settle for working with advisors who offer excuses, engage professionals whose work demonstrates they value your relationship as much as they say they do. Don’t tolerate brokers who embrace the status quo, but look for those who shatter it. Look for business partners rather than vendors. Find those firms willing to serve you, regardless of whether a commission exists or not. Look for those willing to embrace change, those who innovate, and those who radicalize the norm.

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If you haven’t experienced working with a brokerage firm that embodies the ethos I’ve described above, then I invite you to contact us and experience the Sperry Van Ness difference for yourself.

Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation

 

*All Sperry Van Ness® offices are independently owned and operated.

 

The Good News…

Recent events in the market, including the drawn out debate over the budget ceiling, Friday’s downgrade of the US credit rating and today’s downgrade of Freddie & Fannie by Standard & Poor’s, coincide with new data that show the broader economic recovery has slowed in recent months. Bet I’m not telling you anything that you didn’t already know.

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These developments, alongside heightened volatility in stock markets, have obviously prompted concerns about the resilience of the commercial real estate recovery. In assessing what all of this means for the investment outlook, our clients are looking to us for leadership and a more balanced, long-term assessment of the future. Along those lines, and while I could certainly fill this post with a summary of the downside risks stemming from recent events which have recently imbued the blogosphere, the following is a different but pragmatic take on the road ahead – the market is currently sensitive to the downside risks, but it is also prone at this juncture to discount positive information. There is some good news, which stands apart from the cacophony of recently sounded panic alarms.
Continue reading “The Good News…”