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

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SVN’s Diane Danielson Featured in REI INK Magazine

SVN International Corp. COO, Diane Danielson, is featured in the August 2019, Women in Real Estate issue of REI INK magazine. The article, A Calling to Grow, written by Carole VanSickle Ellis, highlights Diane’s tireless advocacy not only for women, but also for diversity and inclusion within the commercial real estate industry.

“At SVN … we do not set out to recruit any one demographic group, but we do set out to recruit candidates who might otherwise have been overlooked,” Danielson said. “We bring the focus in on skills, which removes a lot of the biases anyone in the system or in our offices might have.”

 

Diane is featured along with eight other women who are making a difference within the real estate industry through their involvement in sectors such as real estate investing, private lending, and mortgage services.

Read the full article HERE.

CLICK HERE to check out the entire August issue of REI INK.


Editors Note:

According to SVN’s 2019 Diversity & Inclusion report, authored by Diane Danielson, the focus on skills and attitude raises the bar for all candidates in all populations in the process. The result: The entire playing field is both level and higher without sacrificing the highest ground or the most qualified candidates.

For more information and to read/download the full report, CLICK HERE.

 

 

Broker Boot Camp | 4 Traits of a CRE Brokerage Superstar

Do You Have What It Takes to Be a Brokerage Superstar?

Having attended the Sperry Van Ness® Broker Boot Camp in Chicago three weeks ago, I now know a little bit about what it takes to “make it” in the commercial real estate brokerage business. Full disclosure: I’m a marketing intern, so my experience as a broker is non-existent. However, since I had the opportunity to sit in on the first day of the Boot Camp, led by industry veteran John McDermott, I now have a pretty good idea of some of the qualities that differentiate a brokerage “superstar” from the rest.

To be clear, even being just a “good” broker isn’t as easy as you may think. (See my first Boot Camp blog post for some elaboration). To be a “superstar” in any field you need to set measurable goals, as my second Boot Camp blog post discussed. But for commercial real estate brokerage in particular, you must possess 4 specific traits to become a top performer.

The Intern’s Take on the 4 Traits of a Brokerage Superstar

1. You must be tenacious. As a broker, there are few times when it’s acceptable to simply take “no” for an answer. Brokerage superstars are relentless — when appropriate, they prod further with clients who seem to be shutting them down. Instead of calling it a day, a brokerage superstar asks questions when she is slammed with a “no.” For example, rather than ending the conversation when a potential client says he has no interest in giving you an exclusive listing, ask what his reservations are and listen to his response.

2. You must be a self-starter. As I already mentioned, brokerage isn’t easy. Perhaps the hardest part of commercial real estate brokerage is starting out as a brand-new broker. A budding brokerage superstar will jump on the opportunity as soon as she is hired by a brokerage firm by immediately starting to build her database, accumulate contacts, and practice key skills. This brokerage superstar doesn’t wait to receive help or direction. Instead, she takes initiative by doing everything in her power to succeed from the Day 1.

3. You must be self-motivated. From what I understand, brokerage can be a lonely business at times, because it is ultimately up to you as a broker to close your deals and earn paychecks. While it seems scary (in my opinion) to be relying only on commission for your income, a brokerage superstar sees this as an advantage. A brokerage superstar is fearless and confident in her own abilities to bring home the bacon, and doesn’t need outside motivation to stay fired up.

4. You must be able to make connections with the right people. This doesn’t mean you can just say “oh, I’m a social butterfly!” and spend your week chatting with your friends. A brokerage superstar doesn’t just work the room — she works the room with a purpose. She goes out of her way to introduce herself to industry leaders and research the local movers and shakers. Following any meeting or casual encounter, a brokerage superstar takes notes and catalogues this experience for future reference. As a broker, your business is built on knowing the right people, so you must be professional, likeable, and strategic in order to make worthwhile connections.

If you think you have what it takes to be a brokerage superstar, visit our Careers page by clicking here

To learn more about the SVN Broker Boot Camp, click here

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Broker Boot Camp | Setting Goals for Success

Intern Insights: Setting Goals in Your Personal and Professional Life

If you’ve read my previous blog post, then you know that I learned a lot about the commercial real estate industry by attending the Sperry Van Ness® Broker Boot Camp in Chicago. However, the Broker Boot Camp was not strictly about the brokerage business. In fact, one of the most interesting parts of the training for me was when speaker John McDermott talked to us about setting goals. We’ve all heard it before — setting goals is a good thing. But not many of us actually do it. As author Brian Tracy states in his book Goals!, going through the process of writing out your goals on paper can make all the difference. By writing down your specific aspirations with measurable standards, you have already committed to something tangible.

Don’t know where to start? Not to worry! I’m going to share with you 3 out of my 10 goals that I wrote down during the Broker Boot Camp to give you some ideas.

The Intern’s Top 3 Goals for Success in Life

1. Work out at least 4 times a week. In my opinion (and John McDermott’s), health should always be your number one priority. Whether you’re a high-profile Advisor working on multi-million-dollar deals or a college student like me, finding time to take care of yourself can be difficult. But maintaining good health is crucial, because without your health you can’t perform at your best in all aspects of life. Let’s be real — I probably won’t work out 4 times a week every week. Other things always seem to get in the way, such as my best friend Netflix. But having written this goal down, I now feel accountable for meeting my own expectations. (Now I have to go on a run after publishing this.)

2. Call my dad at least twice a week. Family is also incredibly important — it’s a built-in support system that no one should neglect. But like exercise, family time is often forgotten, as we tend to prioritize working hard and making money over our personal lives. Let me be clear — working hard is awesome. That’s how you get places in life. But at the end of the day, your family is all you have. Using my example, my dad is literally the smartest person I know. I would be missing out on receiving advice, motivation, and support by continuing to work through the evening instead of calling my dad.

3. Graduate magna cum laude in 2017. Since I’m going to be a junior in college, my academics are a huge priority. In the brokerage business, a similar goal could be something like “earn my CCIM designation by 2017” or “make the National Top 10 Advisors list by 2017.” Since school is my “work” at this point in my life, I’m committed to performing at my maximum potential. Hey, I might not graduate magna cum laude. Although it’s not impossible, I know it’s super hard. But now that I have this goal written down in front of me, I have something tangible that I can strive for over the next two years.

I know — my top 3 goals don’t really relate to the commercial real estate business. But that’s sort of the point. No matter where you are professionally, it’s important to keep your personal goals in mind along with your professional ones. If you’re at work, then work. But if you’re off the clock, take time to focus on your health, your family, and whatever else is important to you personally. So grab a pen and paper and write down your top 10 life goals. You never know — all 10 of them might come true.

To find out more about the SVN Broker Boot Camp, click here.

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Broker Boot Camp | Top 3 Rookie Mistakes about CRE Brokerage

Intern Insights: Rookie Mistakes about CRE Brokerage

As a marketing intern at Sperry Van Ness International Corporation I had the opportunity to attend last week’s Broker Boot Camp in Chicago. Now, let me be honest — I knew next to nothing about commercial real estate brokerage going into this training. Since I’m just about as “rookie” as it gets, speaker John McDermott’s “Top 10 Rookie Misconceptions” about the brokerage business provided me with a much-needed wakeup call about the industry.

I’ll admit it — I was guilty of falling for each of the CRE brokerage myths John mentioned, so I’m going to share my 3 favorites with you. It’s time to dispel some rumors…

The Intern’s Take on the Top 3 Rookie Mistakes

1. “It looks easy.” Well, it’s not. If CRE brokerage were easy, everyone would be doing it. Good brokers can often work up to 80 hours a week building their businesses. Since brokers rely on the commission-only “results economy,” the pressure is always on and the work is never done. You can always be making more cold calls, setting up more meetings, adding more information to your database… the list goes on.

2. “I can do it online.” Perhaps you can, but you won’t be making any money. It’s impossible to “do” brokerage well if you’re sitting at your computer, because the majority of the job involves going out and meeting prospects and surveying properties in person. To all my fellow millennials out there: nothing replaces face-to-face interactions, especially in the brokerage business. Sorry, but no one is going to tweet you your paycheck.

3. “I don’t need to cold call.” Oh, yes you do. Although cold calling is intimidating, especially for avid texters like me and my generation, it’s proven to be the single most effective way of reaching a prospective buyer or seller. Look at it this way: you only need to cold call each contact once. After that first time, the person already knows you, so that awkwardness of cold calling subsides. By the way, as a broker you should aim to make 250-300 cold calls a week. So hop on that phone and get calling.

Clearly, you don’t have to know much about commercial real estate brokerage to get something out of the Sperry Van Ness® Broker Boot Camp. Anyone can learn something useful, especially complete rookies like me.

To see how you can break into the brokerage business, visit our Careers page here

To find out more about the SVN Broker Boot Camp, click here

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You can’t ignore demographics when it comes to real estate

The End of the Suburbs Book Cover(2)Everyone knows we have a changing demographic: aging Boomers, unemployed Generation Y/Millennials, and the much smaller-in-size Generation X sandwiched between elder care and child care (often both at the same time). But how is this affecting real estate? Pretty drastically. Recently, commercial real estate bloggers have been writing a lot about how younger generations will affect the actual sales process, including rants about how technology and demographics are changing the industry. I’ve even written on how mobile technology is a factor.

Yet, these are only tips of the same iceberg; at least according to the new book by Leigh Gallagher, The End of the Suburbs: Where the American Dream is Moving. How Americans live and where they live will  greatly affect commercial real estate in the next few decades. In The End of the Suburbs, Gallagher gathers some of the most recent statistics and studies on the changing residential landscape. Here are just a few items to ponder.

  1. Due to the employment situation, one out of three Millennials are living at home through their late 20s. This means they are not getting married, buying new cars, or having kids in their 20s: all basic life steps that lead to purchasing homes in suburbia sooner rather than later.
  2. What’s attractive to Millennials – when they can finally afford to move out – is to get out of suburbia and into cities, or suburban settings that mimic what cities have to offer: shopping, entertainment and restaurants, all within walking distance or on public transportation.
  3. Millennials are a generation unenthused about life in a car. After being chauffeured everywhere their whole life, many are not looking for a future with a 2-car garage, let alone a 3-car one.
  4. In the most recent recession, Detroit notwithstanding, suburban properties lost 40% of their value, whereas urban properties lost only 20%. This is a reversal of earlier real estate bubbles.
  5. There is a trend towards “New Urbanism” and classic town centers where there are sidewalks, front porches and apartments mixed in with single-family homes and commercial enterprises.  What’s falling out of favor is the large sprawling suburb where the schools, stores, play dates, and community resources are all at least a 20-minute drive away.
  6. Towns that received Federal and/or State funding 20 years ago to put in far-reaching town services like water, sewer and roads to expand further and further out, do not get funding for their upkeep. Without commercial enterprises in town, they can’t support it with the tax base.
  7. People are starting to factor in the price of gas to the far-reaching suburbs, leading to further discounting of prices to accommodate.
  8. The big mystery is what will the aging Boomers do. Will they stay in their homes? Buy into assisted living in their suburb? Head South or to a more urban setting? Will they be able to even find buyers for their homes if they do decide to leave?

If those are the trends and things to watch in residential real estate, what does that mean for commercial real estate? Perhaps that’s something to think about on your next commute home to the ‘burbs.

Diane K. Danielson is the Chief Platform Officer of Sperry Van Ness International Corporation.

 

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

Central Florida Commercial Real Estate is Jumping

The Central Florida commercial real estate industry is recovering nicely from the recession reports The Orlando Business Journal in its June 28 edition. Some sectors are doing better than others, with industrial and retail leading the way. The office sector continues to struggle with high vacancy rates, however.

Miguel de Arcos, Managing Director, Sperry Van Ness Florida Commercial Real Estate Advisors
Miguel de Arcos, Managing Director, Sperry Van Ness Florida Commercial Real Estate Advisors

The article reports there are five game-changers for the Central Florida commercial real estate market:

  1. Office market has changed for the good, since companies are doing more with less.
  2. Financing is available from different sources to fund to new projects.
  3. Industrial real estate will see an improvement.
  4. Orlando is attractive to national firms.
  5. The SunRail will help boost the region’s attractiveness.

The market’s recovery can be evidenced in the spectacular increase in total dollar volume experienced by Sperry Van Ness Florida Commercial Real Estate Advisors. With $73.2 million in total dollar volume in 2012, Sperry Van Ness Florida jumped from the number 16 position to number 8 position on the Orlando Business Journal’s  List of Top Commercial Real Estate Brokerage Firms.

In discussing the current commercial real estate environment with the Orlando Business Journal, Miguel de Arcos, managing director of SVN Florida, says he likes the long term prospects in the Central Florida area due to the booming entertainment, biomedical and high-tech markets in the region.  Miguel says “We have land and reasonable costs for real estate….Once folks realize we’re not a just a Mickey Mouse economy down here, it’s going to help.”

 

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

 

Hospitality Real Estate Market: Q4 Analysis and Outlook for 2013

Tom Hamm Sperry Van Ness Commercial Real Estate Advisor
Tom Hamm, Hospitality Council Chair, Sperry Van Ness/Hamm & Co.

Hotels are operating businesses housed within commercial real estate boxes. As such, their value is based on the revenue and profit earned by the business, and fluctuates accordingly.

Hotel values dropped precipitously following the start of the recession in Q4 2008 with cutbacks in corporate, group and leisure travel. Hotels responded by slashing their rates in order to compete for what little business was available.

Since 2010,  recovery has been steady but slow, driven first by occupancy improvements, followed by room rate increases. Initially, the greatest improvements in both occupancy and average daily room rates (ADR)  was seen in the luxury segment.  In 2012, upper mid-scale and upscale enjoyed the greatest increase in rooms sold. Regionally, the West South Central and Pacific had the highest growth in rooms sold, year over year. Some markets, notably Manhattan, have seen dramatic demand improvements, which has spurred a hotel building boom there.

In most markets, supply growth has been constrained by limited  availability of financing. According to Smith Travel Research, for the trailing 12 months through November 2012 supply is up  0.4% while demand increased by 3%. That’s a great dynamic for the industry that has translated into an increased Revenue Per Available Room (RevPAR) of 6.8%.

For the 2012 year to date through November, performance for in the hospitality market in the United States was as follows:

 

Occupancy

Average room rate

RevPAR

2012 2011 2012 2011 2012 2011
62.6% 61.1% $106.23 $101.98 $66.47 $62.27

 

Hotel transaction volume was down 25% in Q3 but looks to be up 25% in Q4 compared to last year, driven by large portfolio transactions. On an individual property  basis, sales volume was flat, according to Real Capital Analytics.

Cap rates for hotels have held around 7.6%, down from 9.5% in 2009. Full service hotels traded on average at 7.2%, while limited service hotels traded at 8.6% cap rates.

Average price per room was $164,015 for full service and $64,233 for limited service. There continues to be strong buyer demand for deeply discounted distress opportunities, while publicly  traded REITs focus on major markets: seeing acquisitions in non-core markets as diluting the value.

In their 2013 outlook, hoteliers are less optimistic than in 2012. They see top line growth slowing with resistance to rate increases, while operating costs will increase at a faster rate than revenue, thereby putting pressure on profitability. In addition, the brands, which have shown patience and flexibility during the recession, are expected to tighten up on Quality Assurance standards and Property Improvement Plans (PIPs) associated with license renewals and hotel sales.

We expect that many hotel owners who struggled to hold on through the recession and benefited during recovery, will decide to sell in 2013 in light of anticipated slowing profits and before pent up buyer demand abates. This should bode well for brokered transactions in the hospitality arena.

Report submitted by:

Tom Hamm, Hospitality Council Chair, Sperry Van Ness/Hamm & Co., Stamford, CT

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

 

Finishing Well by Kevin Maggiacomo

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The following are excerpts from a note I sent to the SVN Advisor base this morning. I thought that others may find some of the content useful, and I am posting herein as a result. Enjoy.

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SVN Advisors and Staff:

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While having the courage to start something is an admirable quality, having the tenacity, the dogged determination, and the sheer will to finish well is a quality possessed by all true champions. Let’s cut to the chase – entering the race is easy, fast starts are a dime a dozen, but finishing victorious as a champion is what everyone strives for but few achieve. My question is this: where will you be at the finish line in 2012?

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The interesting thing about a year in time is we all have the exact same opportunity – 365 days. If you break down the 365 days, you’ll see you also have the same 24 hours, 1,440 minutes, and 86,400 seconds in a day your peers and competitors have. The question you need to answer for yourself is this: are you satisfied with what you’ve accomplished this year?

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The realization I’d ask you to consider is a simple one: While summer is over, the year is not – you still have more than 90 days to compete and win business. So, will you finish well, or just stand on the sidelines and cede opportunity to your competitors? One of the greatest myths in the commercial real estate business is if a deal isn’t scheduled to close this year by now, it simply can’t happen. Let me say this as clearly as I can – THIS IS A NOT TRUE. Based on my having observed 12 years of pipeline activity at SVN, I can guarantee you between now and the end of the year all of the following things can occur:

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1. Some of the deals you hope to close by year-end won’t. You can either mourn the inevitable, or work hard to ensure there’s enough volume in your pipeline to more than offset any year-end slippage that occurs.

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2. Not all deals that die remain dead. Transactions previously considered dead opportunities can have life breathed back into them, but only by those Advisors who remain engaged.

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3. New opportunities will go full lifecycle from list to close by 12/31/2012. You can either find and win this new business, or let one of your competitors do so.

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Stay engaged, don’t quit, and keep working. Those who stay focused on items #2 and #3 above won’t need to spend time mourning losses covered under point #1 above.

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A trusted advisor of mine has always told me great companies beat their competition to the future, because their leaders understand how to pull the future forward. I would encourage you to build a 90-day plan in which you both beat your competition to the future (go win new deals), and in which you pull the future forward (pull deals from Q1 ’13 into Q4 ’12). To that end, I offer the following suggestions to help power your plan:

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The most successful Advisors help clients reach their goals by using their experience, knowledge, and work ethic to close transactions, not explain why they can’t close them. New listings will be acquired, and transactions will be closed before year’s end – will your deals be among them?

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With less than 30 days remaining before we enter Q4, what are you going to accomplish with the last 90+ days of the year? It’s been said that mediocrity rests while excellence remains in tireless pursuit of the objective. Will you stay the course and finish well, or will you let others win the prize? It’s your choice – choose wisely.

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

 

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

 

The Year Ahead – 2012 by Kevin Maggiacomo

As we look forward to a new year, I am pleased to share my thoughts on the very memorable 12 months past, and to offer my outlook for the commercial real estate market in 2012. Before I do, I would be remiss if I did not thank the Sperry Van Ness clients, Advisors, staff, and fellow brokers for their contributions in driving us forward in spite of the unpredictable times. I know that I speak for all SVN Advisors and staff when I wish you a prosperous New Year.

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A Year of Fits and Starts for Commercial Real Estate

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During a year of extraordinary economic and political uncertainties, commercial real estate held its position as a crucial safe haven for investors in 2011. Investment into the sector reached a peak in the second quarter, supported by CMBS conduit originators and more active life company and bank lenders. Even as economic and employment trends fell short, leasing activity for well-positioned assets strengthened. During this period, investment into segments of the market that had lagged during 2010, including commercial properties in secondary and tertiary markets and value-add opportunities, showed signs of firming, as well.

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In spite of the rising momentum, commercial real estate investors revealed they were not entirely immune to the obstacles facing the wider recovery in business confidence. As I suggested in my New Year’s message one year ago, this has been a period of fits and starts. Over the summer, renewed disruptions of capital and credit that were largely unrelated to the property sector threw the conduit into disarray and slowed the pace of transaction activity more broadly. For many borrowers, lending sources pulled back once again, with the result that a larger share of pending sales has struggled to reach closing.

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While sales volume in the third and fourth quarters will not match the spring’s flurry of trades, the shifts in the market must be understood in the context of a turbulent economic and political environment. Where investors have retrenched, it is often under the force of external pressures. It nonetheless remains clear from the current diversity of investors and lenders that commercial real estate is high on the investment hierarchy. In fact, many of the last twelve months’ most notable and most visible deals only came to fruition as the year drew to a close. The fundraising activities of the major REITs support this assessment, as well. US REITs raised $37.5 billion in equity in 2011, a new record that easily surpasses the previous high of $32.7 billion set in 1997. They raised another $13.8 billion in unsecured debt.

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A Persistent Imbalance

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In the final tally, investment sales in 2011 will easily surpass the $120 billion benchmark set in 2010 and will roughly triple the record lows set in 2009. As a wider range of buyers and sellers have reengaged, pricing in the most actively traded markets has exhibited the sharpest improvements. In the extreme, some highly coveted trophy properties have prompted aggressive bidding by domestic and cross-border buyers and have ultimately sold at higher prices than during the market peak in 2006 and 2007.

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While the most visible investments affirm institutional investors’ confidence in the sector, they offer only one perspective on the market. As I pointed out at this time last year, the headline statistics do not fully convey the unevenness of the recovery or the diversity of its investors. The market for assets that do not dominate their respective cities’ skylines is necessarily recovering along its own trajectory. In the current market, that has meant a balance of tailwinds and headwinds that has weighed in favor of the latter.

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Core investors whose scope may be limited to a subset of metropolitan areas have argued that rising prices and falling cap rates will inevitably spill over into other segments of the market. In one respect, this is correct. Yields on mid-cap investments are higher than for any trophy property. But that assessment also overlooks the uniqueness of the market for small- and mid-cap commercial properties and the very different makeup of the investor and lender base. Understanding these differences is crucial to assessments of what the next year will hold for commercial real estate.

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The Economy, Jobs, and the Political Deadlock

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As in previous cycles, the recovery in small- and mid-cap property investment is proving more sensitive to underlying drivers of cash flow than the market for the largest properties. This inevitably means that a strong economic recovery will be one of the requisites for more robust investment. While companies have seen their profits rebound, surpassing their previous peaks from 2007, an environment of extraordinary economic and political uncertainty has constrained decision-making and investment in new tools and people.

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In the first days of 2012, the employment outlook looks brighter. For commercial real estate – and for millions of families across the country that have struggled with unemployment – this is the critical missing link to a more balanced recovery. Although the data on job creation in 2011 only shows a modest improvement over the prior year, leading indicators of firm hiring have turned more positive. Job openings have been trending up consistently over the last year. More recently, first-time applications for unemployment insurance have fallen back to their lowest levels since early 2009. Further, employment gains in temporary help services have picked-up over the past 5 months, which lends well to permanent job creation. Even though single-family housing shows no definitive signs of an inflexion, other metrics indicate that marginally stronger growth in 2012 will support a healthier pace of private sector job creation.

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Regrettably, an environment of political dysfunction qualifies the outlook, both at home and in Europe. In fact, the latter presents one of the most credible threats to global growth. In the United States, the uncertainties presented by unusually intrusive policymaking may resolve over the next year, given the need for all parties to clarify their political positions and objectives as Election Day approaches. Needless to say, a business environment where the rules of the game are more predictable is more conducive to growth and job creation.

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Investment Sales and Financing

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As much as it depends on a stronger economic trajectory, the outlook for small- and mid-cap investment also relies on buyers’ access to financing. In financing their investments, large REITs may offer shares or issue unsecured bonds; trophy investments have also been supported by favorable lending terms from life companies and large international banks. These scenarios are not reflective of the market for smaller assets where the sources of risk and its mitigating factors can be very different. Given the historically dominant role of regional banks and CMBS lenders in facilitating this segment of the market, these lenders figure prominently in the assessment of what the next year will hold.

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Although the CMBS market has struggled to reassert itself since last summer’s interruption, plans for new issuance in the first quarter of 2012 indicate a gradual increase in conduit origination activity. Surprising as it may seem, stability in global bond markets is an important condition for well-functioning CMBS markets, since the spreads on the latter’s bond yields are influenced by corporate bond market trends, as well. In the first half of 2011, more than half the CMBS loans securitized had origination balances of less the $10 million. It remains the case that a more active CMBS market is required for the small and mid-cap segments to flourish, in particular, as a large number of seasoned CMBS loans mature over the coming year.

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Outside of the apartment sector, where generally improving fundamentals and the contributions of Fannie Mae and Freddie Mac are facilitating both sales and new development, commercial property investors are dependent on bank financing given an absence of other debt sources. For the last several years, that has presented a problem. Banks have been preoccupied with the management of their distress portfolios and have hesitated to extend new credit, even in the best of cases. The most recent data show those priorities changing. Banks’ default rates on their commercial and apartment loans have fallen consistently over the last year. Coinciding with the stronger performance of the legacy balance sheets, many banks are accelerating the liquidation of bad loans and real estate-owned. A growing minority are lending again, increasing their exposure in segments of the market where an absence of competition and low interest rates are affording opportunities to extend credit. Improvements in bank lending and CMBS issuance will have a disproportionately positive impact on the mid-cap market. Access to historically low-cost credit in 2012 and the likelihood of higher interest rates in 2013 signal an unmatched window of opportunity for acquisitions over the next 12 months.

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Conclusions

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The economic and jobs outlook is improving. With so many of the underpinnings of a stronger recovery in place, we can afford a degree of optimism. Politics and the possibility of external shocks, primarily from Europe, still qualify that optimism.

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While prices in the largest markets have recaptured a significant share of their lost value, other assets have lagged the headline measures. Combined with historically low borrowing costs, there is tremendous upside potential for borrowers with access to financing who can identify well-positioned assets.

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While the process has been frustratingly slow, more banks are moving distress off their balance sheets. This process has the potential to accelerate in 2012, given banks’ stronger positions generally, an evolving regulatory environment, and the potential for distress from maturing CMBS. That will create some pressures on the market, but it should also deepen the pool of distressed assets and notes for sale.

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Attention will necessarily turn to the small and mid-cap market as the economy improves and financing options broaden. Given our experience in this arena, we are anticipating a high volume of advisory work to identify and market investment opportunities before consensus firms. Timing will be the crucial differentiator in this market – the intersection of low-cost financing and first-mover advantage demands that we act deliberately.

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.