The Ground Floor

ULI and AIA Host Recovering Green Forum

This post was written for The Ground Floor by Robert Krueger, communications associate at the Urban Land Institute.

Leading research has indicated that U.S. city budgets will be negatively impacted well into 2012 and possibly beyond. In face of hardship, cities are still focusing on green economic development. However, difficulties in prioritizing investments while tax revenues continue to decline remain a top concern for city planners.

Last week, the Urban Land Institute’s (ULI) Daniel Rose Center for Public Leadership in Land Use and the American Institute of Architects (AIA) jointly hosted a forum in Washington, D.C.--"Recovering Green."  The event brought together city mayors, developers, architects in order to discuss how cities can still achieve their green goals and the best ways for localities to move forward given the current economic conditions.

"“A lot of the tough decisions have been passed down to cities," said Ken Rosenfeld, policy director for the National League of Cities.  "In the coming years, city incomes are going to continue to decline. The deficit is very real and now we have to find ways out of it."

Attendees heard case studies from the mayors of Des Moines, Iowa; New Bedford, Massachusetts, Southfield, Michigan; and Chattanooga, Tennessee, along with planning discussions on development and infrastructure before breaking out into small group discussions. Each group developed one-page action plans about what could be done with zoning and building codes, public/private partnerships and inter-jurisdictional challenges in order to help growing cities implement development projects while in the green spirit.

"“As a mayor I am always looking to how we can add value; however, I constantly see how change is really hard," stated T.M. Franklin Cownie, Mayor of Des Moines.  "It it is important that we always look how to keep the private sector involved and what incentives can we work with in this economy. You got to get the private sector energized through incentives and tax breaks."

One of the questions brought up was how needed infrastructure projects would be funded when a second stimulus bill seem unlikely. As a result of the American Recovery and Reinvestment Act and forthcoming re-authorization of the surface transportation funding bill, cities, and counties are putting forward plans to invest in transportation infrastructure since this type of investment is shown to be a key part of the equation when discussing sustainable development.  

"One of the ways that cities become successful is by having a good infrastructure strategy," said Roger Platt, senior vice president for global policy & law, U.S. Green Building Council (USGBC).  "We should not forget that we need to look international examples of what works for infrastructure. Right now, there is an infrastructure bank in Europe and there is a lot of talk about how such a system would work in the U.S."

As cities find solutions to pay for infrastructure development, there will be discussion about news and innovative ways for fund investment. Currently, funding for sustainable development remains tight, but the overall need remains enormous.

Slowly but Surely

This post was written for The Ground Floor by Robert Krueger, communications associate at the Urban Land Institute.

As credit eases and property values begin to stabilize, investors are optimistic about Europe’s commercial real estate industry in 2010.  However, investors don’t believe they can rest easy.  According to the newly released report Emerging Trends in Real Estate® Europe 2010, published this week by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PWC), while European real estate will see improvements during this year, there is still a ‘long, slow haul’ to recovery.

In a statement, ULI Europe Chairman Alexander Otto cautioned, “Europe’s economic recovery is underway, but it will be sluggish and uneven.”

Emerging Trends discusses the issues associated with real estate refinance debt and the worries and uncertainty over how European governments will get involved with the economic recovery.  Survey respondents noted their apprehension concerning the possibility of an abrupt withdrawal of stimulus funds by European governments.  Such actions could derail the region’s growth potential and whatever steps that has already been made. 

“This year there is a sense of cautious optimism,” said John Forbes, PWC real estate leader in Europe, Middle East and Africa. “Sentiment regarding investment prospects has stabilized and although sentiment regarding development continues to decline, it is a less dramatic fall than that witnessed last year.”
According to the report, London takes the top spot for new property acquisitions.  Among the other popular targets were Munich, Paris, Istanbul, Vienna and Hamburg.

The report’s findings are based off the responses from surveys and interviews of over 600 authoritative voices in the industry.   The sample of respondents ranges from a variety of leading investors, developers, bankers, and property managers. 

ULI Online Community Insider

The following newsletter is distributed monthly to ULI's followers on Facebook, Linked In, and Twitter.  For more information, contact ULI communications associate Robert Krueger.

 

Insider Information from ULI:

Connecting the Global Real Estate Communiy

 

1. Registration opens soon for the 2010 ULI Real Estate Summit at the Spring Council Forum. Join top decision-makers and take part in shaping the New World of Real Estate April 14-16, 2010 in Boston.  Find out more.

2.  Coalition Urges Obama To Create National Infrastructure Bank

Last week, Building America’s Future, a coalition of public officials and private organizations – including ULI – hosted a news conference on Capitol Hill to voice support for greater investment in infrastructure. The group, which included ULI Executive Vice President Maureen McAvey, urged President Obama and members of Congress to make the creation of a National Infrastructure Bank (NIB) a top domestic priority for 2010.   Read more.

3.  What are your thoughts on social networking sites?  Are you going to be digitized? Networking sites, such as Facebook and Twitter, are increasingly becoming the preferred method of communication. But it is real estate lagging behind? Do we need to change the way we do business? ULI Europe would appreciate a few minutes of your time to fill out this survey on social media. The results will be presented at our annual conference in Paris on 3rd February 2010.  

4.  The deadlines for both the ULI Awards for Excellence and the newly created ULI Amanda Burden Open Space Award are Feb. 19. Submit your development project today!

 

5.  Just published!

Real Estate Market Analysis, Second Edition

Deborah L. Brett, Adrienne Schmitz, et al.

Now thoroughly updated, the Second Edition maintains the same focus as the original: providing practical “how to” information on analyzing real estate markets. A great introduction to the tools you will need to evaluate trends and understand the key factors affecting real estate markets. This book explains how to get started, where to get information, and how to apply the basic techniques to a variety of development types.

Visit our ULI online bookstore for more information and to purchase your copy today!

 

6.  Are you following ULI on our social media channels?  Check us out at:

ULI on Twitter

ULI's Facebook Page 

ULI's LinkedIn Group

ULI's YouTube Channel

Coalition Urges Obama To Create National Infrastructure Bank

This post was written for The Ground Floor by Robert Krueger, communications associate at the Urban Land Institute.

 

This week, Building America’s Future, a coalition of public officials and private organizations – including ULI – hosted a news conference on Capitol Hill to voice support for greater investment in infrastructure. The group, which included ULI Executive Vice President Maureen McAvey, urged President Obama and members of Congress to make the creation of a National Infrastructure Bank (NIB) a top domestic priority for 2010.  

 

“We are in desperate need of movement,” said Pennsylvania Governor Ed Rendell, co-chairman of Building America’s Future.  “Infrastructure is still the nation’s best job creator.  A National Infrastructure Bank would bring the best ideas of the public sector along with the best ideas of the private sector together to produce jobs and rebuild America’s infrastructure.”

 

Rendell expressed the need for both presidential leadership and Congressional cooperation in creating a new system for long-term funding that is “based on merit.”  He noted that the current system is inadequate since it results in the incompatibility of work between various states.

 

The concept of a National Infrastructure Bank is supported by ULI. Building America’s Future suggests a National Infrastructure Bank that would go beyond allocating funds for national, regional and local transportation projects.  In addition, it would synchronize projects between states and improve investment by:

 

• Creating a system of project selection based on what is most needed and feasible
• Providing incentives for multi-state transportation projects
• Ensuring that sufficient federal funding will be available for these projects
• Creating a system that maximizes public sector spending by integrating private sector investment.

 

“This is common sense,” said Senator Chris Dodd (D-CT).  “If we are to grow in the 21st century, we need to maintain and expand the existing infrastructure.”  

 

Though there is much support for creation of this type of system, there is concern over funding and how a National Infrastructure Bank would work into the current system.  In a statement issued by Building America’s Future, McAvey stressed the need for dropping what has not worked and adopting systems that have proven effective. “Europe, China and Japan have all used infrastructure banks to fund major, cross-border projects of long lasting significance,” she said. “A financing tool like the National Infrastructure Bank should operate as a bank, independently underwriting loans to important projects.  This would bring billions of new money, private and public, to invest in sorely needed modernization and new construction.”

 

The coalition also includes Rep. Rosa DeLauro (D-CT), Gov. Arnold Schwarzenegger (R-CA), New York City Mayor Michael Bloomberg, former Senator Chuck Hagel (R-NE). In addition to ULI, it includes representatives from the Brookings Institution, American Public Transportation Association, American Society of Civil Engineers, Center for National Policy, and the United Steelworkers.

Monday's Numbers and Noteworthy News

We’re going on vacation! The next issue of ULI”s Monday’s Numbers and Newsworthy News will be published on Monday, February 8th.

Commercial Mortgage Alert mortgage spreads based upon a weekly survey of 15 active portfolio lenders conducted by Trepp, the analytics firm.

Asking Spreads over U.S. Treasury Bonds in Basis Points (10-year Commercial and Multifamily Mortgage Loans with 50% to 59% Loan-to-Value ratios)
	11/27	12/4	12/11	12/31
Office	366	361	342	342
Retail	365	369	354	326
Multifamily	314	323	319	318
Industrial	350	355	336	333
Source: Trepp

Indicated Spreads for Conventional Fixed and Floating Commercial Mortgages (as of November 20, 2009)

Property Type	Mid-Point of Commercial Mortgage Rate Spreads for 5-10 Year Fixed-Rate Mortgages
	10/01/09	10/15/09	10/28/09	11/11/09	11/20/09	12/09/09
Multifamily: Non-Agency	+350	+350	+340	+375	+360	+330
Multifamily: Agency	+240	+240	+220	+220	+220	+220
Regional Malls	+458	+438	+438	+400	+400	+395
Strip/Power Centers	+465	+450	+450	+425	+425	+400
Multi-Tenant Industrial	+470	+465	+440	+400	+395	+380
CBD Office	+460	+450	+425	+390	+388	+378
Suburban Office	+475	+475	+475	+388	+413	+375
Full-Service Hotel	+563	+550	+550	+563	+563	+525
Limited-Service Hotel	+575	+575	+575	+575	+575	+538
5-Treasury	2.47%	2.41%	2.37%	2.35%	2.20%	2.12%
10-Year Treasury	3.43%	3.49%	3.44%	3.47%	3.36%	3.37%
Source: Cushman & Wakefield Sonnenblick-Goldman, LLC.

Property Type	Mid-Point of Floating Rate Commercial Mortgage Rate Spreads for 3-5 Year Fixed-Rate Mortgages
	10/01/09	10/15/09	10/28/09	11/11/09	11/20/09	12/09/09
Multifamily: Non-Agency	+413	+375	+375	+375	+375	+350
Multifamily: Agency	NA	NA	NA	NA	NA	NA
Regional Malls	+450	+413	+413	+413	+413	+400
Strip/Power Centers	+438	+413	+413	+413	+413	+400
Multi-Tenant Industrial	+388	+388	+388	+388	+388	+350
CBD Office	+375	+375	+375	+400	+350	+350
Suburban Office	+400	+400	+400	+400	+400	+400
Full-Service Hotel	+600	+538	+538	+538	+538	+488
Limited-Service Hotel	+650	+600	+600	+600	+600	+600
1-Month LIBOR	0.25%	0.24%	0.24%	0.24%	0.24%	0.24%
3-Month LIBOR	0.29%	0.28%	0.28%	0.28%	0.27%	0.26%
Source: Cushman & Wakefield Sonnenblick-Goldman, LLC.

	Spread in Basis Points over Interest Rate Swaps
	Current	3 Months Ago
AAA	487	488
AA	2962	3038
A	3598	3687
BBB	5169	5526
BBB-	6259	6631
Source: Trepp

Sign the Times? For as many who say that the capital markets crises is easing or ending or whatever, there is daily evidence that things are not quite that rosy as shoe after shoe continues to drop.  A number of this week’s shoes included the following:

U.S. COMMERCIAL PROEPRTY VALUES FALL TO LOWEST LEVEL IN 7 YEARS!

Commercial property values continued their inexorable decline in value, impacted by everything from declines in employment to tenant credit problems and everything in between.

According to the Moody’s/REAL Commercial Property Price Index, values are down 44 percent from their peak in October 2007.

Monday’s Numbers

Year-to-Date Equity Market Performance (as of January 8, 2010):

DJIA⁽¹⁾: +1.82%
S & P 500⁽²⁾: +2.68%
NASDAQ⁽³⁾: +2.12%
Russell 2000⁽⁴⁾: +1.66%
MSCI U.S. REIT⁽⁵⁾: -0.36%

(1) Dow Jones Industrial Average.
(2) Standard & Poor’s 500 Stock Index.
(3) NASD Composite Index.
(4) Small Capitalization segment of U.S. equity universe.
(5) Morgan Stanley REIT Index.

U.S. Treasury Yields: (as of January 11, 2010)

3-month: 0.04%
6-month: 0.13%
2-Year: 0.95%
5-Year: 2.56%
10-Year: 3.80%

Monday's Numbers and Noteworthy News

Commercial Mortgage Alert mortgage spreads based upon a weekly survey of 15 active portfolio lenders conducted by Trepp, the analytics firm.

Asking Spreads over U.S. Treasury Bonds in Basis Points (10-year Commercial and Multifamily Mortgage Loans with 50% to 59% Loan-to-Value ratios)
	11/13	11/27	12/4	12/11
Office	380	366	361	342
Retail	398	365	369	354
Multifamily	323	314	323	319
Industrial	374	350	355	336
Source: Trepp

Indicated Spreads for Conventional Fixed and Floating Commercial Mortgages (as of November 20, 2009)

Property Type	Mid-Point of Commercial Mortgage Rate Spreads for 5-10 Year Fixed-Rate Mortgages
	10/01/09	10/15/09	10/28/09	11/11/09	11/20/09	12/09/09
Multifamily: Non-Agency	+350	+350	+340	+375	+360	+330
Multifamily: Agency	+240	+240	+220	+220	+220	+220
Regional Malls	+458	+438	+438	+400	+400	+395
Strip/Power Centers	+465	+450	+450	+425	+425	+400
Multi-Tenant Industrial	+470	+465	+440	+400	+395	+380
CBD Office	+460	+450	+425	+390	+388	+378
Suburban Office	+475	+475	+475	+388	+413	+375
Full-Service Hotel	+563	+550	+550	+563	+563	+525
Limited-Service Hotel	+575	+575	+575	+575	+575	+538
5-Treasury	2.47%	2.41%	2.37%	2.35%	2.20%	2.12%
10-Year Treasury	3.43%	3.49%	3.44%	3.47%	3.36%	3.37%
Source: Cushman & Wakefield Sonnenblick-Goldman, LLC.

Property Type	Mid-Point of Floating Rate Commercial Mortgage Rate Spreads for 3-5 Year Fixed-Rate Mortgages
	10/01/09	10/15/09	10/28/09	11/11/09	11/20/09	12/09/09
Multifamily: Non-Agency	+413	+375	+375	+375	+375	+350
Multifamily: Agency	NA	NA	NA	NA	NA	NA
Regional Malls	+450	+413	+413	+413	+413	+400
Strip/Power Centers	+438	+413	+413	+413	+413	+400
Multi-Tenant Industrial	+388	+388	+388	+388	+388	+350
CBD Office	+375	+375	+375	+400	+350	+350
Suburban Office	+400	+400	+400	+400	+400	+400
Full-Service Hotel	+600	+538	+538	+538	+538	+488
Limited-Service Hotel	+650	+600	+600	+600	+600	+600
1-Month LIBOR	0.25%	0.24%	0.24%	0.24%	0.24%	0.24%
3-Month LIBOR	0.29%	0.28%	0.28%	0.28%	0.27%	0.26%
Source: Cushman & Wakefield Sonnenblick-Goldman, LLC.

	Spread in Basis Points over Interest Rate Swaps
	Current	3 Months Ago
AAA	487	505
AA	2962	3237
A	3598	4112
BBB	5169	5537
BBB-	6259	7041
Source: Trepp

Sign the Times? For as many who say that the capital markets crises is easing or ending or whatever, there is daily evidence that things are not quite that rosy as shoe after shoe continues to drop.  A number of this week’s shoes included the following:

It was recently reported that Hammerson Property, a large, well known U.K. publicly-traded property company, is believed to be among some of the UK’s largest commercial property firms that have prepared self-help emergency measures—effectively “living wills”—to avoid the need to seek help of shareholders or banks in the event of a future market collapse.

The steps involve identifying assets that would be quickly and decisively sold or otherwise liquidated during a crises to strengthen the company’s balance sheet.

Monday’s Numbers

Year-to-Date Equity Market Performance (as of December 31, 2009):

DJIA⁽¹⁾: +18.82%
S & P 500⁽²⁾: +23.45%
NASDAQ⁽³⁾: +43.89%
Russell 2000⁽⁴⁾: +26.95%
MSCI U.S. REIT⁽⁵⁾: +20.97%

(1) Dow Jones Industrial Average.
(2) Standard & Poor’s 500 Stock Index.
(3) NASD Composite Index.
(4) Small Capitalization segment of U.S. equity universe.
(5) Morgan Stanley REIT Index.

U.S. Treasury Yields: (as of January 1, 2010)

3-month: 0.06%
6-month: 0.19%
2-Year: 1.41%
5-Year: 2.68%
10-Year: 3.83%

Monday's Numbers and Noteworthy News

Commercial Mortgage Alert mortgage spreads based upon a weekly survey of 15 active portfolio lenders conducted by Trepp, the analytics firm.

Asking Spreads over U.S. Treasury Bonds in Basis Points (10-year Commercial and Multifamily Mortgage Loans with 50% to 59% Loan-to-Value ratios)
	11/13	11/27	12/4	12/11
Office	380	366	361	342
Retail	398	365	369	354
Multifamily	323	314	323	319
Industrial	374	350	355	336
Source: Trepp

Indicated Spreads for Conventional Fixed and Floating Commercial Mortgages (as of November 20, 2009)

Property Type	Mid-Point of Commercial Mortgage Rate Spreads for 5-10 Year Fixed-Rate Mortgages
	10/01/09	10/15/09	10/28/09	11/11/09	11/20/09	12/09/09
Multifamily: Non-Agency	+350	+350	+340	+375	+360	+330
Multifamily: Agency	+240	+240	+220	+220	+220	+220
Regional Malls	+458	+438	+438	+400	+400	+395
Strip/Power Centers	+465	+450	+450	+425	+425	+400
Multi-Tenant Industrial	+470	+465	+440	+400	+395	+380
CBD Office	+460	+450	+425	+390	+388	+378
Suburban Office	+475	+475	+475	+388	+413	+375
Full-Service Hotel	+563	+550	+550	+563	+563	+525
Limited-Service Hotel	+575	+575	+575	+575	+575	+538
5-Treasury	2.47%	2.41%	2.37%	2.35%	2.20%	2.12%
10-Year Treasury	3.43%	3.49%	3.44%	3.47%	3.36%	3.37%
Source: Cushman & Wakefield Sonnenblick-Goldman, LLC.

Property Type	Mid-Point of Floating Rate Commercial Mortgage Rate Spreads for 3-5 Year Fixed-Rate Mortgages
	10/01/09	10/15/09	10/28/09	11/11/09	11/20/09	12/09/09
Multifamily: Non-Agency	+413	+375	+375	+375	+375	+350
Multifamily: Agency	NA	NA	NA	NA	NA	NA
Regional Malls	+450	+413	+413	+413	+413	+400
Strip/Power Centers	+438	+413	+413	+413	+413	+400
Multi-Tenant Industrial	+388	+388	+388	+388	+388	+350
CBD Office	+375	+375	+375	+400	+350	+350
Suburban Office	+400	+400	+400	+400	+400	+400
Full-Service Hotel	+600	+538	+538	+538	+538	+488
Limited-Service Hotel	+650	+600	+600	+600	+600	+600
1-Month LIBOR	0.25%	0.24%	0.24%	0.24%	0.24%	0.24%
3-Month LIBOR	0.29%	0.28%	0.28%	0.28%	0.27%	0.26%
Source: Cushman & Wakefield Sonnenblick-Goldman, LLC.

	Spread in Basis Points over Interest Rate Swaps
	Current	3 Months Ago
AAA	487	505
AA	2962	3237
A	3598	4112
BBB	5169	5537
BBB-	6259	7041
Source: Trepp

Sign the Times? For as many who say that the capital markets crises is easing or ending or whatever, there is daily evidence that things are not quite that rosy as shoe after shoe continues to drop.  A number of this week’s shoes included the following:

Monday’s Numbers

Year-to-Date Equity Market Performance (as of December 21, 2009):

DJIA⁽¹⁾: +17.69%
S & P 500⁽²⁾: +22.06%
NASDAQ⁽³⁾: +40.24%
Russell 2000⁽⁴⁾: +22.25%
MSCI U.S. REIT⁽⁵⁾: +18.80%

(1) Dow Jones Industrial Average.
(2) Standard & Poor’s 500 Stock Index.
(3) NASD Composite Index.
(4) Small Capitalization segment of U.S. equity universe.
(5) Morgan Stanley REIT Index.

U.S. Treasury Yields: (as of December 20, 2009)

3-month: 0.04%
6-month: 0.16%
2-Year: 0.79%
5-Year: 2.75%
10-Year: 3.54%

Signs of an Economic Rebound?

Sign of an economic rebound are beginning to shpw, according to survey findings from top executives in real estate. Survey data from the participants at the ULI McCoy Symposium on Real Estate Finance, held on December 14, 2009, in New York, present a mixed but generally improving outlook for a variety of key indicators.

In general, for 2010 these observers expect a healthy 3 percent gross domestic product (GDP) growth rate, a persistent 10 percent unemployment rate, positive job growth of 1 million jobs, modest growth in housing starts reaching 675,000 units annually, increasing bond rates, modest growth in property transactions, real estate investment trust (REIT) total returns of 10 percent, negative returns of -5 percent in the NCREIF index, growing REIT issuance, and office vacancies climbing higher to 18 percent. A summary of their responses appears below.

Most economists said that the economy bottomed between February and July of 2009, but job growth is certainly lagging and the volume of job losses is staggering. The question remains whether there will be a robust, average, or weak recovery, and participants had varying views on this, with the general consensus falling around 3 percent growth in GDP. With the job losses we have seen, even a robust recovery of 3.5 percent or more would take three years or more to re-create the jobs that have been lost since 2008.

Inflation is certainly a concern going forward. The federal deficit is also a major concern. The fiscal imbalances are outside Fed control, and will likely lead to inflation, higher taxes, and higher interest rates, and with higher interest rates this deficit problem will balloon further. Higher rates could also create further threats for real estate and housing. LIBOR will rise and this will affect those who are today benefiting from the existing low rates.

A lot of population growth assumptions are also in question. Many have assumed that population growth will continue as in the past, but there is reason to believe it may not, as immigration has declined and reverse immigration is actually happening in some areas, e.g., many Brazilian immigrants are moving back to Brazil, where the economy is better. This is especially important for the multifamily property sector, which may see much less absorption from these demographic sectors. Immigration is not driving markets in places like Phoenix and Florida as it has in the past.

Read more from the McCoy Symposium white paper.

How to Cut Carbon Emissions through the Renovation of Existing Structures

A new publication from the Urban Land Institute (ULI), Retrofitting Office Buildings to Be Green and Energy Efficient: Optimizing Building Performance, Tenant Satisfaction, and Financial Return, adds a new dimension to the sustainable development discussion while showing how to achieve significant reductions in green house gas emissions through the renovation of existing buildings. The book explores the innovative trends, practices, and goals of building retrofits while serving as an authoritative guide to understanding the business aspects and policy implications of energy-efficient retrofits.

Written by accomplished speaker on sustainable real estate investment, Leanne Tobias, the book provides a comprehensive, international analysis of the implications and strategies behind renovating existing buildings. In contrast to other publications on green building and retrofitting, which describe the practice from the “20,000-foot” level, Tobias gives readers a ground floor perspective. Tobias provides data and numerous case studies to illustrate the importance of green building retrofits, the collaboration of building owners and tenants, global public policy initiatives that affect the industry, and how new technologies and materials are shaping sustainable building renovation.

In addition to serving as a how-to book for professionals involved in commercial real estate, this book echoes ULI’s efforts of promoting sustainable development by showing the significant connection between the built environment and energy use. Tobias stresses the big picture impact of green renovation over new construction by highlighting evidence which proves that existing buildings make up 98 percent of the building stock in developed countries, while new construction makes up only 2 percent. In addition, the majority of these existing buildings were constructed before green building regulations were implemented. 

In addition, Retrofitting Office Buildings to Be Green and Energy Efficient presents an approach for green renovation that is neither top down nor bottom up. Through case studies on the retrofits of corporate headquarters, multi-tenant buildings, and leased space, Tobias argues that a successful green renovation strategy must be a team effort that incorporates the owner, the tenant, as well as anyone involved with building operations. 

Some of the book's highlights include:

• Green retrofit case studies from around the globe, including: The Empire State Building (New York, NY);  Adobe Towers (San Jose, CA); the Joseph Vance Building (Seattle, WA);  McDonald’s Campus Office Building (Oakbrook, IL); One Beacon Street (Boston, MA);  Shui On Land Headquarters (Shanghai, China); Trevor Pearcey House (Canberra, Australia)
• The strategic steps to planning green and energy efficient retrofits, ranging from market feasibility to life cycle cost analysis.
• The extended management process of green retrofitting, including everyone from consultants, contractors, building owners, building managers and operations staff, and tenants.
• An in-depth look at global public policy initiatives and government spending intended to target green building and energy-efficient retrofits.

Retrofitting Office Buildings to be Green and Energy Efficient author, Leanne Tobias, is the founder and managing principal of Malachite LLC, a global real estate consulting firm. She is an accomplished speaker on sustainable real estate investment and development, having lectured at the United Nations; Harvard, Columbia and Wharton Business Schools; and the U.S. Green Building Council. 

Retrofitting Office Buildings to Be Green and Energy-Efficient: Optimizing Building Performance, Tenant Satisfaction, and Financial Return (ISBN: 978-0-87420-133-8; Urban Land Institute, 2009) is available everywhere books are sold, and through the Urban Land Institute at www.uli.org or by calling 1-800-321-5011.

As They Cope with a Recession, Leaders of Europe’s Real Estate Companies Rewrite Their Business Plans

Despite seeing first green shoots of recovery in select European economies, in an uncertain environment, most remain focused on risk management – protecting their assets and conserving capital, according to an annual economic report released today. 

Based on interviews and surveys with approximately 100 leaders across European property companies (public and private), investment banking, investment management, private equity and brokerage firms, banks and insurance companies, and other sectors, the report – The Business Enterprise in Europe – provides an assessment of how real estate executives are managing their companies through challenging economic conditions and how they are adapting to transformative changes within the broader industry.  The study was completed by Ferguson Partners Europe Ltd, a leading provider of executive search services, in conjunction with the Urban Land Institute (ULI), a global non-profit research and education institute dedicated to responsible land use, and ULI EMEAI (Europe, Middle East, Africa and India) which serves the Institute’s members in those countries.  

Respondents reveal that leaders are intensely focused on maintaining stable cash flows, looking for every opportunity to cut costs, redoubling efforts to maintain good relationships with investors, and taking the initiative to keep closer communication with lenders.  More than ever, leaders are also re-examining and restructuring talent pools to ensure that organisations have teams with vision, knowledge, and skill to drive further growth and success in the real estate industry of the future. 

According to the report, the forecast regarding headcount change in 2010 is not overly encouraging.  Demand will be most significant among investment managers and property services firms, with investment management firms expecting to increase their total workforce headcount by an estimated 2.8% and the private equity sector anticipating an increase in total workforce headcount by an estimated 0.7%.  The development/construction and banking/lending sectors are expected to see decreases in their workforce decrease by 1.3% and 3.3% respectively.

The report notes that, in general, salaries throughout the real estate industry are expected to be flat to slightly up for 2010.  2009 cash incentives will be down and equity awards will be higher to retain and incentivise executives where common equity holdings are largely meaningless. Creating compensation programs is particularly challenging, as companies try to restructure or replace plans that were developed during boom times, the report says.
 
ULI EMEAI President William Kistler said: “Real estate executives are being tested as never before. This report offers a unique insight into how well they are coping and what strategies they are using. Without a doubt, human capital is a top priority as companies move beyond survival towards success for the future.”
 
William J. Ferguson, Co-Chairman and Co-CEO of FPL Advisory Group commented, “Companies are focused on strengthening asset management and restructuring teams, as well as finding executives who can interface effectively with disgruntled investors and lenders.”

Serena Althaus, Managing Director, Ferguson Partners Europe noted, “Experience is at a premium right now.  Business leaders who started their careers in the early ‘90s have not managed through a significant downturn before.  There is therefore a demand for those who have been through this – or something similar – previously.  The large-scale change of senior management, across Europe, over the last two years, illustrates the point.”

Geographically, growth seems to be focused in Western Europe and, on a global basis, in Asia.  Thirty-two percent (32%) of respondents expect to increase their workforce in Western Europe, while 41% of respondents expect a decrease in Southern Europe and 43% of respondents expect a decrease in Eastern Europe.  Nearly one-half (49%) of respondents expect to increase their workforce size in Asia in 2010.

Many Business Enterprise in Europe respondents were buoyed by signs of recovery in Europe’s economies and property markets, although it could be many months before Europe recovers.  Some companies have started to raise capital and to look for investment opportunities, while others continue to lower debt, manage assets more intensively, and strengthen their portfolio by selling non-core assets.  

“As firms continue to focus on legacy issues, they are also mindful of the opportunity ahead and are making sure to allocate a percentage of their time, focus, and resources on new initiatives such as creating a debt or distressed investment capacity or expanding their capital formation infrastructure,” added James D. Dell’Olio, President and Senior Managing Director of Ferguson Partners Ltd.

The full report, The Business Enterprise in Europe: Leadership Perspectives, is available at www.fpladvisorygroup.com.