This 2021 economic forecast questions economists’ predictions of a roaring recovery in the second half of 2021, looks at the state of CRE sectors today and checks in with the real estate cycle.
Teaching CRE Entrepreneurship at Georgia State University was something I always wanted to try. And now I can say I did it, and it was an A+ experience. The class was about helping students decide what they want to do, how they are going to do it, and which resources they need to be successful. It was also about discerning whether they were willing to take the risk and go the extra mile to thrive.
In May, I think we all thought (or at least hoped) that the COVID -19 situation would be under control by now. Well, it isn’t nor is it clear what the long-term impact on our lives will be. Commercial Real Estate Today? Six months ago when this all started, I posted the blog, “Coronavirus Pandemic Impacts Commercial Real Estate Sectors.” It now makes sense to revisit this topic again. Let’s look at the status and possible future of the various commercial real estate sectors. Industrial: Can’t Build ‘Em Fast Enough It’s fair to say that Industrial has been the least affected sector and has benefited the most from the acceleration of online shopping. Developers can’t build buildings fast enough, especially not the huge, specialized buildings needed by companies like Amazon and Apple. Investors are buying them before they are finished or leased. This is an ominous sign and could lead
I’ve participated in the Georgia State’s Robinson College of Business Mentoring Program for many years and have always taken time to offer career advice to students and young adults interested in commercial real estate. Mentoring is an important way to develop talented professionals for my industry and give back to the community. But one thing I have not done, but always wanted to do, is step inside the classroom. That is about to change. This fall I teach CRE Entrepreneurship at Georgia State. The course is an extension of how I mentor—this should be interesting for both me and the students. Georgia State’s Real Estate Program Georgia State offers a Master of Science in Commercial Real Estate. Taught by industry executives using experiential learning techniques, the program can be completed in three semesters, with students attending two evening classes per week. Program students are typically in their 20s to 30s
Most people view making decisions about death with dread. Therefore, the made-up acronym DRED to represent the topic of Death and Real Estate Decisions makes sense. No one likes to think about his own demise, but it is important to make smart decisions now, especially if you own real estate. Major Transfer of Wealth Impending With the impending retirement and eventual demise of the Baby Boomers, we will soon experience one of the largest transfers of wealth in history. The transfer of wealth from the Greatest Generation to their Baby Boomer children, while significant, was not that great. The earlier generation grew up during the Great Depression, followed by World War II, and thus lost significant time to build wealth. Baby Boomers, on the other hand, have known predominantly prosperous times with only short-term and relatively minor setbacks, thus resulting in considerably more wealth to transfer to their children. Who
The Fog of Uncertainty As we emerge from this imposed economic catastrophe caused by the fear of COVID-19, we need to consider how we take advantage of the investment opportunities it will present. Investment strategies tend to be driven by people’s current perceptions. In times of distress, we assume it will last an exceptionally long time with a weak recovery. Yet in boom times, we feel like it will never end. To successfully navigate the choppy waters, you must keep your head and have a solid plan. It is good to start with what we know. What We Know or Can Reasonably Assume We are faced with a virus for which there is no cure or vaccine and might not ever be one. The public has been scared to death even though the number of cases (relative to total population) is extremely low and primarily confined to an identifiable “at-risk
To quote the Greek Philosopher Heraclitus, “Change is the only constant in life.” As we stare down the barrel of the coronavirus rifle, we must ask ourselves what will future changes be like. Which changes will be temporary? Which changes will be permanent? Impact of Coronavirus In my last two blogs, I’ve reviewed the impact of coronavirus on the restaurant industry as well as other commercial real estate sectors. Here, I contemplate the impact of the coronavirus on the economy, urbanization, healthcare and, perhaps most interesting, people and their habits. Impacts from major societal events do not show up for a while. For example, people had fewer children following the 2008 economic crisis because they felt financially insecure; however, we are just seeing this impact now in schools, as current graduating classes outsize current elementary school classes. That recession also profoundly affected the housing market; people became more inclined to
Unemployment is increasing rapidly, businesses are closing, shelter-in-place is the order of the day, and experts warn this could be the deadliest week we’ve seen yet. It feels like the Apocalypse. At the same time, the weather is beautiful, the trees turn green and flowers blossom—giving us hope. All Commercial Real Estate Sectors Somehow Impacted In my last blog, I focused on the hard-hit restaurant industry. In this blog, I look at other commercial real estate sectors—all experiencing the impact of the virus and the resulting business interruption. Hotels One of the Hardest Hit CBRE forecasts “hotel revenue to decline by an average of 37% for 2020, with properties in high tourist and convention business areas getting clobbered.” Hotels have been in expansion mode, in both number of units and brands. Marriott is a good example. With most hotels, however, Marriott does not own their properties. They merely operate the
You never see the lightning bolt that hits you. Coronavirus COVID-19 has taken us all by surprise and continues to baffle us with its strength and uncertainty. It’s difficult to write a post about the current climate because it changes daily, hourly even. Every day, we hear of communities requiring residents to shelter-in-place as more orders are announced, clarifying which businesses can operate and which must shutter their doors. Real Estate Recessions: Causes Real estate market recessions are NOT always the result of real-estate activities, such as overbuilding, loose underwriting or easy financing. Sure, there have been real estate recessions caused by these actions, but not always. Often there are non-real estate triggers—think of the mid-70’s oil embargo, the Iraq War, inflation in the 80’s and 9/11. These events usually expose underlying market weaknesses and cause the debt markets to lock up, resulting in sharp declines in real estate fundamentals.
We are accustomed to seeing headlines about big philanthropic donations or seeing billionaire’s names on buildings, but do you ever stop to think about the massive multiplier effect these philanthropic donations have? On everything from job growth to real estate worth to quality of life? In Atlanta, we have a multitude of big givers—from Home Depot’s Bernie Marcus and Arthur Blank to the Coca-Cola-affiliated Robert W. Woodruff Foundation to CNN’s Ted Turner. Let’s take a deep dive into how philanthropic giving impacts Atlanta, focusing specifically on Bernie Marcus. Growth of The Home Depot The Home Depot got its start with two entrepreneurs and two Atlanta stores, one in Doraville and one in Decatur, in former Treasure Island locations. Marcus and Blank grew that humble beginning to 2,200+ stores, simultaneously profiting from the DIY craze and revolutionizing the industry. The growth of Home Depot in Atlanta significantly impacted Atlanta. First, think
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