Wednesday, September 30, 2009

Commercial Real Estate – There is Bad News and Good News

Jones Lang LaSalle just released a forecast that both sobers and offers hope. In short, more pain to come but a commercial real estate recovery is on the far horizon.

The numbers tell the bad news side of the story. Commercial property sales during the second quarter of 2009 totaled $5.2 billion, $25.5 billion lower than 2Q08 and $109.5 billion lower than 2Q07.

On the good news side of the ledger JLL projects a slow paced turnaround beginning in 3Q10 which they expect to take a full decade to mature.

If accurate then we have another nine months of decline to endure before commercial real estate begins its rebound. That is an optimistic forecast compared to what we are hearing from most other prognosticators. Some project that CRE will not begin a turnaround for three years in a best case scenario. One advantage of a slow paced recovery is that it will have a more conservative, some would say more rational, financial foundation than we saw in the euphoria that preceded the crash. Let’s hope that no one has an appetite left for risk taking of the kind that exposed us to the current fall.

What is the bottom line on this message? Simple. Keep your seat belts fastened and watch the dashboard very closely.

Sunday, September 20, 2009

Why Renewable Energy Is Our Future

In his September 16 New York Times opinion piece entitled Have a Nice Day, Thomas Friedman makes a strong presentation of how and why the U.S. is dropping the renewable energy ball, and the consequence of doing so.

As Friedman posits, the green revolution has moved from being a “cause” to the mainstream and is now becoming a prime engine of economic growth. Countries like Germany that have incentivized renewable energy and encouraged its widespread adoption are now positioned to be technical leaders and reap the rewards as the world follows. That means economic power and jobs will flow to them, along with the ability to influence and maneuver.

Some will tell you that green and its various components, including renewable energy, are the future, not just for the environment but for economic development as well. In a time when we must make extremely difficult investment decisions sustainable energy seems a wise choice. This is where innovation is occuring and this is where jobs will be created. The jobs we need to drive economic recovery.

It seems these days that we are all about rescuing companies and policies that have failed. Why not rescue our future with investments and policies that encourage sustainability at a national level. Grass root efforts will be stymied unless they find deeper roots and nourishment in national strategy and policy. And that’s what the U.S. needs now.

Let’s get serious and get busy with sustainability.

You can read Friedman’s article here

Monday, September 14, 2009

Strategy Questions Are Big Questions

As FM’s it is easy to step into the trap labeled “tactical success.” It’s easy because our job is about providing and sustaining work places that support the success of our organizations. We are doing our job when we take care of the details and make sure everything is as it should be. But that isn’t our only job. As FM increases in importance and visibility to the C-Suite then we are challenged to become more strategic. And that requires a different way of thinking.

In my experience questions make all the difference. When I am engaged in a tactical problem solving issue I ask myself and others tactical questions that deal with details and nuance. My guess is that most of you would say you do the same. This is where FM’s live and breathe – in the detail. There are project schedules, contracts, move – add – changes, systems operation and a host of other requirements that make living in the “now” and the tactical easy and natural, and for many it is the comfort zone.

But “now” only works if it has been properly envisioned, thought about, decided and empowered. In other words, “now” only works if the strategy that led to it was well conceived and executed. Strategy. There’s that word again. So how can FM’s shift their mindset from tactical to strategic?

It’s all in the questions you ask.

Think of the strategic planning process as a funnel. When you start at the top the questions are open ended and broad in scope. Each hypothesis or conclusion then leads to a new set of questions, gradually increasing in detail as you work your way through the process. Finally, at the bottom of the funnel, you have very tightly constructed questions leading to very specific answers.

Importantly, strategic questions are big questions. They may focus on supporting corporate strategy, goals and objectives (alignment) or they may deal with the unknown (risk/opportunity management). What if revenue fell or increased 20% in a year? What is FM likely to be required to do in response? What could we do instead that would be more beneficial, given the chance? How would we recognize the situation in advance and begin to prepare ourselves? How could we most effectively communicate these options? How would this situation affect critical alliances? What do I need to do at each phase of a crisis? How will I recognize one phase from another?

Timing is important also. Being strategic is about being ahead of the curve, anticipating possible events or trends and thinking in advance how to take best advantage of the opportunities they present.

There are a number of tools available of course and you should expect to use many of them. Decision trees, risk analyses, SWOT analysis and a host of others will become your friends, and good friends they are. They bring clarity amid ambiguity and lead you to the bottom of the funnel. And they all start with the questions you ask.

Think strategic. Think big picture. Anticipate, question, analyze. Then communicate - share the process and wisdom.