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.

http://www.zacks.com/stock/news/25189/Jones+Lang:+CRE+Boom+Next+Decade

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 http://www.nytimes.com/2009/09/16/opinion/16friedman.html?

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.

Influence: The Capital of Leadership

This article is taken from archives and goes back nearly twenty years. It’s premise, however, remains valid today. Influence pays long term dividends. The article has been updated only to add a more recent historical reference.

Today’s volatile capital markets are affecting us all. We listen daily to market reports to determine what has happened during the trading day - and lately that has been a lot! There have been large swings up and down. A six hundred-point drop in one day sends commentators spinning into a spiral of “what ifs?” and each of us is forced to re-evaluate our investment strategy. Then a quick resurgence settles nerves, we blink, and go on about our lives. Yet, in the background, there is a recognition that things aren’t like they used to be, and probably never will be. The world’s capital markets are re-defining themselves and we are along for the ride.

Each of us, however, possesses another kind of capital. We spend it, give it, receive it, and collect interest on it everyday. It is the Influence we possess - our ability to have an impact and make a difference in the world and lives around us. And in this case, we choose on a moment-by-moment basis where and how it is invested.

My guess is that most of us have little idea of the amount of influence we carry. I recently received an e-mail, one of those great stories that make you stop and think. It was about a very simple act of kindness and the life-saving, life-changing impact it had - all of which was unknown to the person performing the act. In this particular true story, a young man was a student at a new high school where he simply did not fit in. Teasing, intimidation and mockery were his daily diet. Alone in a new school and not able to make friends, he was miserable. Walking home one day he dropped his books. Another young man saw this, crossed the street and offered to help. Assisting his new acquaintance he helped the boy home. Over time the acquaintance became a deep friendship. Years later this young man sat at his high school graduation ceremony listening to the Valedictorian, the boy he had helped that day, describe the impact of friendship on his life. He was stunned to learn that on that fateful day his friend was walking home with the intent of committing suicide. This class Valedictorian, captain of the baseball team and honor student had been in such despair that he was about to do the unthinkable until a simple act of kindness changed his course.

The point of this story? The boy who performed the act of kindness had no idea of the dire circumstance that was playing out, yet his action though casual and unplanned had an enormous impact. In short, he was unaware of the influence he was having. I think the same can be said for most of us. Here are a few simple thoughts on Influence for you to consider:

Everyone Influences Someone: At every level of our lives we are in constant contact and interaction with others. Even the most introverted person cannot escape the reality that they personally influence thousands of people. But beyond casual influence, there is a purposeful influence that is a key to leadership. This kind of influence is thought out and implemented by design, not haphazardly. Its motivating desire is to help shape the thoughts, development and character of those being influenced.

We Seldom Know Whom or How Much We Influence: Although these questions are generational, you can ask them of people and get immediate emotional responses: Where were you when Pearl Harbor was attacked? Where were you when President Kennedy was assassinated? Where were you when the Challenger exploded? Where were you on 9/11? Those were big events; we expect them to be indelibly written in our hearts. But there are in each of our lives a host of smaller, character-building, career-enhancing and life-defining moments and relationships that the entire world doesn’t know about. In my own life I think instantly of a high school teacher, a friend of my parent’s, a fellow aircrew member, and a mentor in my professional career. Each of these has left a mark on my life that will never be erased – none of them set out purposefully to do so.

The Best Investment in the Future is a Proper Influence Today: The question is never whether you will influence someone, rather it is twofold: Who will you influence, and who will you allow to influence you? I count myself fortunate to have had mentors who decided to invest themselves in my life and career. It is a partnership, and not always an easy or comfortable one. This investment runs in both directions, unable to be given if the intended receiver is unwilling. An appropriate challenge to each of us is to consciously think about whom it is that we wish to be influenced by in our professional career. Who is it that models the professional development and character that you wish to attain? How can your relationship with that person be strengthened so that you can closely observe how they have obtained and share their influence, and be in a position to gain from their experience?

Influence Is a Skill That Can Be Developed: Yes, there is hope! Leadership and Influence are inexorably linked, you cannot have one without the other. Fortunately both are learned skills. There is no course or class, no diploma to mark your passing to a “position of influence.” It is one result of your experiences as you think about, envision, plan, and live the life you choose. Your career will bring success and success will bring recognition. With recognition comes the opportunity for influence on a wider scale. Do you know what your personal “Influence Quotient” is? Do you know where you need development in order to gain more influence? Do you know how to exercise your influence? Have you engaged in an influence development partnership, either as a mentor or the one being mentored?

Financial markets will fluctuate on a day-to-day basis and the value of the capital invested in them will vary greatly. But the investment decisions we make with our “Influence Capital” are under our direct control, captive to no one else. What we do with them will go far in defining the quality of our lives and our leadership.

“Influence.” We all have it. How are you investing yours?

Most Companies Not Prepared for Lease Accounting Rule Changes

Although timing of accounting changes has not been resolved yet and likely remains several years away, the impact of the changes to corporate balance sheets will be significant. A recent survey jointly conducted by Jones Lang LaSalle and CoreNet Global indicates that 99% of respondents have not yet evaluated the impact of proposed changes on their balance sheets and P&L statements. Twenty-three percent said they were not even aware of the changes.

See http://www.globest.com/news/1478_1478/insider/180564-1.html for more information.