A recent visit by Angela Choi (Deloitte) to my market analysis class provoked me to reconsider the ways in which a building could add value to businesses using that building. Old style thinking emphasized that a business needs to locate somewhere and that real estate expenses were best if lowered. That made sense when a building was basically a box. Innovations in information technology has some people talking about “cognitive buildings” and people like Angela talking about disruption in the real estate industry.
Congratulations to the REH team from the University of Guelph which won Ryerson’s EYE Competition: Hillary Hetherington, Conrad Hilgendag, Stefanie Kaminski and Sasha Somjen.
Case competitions are something new since I was an undergraduate student. The team was given an address and a week to put together a proposal about the highest and best use. In this case, the “Stone Group” proposed that 20 Valleywood Drive in Markham be redeveloped into a six-storey mixed use office complex.
Case competitions are nerve-racking because Continue reading
Last week, I attended an interesting breakfast meeting which launched a new book. If you are new to the commercial real estate business, I encourage you to read it: it is published by REALpac and is an updated version of their most popular publication. This comprehensive resource will be useful as you discover your position within the industry. (Full disclosure: I will not get a commission for saying such nice things.)
As with most meetings, the most stimulating part is not what was listed on the official program but what happened during the conversations. I was fascinated by a conversation on literacy and the challenges it poses for everybody. Continue reading
Was the Ontario government’s Speech from the Throne useful? The media certainly seemed to like the idea that the government was planning to give a rebate on electricity prices. It will make consumers happy, regardless of whether that consumer is a single parent struggling to raise children or a large property owner (where a 1 percent change could mean millions of dollars). But what does it all mean?
It should be obvious that the rebate policy is reversing some of the effects of other government policies. It is also true that the rebate will affect the government’s finances, and its deficit. Therefore, to some extent, the new policy is a bit of misdirection: the problems remain but in a new disguise.
If you think about it, prices are a means to an end. There are more important concerns. Continue reading
Failure is not fun. We think about failure, mostly to prevent it from happening.
In real estate, the solution often seems to be “be lucky”. Regardless of whether they were smart or stupid, people who invested in real estate for the last decade or so have made a lot of money. They benefited from a rising tide.
That cannot continue forever. I say this knowing that a surprising number of people think that the rules of supply and demand which apply everywhere else do not apply to real estate. For various reasons, the real estate market tends to experience endogenous cycles, where everybody agrees on a trend and the trend changes because people act on that agreement. I do not know when prices will start to fall, although somebody once told me that it would start on a Thursday. Continue reading
People in other parts of the world are looking at Canadian property and seeing that it is a good deal. Canadians are looking at properties in other countries and seeing good deals. A headline in Fortune stated “These Canadians Own Your Town”. Welcome to the new reality of real estate.
This idea is not new news to the leaders in the business. Continue reading
One of the lessons which all students are supposed to learn from their Intro to Marketing class is that successful sellers satisfy the needs and wants of their customers. The proof that this lesson is not obvious can be seen in the formerly successful companies which stumble (e.g. car companies, airlines, Starbucks or everybody) and then apologize for forgetting the “obvious”.
This lesson is also important for students and practitioners of real estate because there is so much to learn about the other side of a market. Many people think that “build it and they will come” is the secret to being successful in the real estate business. That thought is wrong on many levels, including the fact that many real estate professionals are employed by tenants. Continue reading
Lots of people talk about it but few people can walk the talk. Especially in discussions of sustainability and real estate, talk is cheap and buildings aren’t. Students in one of our classes recently met some people who are walking the talk in a big way; touring some operating office buildings and buildings under construction in Toronto and Mississauga enabled students to learn about the greening of commercial real estate from industry leaders. Continue reading
A common topic of conversation these days in certain real estate circles is the amount of office space needed. The evolution from an office with fixed walls to a set of cubicles to an open floor concept to tele-commuting and “hoteling” to … shows a trend. But how far can it continue? And, to find its realistic prospects, what are its costs?
A recent Doc Zone documentary on CBC offers some insights. While funny and occasionally insightful, it does a better job of raising questions than giving clear and powerful answers (e.g. notice the “brain porn” (a.k.a. neuroscience) near minute 25). Continue reading