North America & Europe – Wins for Investors

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North America and Europe Are Wins for Global CRE Investors
Given the reports of rapid growth in Asia Pacific markets, it might seem that commercial real estate (CRE) investments would follow suit. Not true, according to a study by real estate services company JLL. Instead, it’s major North American and European cities that are attracting global investors.

As Chris Fossick, managing director of JLL’s Singapore and Southeast Asia activities, notes in an interview with CNBC, Asian markets are seeing solid activity, but “are not as mature as the European and the American markets when it comes to direct real estate investment into the commercial sector proportionate to their economies.”

JLL’s most recent Investment Intensity Index examined the direct CRE investment of various cities relative to their GDPs. Oslo is now topping the list, with London second. Other areas in the top 12 include Munich, Edinburgh, Silicon Valley, Sydney, New York City and Paris. Of the top 30, only two Asian markets made the list: Hong Kong was 28th and Tokyo, 30th.

Security matters

Why are global investors leery of Asian markets? Fossick suggests that a low level of transparency, political risks, and other national uncertainties may be partly responsible. Global CRE investors like predictability, and the more mature North American and European markets also offer low-interest-rate environments, with higher levels of savings available as well as local economic opportunities. Says Fossick, “Commercial real estate yields (are) attractive for institutional investors in these regions.”

The takeaway: North American and European markets remain, for the moment, win-wins for CRE investors.

GIGO Is Impacting Decision Making – and Not in a Good Way
Big Data

Some decision makers will talk the talk about leveraging data to increase revenue and better serve their customers. But when it comes to walking the walk, they stumble.

Although the data ecosystem has spawned a dictionary of buzzwords such as “predictive analytics,” “Hadoop,” and even the term “Big Data” itself, many remain skeptical about the quality behind the buzzwords. It’s the GIGO syndrome – Garbage In, Garbage Out – and it’s affecting businesses both small and large.

In a study of more than 1,400 data professionals, conducted by information services company Experian, 84% of US respondents say Big Data is essential to successfully executing their business strategies.

But while they recognize the power of data, they lack confidence in their own information; the study noted that businesses believe 27% of their data is inaccurate.

To be reliable and valid, data input must be complete and linked across all input sources, as well as accurate, consistent, and timely.

Unfortunately, many businesses are hampered by legacy data collection methods or siloed corporate structures that undermine the confidence in the quality of the data they collect.

Obviously, conclusions based on faulty data are useless or even misleading, so strategists are reluctant to base new initiatives, fiscal decisions, or significant operating changes solely on their own data.

However, even with data of proven quality, many still rely on educated guesses or gut feelings when making critical decisions or planning future strategies.

The result: The GIGO syndrome is slowing or eliminating many business growth opportunities, and with that, success.

Desperately Seeking Leaders … for Today and Tomorrow
Young People Leaders

Real leadership requires two things: a vision of what’s possible, and a talent for motivating others to make that vision a reality.

But how do we recognize leadership when we see it? And more important, how can we build those all-important leaders of tomorrow, today?

In a recent Entrepreneur article, writer Nicolas Cole describes leadership as a set of steady-state personality traits: “It’s not something you choose to be one minute and then choose not to be the next.”

Cole believes leaders know what they don’t know, which inspires them to be good listeners, smart thinkers, and conscientious seekers of information. As he tells us, a leader doesn’t want to be the smartest person in the room; leaders prefer to surround themselves with those who are experts in their fields.

Cole identifies nine behaviors of real leaders, ranging from never acting on the spur of the moment to always doing what needs to be done to making criticism constructive rather than negative.

Of course, some of these behaviors are innate. But business leaders hope they are teachable, too. In an article for People Matters titled “Creating Tomorrow’s Leaders,” author Guillaume Gevrey describes the latest approach to building tomorrow’s leaders: “(Companies) are now looking at creating leadership incubators to impart the required leadership and management skills… . Leadership incubators, also popularly known as greenhouse (programs), are based on action learning.”

Convinced that action learning is the essential ingredient required for creating tomorrow’s leaders, Gevrey adds: “For participants, it is a more engaging way to develop critical skills that they will need as they grow in the organization but also a sign that their leadership trusts them to solve mission-critical problems.”

Positively visionary!

Rewards of Investing in the Multifamily Sector
A confluence of factors point to the fact that multifamily properties may outperform many other sectors of commercial real estate (CRE) this year. And this is good news to real estate investors across North America.

While a growing economy may help boost other CRE sectors, the multifamily sector is expected to benefit to the greatest extent, thanks to a severe imbalance of demand and supply in a number of residential markets across the country.

According to the National Association of Realtors (NAR) February 2017 quarterly CRE forecast, “The apartment sector is expected to preserve its status as a top performer this year simply because ongoing supply and affordability challenges are keeping the nation’s low homeownership rate from seeing meaningful improvement.”

As NAR chief economist Lawrence Yun points out, “Especially in the costliest metro areas, higher home prices and mortgage rates are squeezing the budget for many renters looking to buy.”

Yun adds, “Realtors are increasingly citing inventory shortages as their top concern as the pace of new projects slows in large cities and [as] middle-tier and smaller markets see a growing appetite for space.”

Over the past decade, few purpose-built rental buildings have been constructed or even planned. Rental apartments, however attractive, were considered the “poor relative” of the residential housing sector.

That was then; this is now. In addition to attracting disappointed wannabe buyers priced out of single-family housing in many markets, rentals are now drawing downsizing baby boomers as well as many urban millennials – both of whom genuinely prefer to rent rather than own.

Now, as the economy begins to improve, developers are beginning to ramp up. And as far as investors are concerned, new rental projects may well provide a solid yield.

Why? According to recent statistics, rental households represented 37%, and rentals are responsible for all the housing growth in the United States since 2005.

Another reason why industry insiders are bullish on investing in multifamily housing is the relative ease of obtaining financing for these properties. They are widely recognized by lenders as having consistent monthly cash flow, which makes them a better risk for the lender than other types of properties.

Increasingly, the apartment sector has displayed a strong track record of risk-adjusted returns while also adding to the diversification of investors’ portfolios, suggests the National MultiHousing Council (MHC). Investors have considerable choice as to the nature and location of buildings, as well as flexibility, since leases are shorter than in many other sectors of CRE.

As a Business Insider article points out, multifamily properties are also well suited to becoming retirement homes in the future, which, with millions of baby boomers retiring annually, provides an investment with legs and solid demographic support.

Until recently, rental properties were undervalued in real estate portfolios. But you don’t have to look far to see the benefits of investing a portion of your portfolio in multifamily properties for at least the near future.

SA Realty Watch Group
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Worth Reading
Exactly How to Spend the Last Hour of Your Workday
By Larry Alton
Fast Company

When your workload is lighter than usual, or you’ve lost focus, the end of your day can seem endless. You can’t sit and do nothing, and anyway, you don’t want to look like a slacker. The answer is soft projects – simple activities that don’t demand serious concentration but fill the final workday hour productively. Don’t fritter away that last hour. Follow Alton’s list of sixty-minute tasks, and wrap up every day of the week usefully.

Lost Your Biggest Customer? Here’s Your Survival Plan
By Helaine Olen

Losing a major customer can be devastating – especially if you rely on one or two clients for the lion’s share of revenue. But times change and customers leave; as Olen notes, “There’s only so much you can do to protect those relationships.” Fortunately, there are things you can do to prevent a crisis if your biggest client goes.

Seven Steps to Winning New Customers
By Tallat Mahmood

The best response to losing a big customer? Win more customers. Mahmood notes that a continuous and reliable flow of new customers is essential to the success and longevity of your business. And while there are endless possibilities for finding and enticing new clients, some are more costly and less effective than others. Mahmood cuts to the chase with seven simple steps.

SMBs Can Benefit from Big Data
Do your eyes glaze over when looking at piles of data? Do you believe analytics are only for big businesses? Surprise! Big Data is for small businesses, too. And if you’re not using it to your advantage, you may be missing out. The links below can help you discover the implications and applications of Big Data for your SMB:

Big Data can boost your bottom line. Try these tips:
7 Ways To Leverage Your Small Business Data For Enhanced Revenues

Big Data isn’t only for big businesses. Consider its importance for smaller businesses:
Making Big Data User Friendly For Small Businesses

Not sure how to use Big Data in your small business? Here are some additional ideas:
6 Clever Ways Small Businesses Can Use Big Data

To truly benefit from Big Data, you have to move beyond simple data collection to true analytics. Here’s how:
This Is How You Move From Reporting Into Serious Data Analytics

There are several systems that can help you get started. Try one of these:
8 Big Data Solutions for Small Businesses

This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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