I've always been a fan of the word "exploit." Others will say it is negative, but in my lexicon it is a very positive word. Sort of like synergy. And similar in a sense.
Synergy takes the best attributes of two items or services, combines them to make something even more powerful. Another name, actually, for heterosis -- an old term from plant and animal agriculture.
But I digress ....
Exploiting a problem is coming up with a solution that no one has thought of. Exploiting new technology is forward thinking, progress (no, this isn't political) in the application of new tools to solve problems. Exploiting new ideas? It simply means you got there first.
So the hotel industry recently has latched onto social media in a BIG way. So much so, in fact, that a number of chains are not using their websites so much to push lodging specials. Oh sure, they still promote their many locations regionally, nationally or globally, using it as a central communications portal.
But ... the real action is now found on Facebook and Twitter. Hotels are pushing special deals, promotions, packages with airfare and auto rental, and "limited-window-of-opportunity-to-book" getaways via these tools. Think auto rental, when you book over the phone or online and a CSR or online window informs you, "hey, because you are booking now, you get a free upgrade to a larger car!" Specials just come and go depending on the time.
Hospitality groups are using social media to offer various incentives -- offers that constantly change and come and go -- to build excitement among their customers, with the goal being to entice repeat lodging stays.
For the more technologically savvy, often higher-end hotel chains, "Liking" one of their Facebook sites may get you entered into special drawings for free night's lodging, or t-shirts, or discounts. "Share" or "Retweet" a site or offer on Facebook or Twitter and you may get more. Viral marketing on a global scale.
Business Insider notes that a number of forward-looking hotel groups are linking their intimate knowledge of what existing customers like with bleeding-edge tech. Says one such operator, "Web strategy is only a part of what makes the company industry leaders. First and foremost, we have a keen understanding of what our customers like because we focus on so many different aspects and touch points on service. We firmly believe that there's nothing easier than to keep an existing customer relationship than building a new one."
Lessons many businesses can use. As well as investors and managers of, say, in multifamily projects. In fact, savvy multi-unit housing operators are using Twitter and Facebook to promote community events, help with resident retention, promote special events -- all of which encourage a sense of excitement and opportunity.
For operators of hotels and apartment communities, that spells repeat visits, and lease renewals, respectively.
Thursday, May 17, 2012
Tuesday, May 15, 2012
Commercial Real Estate Is Our Economy's Foundation
There are concerns at the national level that in the zeal to raise revenue, the first place certain factions in Washington always look is to increase taxes or eliminate tax deductions. "Loopholes," as the uninformed will often call them.
But right now, as capital continues to only dribble in for availability for commercial real estate acquisitions, increasingly there are calls for Congress to "do something." Frankly, when that happens, that is one damn scary proposition. Because, often, in that same zeal to be "seen" as "doing something," real damage is done, with scads of unforseen unintended consequences.
IMHO, banks are -- largely -- being unfairly blamed for the slow trickle of capital available for CRE acquisition. The same reasons that businesses aren't hiring (do NOT believe the stats coming out of the Department of Labor; they are revised downward every month after an initial splash) is because regulations coming out of Washington DC are a moving target.
No business can efficiently create a business plan for a 24 month cycle because of the byzantine number -- and nature -- of new regs that continue to be piled on. Its no wonder private enterprise is stagnant. Corporate officers -- who have a legal, fiduciary duty to their shareholders (many of which are unions, pension funds, public employee retirement funds, mutual funds, individual investors, etc.) -- are unwilling to take risk to grow or expand their businesses because they may be penalized next month, or next year, for that same growth. For making acceptable business decisions today that might be viewed by overzealous bureaucrats, who frequently don't understand capitalism let alone know how to spell it, as "unfair."
But in our commercial real estate world, there need to be concerted efforts to significantly increase the flow of capital. Why? Commercial Real Estate is the foundation upon which much, if not all, of our economy rests. How, you ask? Consider the following:
- Without land development, there are no new housing developments to employ construction workers, architects and drywallers.
- Without land development, there are no new retail, office or industrial buildings being built -- all of which employee people in new construction, but later, in product distribution, business, and consumer retail opportunities.
- Without office, industrial, multifamily and retail development, it is more difficult for businesses and individuals to locate in areas convenient for their work or family needs.
- Without commercial real estate investors and business entities having access to the capital to fund acquisitions, it is more difficult for businesses to grow and expand.....
Shall I go on?
A part of me says Washington needs to do something. And yet, I shudder at the thought of those very words. What Washington really needs to do -- and this is what separates statesmen from politicians -- is to GET OUT OF THE WAY. Knock off the senseless nanny-state reg passage.
Only then will we see a loosening of capital, and natural, market-driven stimulus.
My two cents ....
But right now, as capital continues to only dribble in for availability for commercial real estate acquisitions, increasingly there are calls for Congress to "do something." Frankly, when that happens, that is one damn scary proposition. Because, often, in that same zeal to be "seen" as "doing something," real damage is done, with scads of unforseen unintended consequences.
IMHO, banks are -- largely -- being unfairly blamed for the slow trickle of capital available for CRE acquisition. The same reasons that businesses aren't hiring (do NOT believe the stats coming out of the Department of Labor; they are revised downward every month after an initial splash) is because regulations coming out of Washington DC are a moving target.
No business can efficiently create a business plan for a 24 month cycle because of the byzantine number -- and nature -- of new regs that continue to be piled on. Its no wonder private enterprise is stagnant. Corporate officers -- who have a legal, fiduciary duty to their shareholders (many of which are unions, pension funds, public employee retirement funds, mutual funds, individual investors, etc.) -- are unwilling to take risk to grow or expand their businesses because they may be penalized next month, or next year, for that same growth. For making acceptable business decisions today that might be viewed by overzealous bureaucrats, who frequently don't understand capitalism let alone know how to spell it, as "unfair."
But in our commercial real estate world, there need to be concerted efforts to significantly increase the flow of capital. Why? Commercial Real Estate is the foundation upon which much, if not all, of our economy rests. How, you ask? Consider the following:
- Without land development, there are no new housing developments to employ construction workers, architects and drywallers.
- Without land development, there are no new retail, office or industrial buildings being built -- all of which employee people in new construction, but later, in product distribution, business, and consumer retail opportunities.
- Without office, industrial, multifamily and retail development, it is more difficult for businesses and individuals to locate in areas convenient for their work or family needs.
- Without commercial real estate investors and business entities having access to the capital to fund acquisitions, it is more difficult for businesses to grow and expand.....
Shall I go on?
A part of me says Washington needs to do something. And yet, I shudder at the thought of those very words. What Washington really needs to do -- and this is what separates statesmen from politicians -- is to GET OUT OF THE WAY. Knock off the senseless nanny-state reg passage.
Only then will we see a loosening of capital, and natural, market-driven stimulus.
My two cents ....
Wednesday, May 2, 2012
Tax Court Blesses Tax-Free Technique For Parents To Transfer Family Business, Wealth To Their Children
Paul Caron, a law professor at the University of Cincinnati who edits the TaxProf Blog, has a great piece out this week. Its not real estate related, but concerns passing wealth onto heirs. And that often includes commercial real estate.
Specifically, Caron notes that the U.S. Tax Court has essentially blessed a technique for parents to transfer a closely held business or assets to their children with a mnimum of taxes of complications. The ruling in the case, Wandry v Commissioner, says Caron, is stirring up excitement among experts.
In his blog, he quotes David Kautter, a director of American University's Kogod Tax Center, as saying the ruling is a "landmark decision, becuase it allows tax-free ownership transfers from one generation with certaintyand in an orderly manner.
Currently, our system imposes a gift tax up to 35 percent when taxpayers give assets away, with exceptions. In the Wandry case, Dean and Joanne Wandry, a Colorado couple, each gave units in a family owned limited liability company worth $1.099 million to their heirs in 2004. To avoid paying tas, they specified the gifts should equal the dollar value of their exemtions. At the time, the lifetime exemption was $1 million and the annual exclusion $11,000.
There was a gift. And their was a professional appraisal. The Internal Revenue Service challenged the appraisal after the gift. In the Wandry case, the value rose approximately 20 percent above the exemption after the gift.
The IRS lost its case because the judge held the couple intended to make a gift equal to their exemptions, so any excess was never actually given by then. And no tax was due.
I make no claims, real or implied, as I am neither a tax adviser nor an attorney. But as a commercial real estate practitioner, I find this to be a fascinating and insightful article, especially for those business owners and wealthy families with family limited partnersships, who want to pass wealth or that closely held family business to their heirs.
Read it and pass it on.
Specifically, Caron notes that the U.S. Tax Court has essentially blessed a technique for parents to transfer a closely held business or assets to their children with a mnimum of taxes of complications. The ruling in the case, Wandry v Commissioner, says Caron, is stirring up excitement among experts.
In his blog, he quotes David Kautter, a director of American University's Kogod Tax Center, as saying the ruling is a "landmark decision, becuase it allows tax-free ownership transfers from one generation with certaintyand in an orderly manner.
Currently, our system imposes a gift tax up to 35 percent when taxpayers give assets away, with exceptions. In the Wandry case, Dean and Joanne Wandry, a Colorado couple, each gave units in a family owned limited liability company worth $1.099 million to their heirs in 2004. To avoid paying tas, they specified the gifts should equal the dollar value of their exemtions. At the time, the lifetime exemption was $1 million and the annual exclusion $11,000.
There was a gift. And their was a professional appraisal. The Internal Revenue Service challenged the appraisal after the gift. In the Wandry case, the value rose approximately 20 percent above the exemption after the gift.
The IRS lost its case because the judge held the couple intended to make a gift equal to their exemptions, so any excess was never actually given by then. And no tax was due.
I make no claims, real or implied, as I am neither a tax adviser nor an attorney. But as a commercial real estate practitioner, I find this to be a fascinating and insightful article, especially for those business owners and wealthy families with family limited partnersships, who want to pass wealth or that closely held family business to their heirs.
Read it and pass it on.
Tuesday, May 1, 2012
PLEASE Be Accurate
Message to my non-office industry colleagues, especially the occasional residential agents dabbling in CRE.
- PLEASE don't list a For Lease property as having no CAM or additional charges beyond rent, then show that it as a Double Net opportunity.
- PLEASE don't tally the combined number of years left on tenant leases in a retail center (two years for Business A, one year for Business B, five years for Business C, etc.), then advertise that there are eight years left on the lease.
- PLEASE don't show a downtown medical office space as being adjacent to the university medical center . . . which is five-plus miles away.
Look, we all make mistakes from time to time. And yes, there is a learning curve if you are new. But continual carelessness leads this author -- and most experienced investment specialists -- to seriously question with whom I want to work. If I think your information is chronically suspect, I likely won't even look at it when searching for properties my investors or tenant rep clients require.
Thus endeth the rant. Thank you.
- PLEASE don't list a For Lease property as having no CAM or additional charges beyond rent, then show that it as a Double Net opportunity.
- PLEASE don't tally the combined number of years left on tenant leases in a retail center (two years for Business A, one year for Business B, five years for Business C, etc.), then advertise that there are eight years left on the lease.
- PLEASE don't show a downtown medical office space as being adjacent to the university medical center . . . which is five-plus miles away.
Look, we all make mistakes from time to time. And yes, there is a learning curve if you are new. But continual carelessness leads this author -- and most experienced investment specialists -- to seriously question with whom I want to work. If I think your information is chronically suspect, I likely won't even look at it when searching for properties my investors or tenant rep clients require.
Thus endeth the rant. Thank you.
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