Social Media and Commercial Real Estate: Strategies to Grow Your Business and Build Your Brand
Social media has created a momentous shift in how we communicate with one another. It has become the great digital equalizer; small and large companies alike can build their brands, expand their businesses and connect with their clients online via social media outlets.
To understand social media, one must understand how communication has changed. Traditional marketing involved identifying a target market, crafting a compelling message and “pushing” it out via channels that would reach a specific audience. Typical strategies included advertising, commercials, brochures, direct mail, billboards, flyers and even websites. Social media has changed this dynamic. Now consumes have a public voice. Did you have a bad experience at a restaurant? Complain about it on Yelp. Do you love a certain athletic brand? Share your passion on Facebook or Instagram. Clients, colleagues and employees can become your biggest advocates or your greatest critics.
Another dynamic occurring today the overload of marketing messaging online and the need for compelling, relevant content. Consumers are inundated with an excess of unsolicited marketing messages, and commercial real estate professionals are no exception. When asked if they get too many emails, most say “yes”. Consumers now have the power to say “no” through action: they can unsubscribe from e-blasts, skip TV commercials using TiVo or a DVR, or avoid radio commercials by subscribing to satellite radio.
More Pulling, Less Pushing
Brands now must figure out how to “pull” clients and consumers to relevant content. Users who are interested in a company or a brand can subscribe to its e-blasts, read its blog, “friend” it on Facebook, follow it on Twitter and so forth. The brand’s content thus is “pulling” fans toward it rather than “pushing” marketing messages to them. The challenge for companies is to produce relevant, interesting content that their clients find useful, not more marketing messages.
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By: Ruth Brajevich (Commercial Real Estate Development Magazine)
Archives for February 2014
Career Tracks: How are Commercial Real Estate Companies Staffing for the Future?
Building upon cautious optimism in the U.S. institutional real estate sector, the market for human capital is recovering, and the outlook calls for momentum to continue in the year ahead. This projected uptick in hiring follows a modest increase in real estate executive searches in 2013, reflecting slow and steady improvements in property fundamentals and overall valuations.
As the new year commences, executive-level commercial real estate hiring will remain favorable as the majority of investment managers expect to continue to growing their organizations. Approximately 71 percent of the 61 U.S. firms surveyed in the 2013 NAREIM/FPL Global Management Survey expect their headcount to grow, while 17 percent expect no change. Only 12 percent of firms anticipate a decline in employees.
Commercial real estate companies staffing levels increased by approximately 4 percent at median in 2012, although there was significant variance from firm to firm. Firms that performed in the top 10 percent and 2 percent increased headcount by 27 percent and 13 percent respectively, whereas firms in the bottom 75 percent and 90 percent reduced headcount by 2 percent and 14 percent respectively. Interestingly, large firms grew their organizations by the same amount percentage-wise as their small and mid-size counterparts. Although this may seem counterintuitive, it makes sense when considering the trend toward concentration of capital among establishing firms. The growing demand for human capital reflects a shift in general sentiment, which has gradually turned positive over the last five years.
Assets under management grew by approximately 11 percent at median in 2012, although once again, there was significant variance from firm to firm. With limited options for earning attractive yields in other asset classes, institutional investors increased their commitments to real estate vehicles by 23 percent through May 2013, with the top five REIMs accounting for more than 40 percent of these new commitments.
Despite the positive trends in 2013, the general sentiment was tempered somewhat by political and macroeconomic uncertainties, both domestically and abroad. Of particular concern is the future interest rate environment, as some believe that recent industry performance has been driven largely by cheap debt and historically large spreads between capitalization rates and bond yields.
Looking ahead, the REIM industry will benefit if macroeconomic indicators continue to improve, and investor interest in real estate accelerates. But not all firms, particularly among those in private equity, will benefit equally. Capital flows have been fairly predictable, shifting from distressed deals to core, and more recently, from core gradually up the risk spectrum to value-add, though it is unclear how enduring this trend will be. What does seem clear is that capital is becoming consolidated among a small number of successful managers, with performance and track record as the primary factors in fundraising.
Commercial real estate companies staffing levels increased by approximately 4 percent at median in 2012, although there was significant variance from firm to firm. Firms that performed in the top 10 percent and 2 percent increased headcount by 27 percent and 13 percent respectively, whereas firms in the bottom 75 percent and 90 percent reduced headcount by 2 percent and 14 percent respectively. Interestingly, large firms grew their organizations by the same amount percentage-wise as their small and mid-size counterparts. Although this may seem counterintuitive, it makes sense when considering the trend toward concentration of capital among establishing firms. The growing demand for human capital reflects a shift in general sentiment, which has gradually turned positive over the last five years.
Assets under management grew by approximately 11 percent at median in 2012, although once again, there was significant variance from firm to firm. With limited options for earning attractive yields in other asset classes, institutional investors increased their commitments to real estate vehicles by 23 percent through May 2013, with the top five REIMs accounting for more than 40 percent of these new commitments.
Despite the positive trends in 2013, the general sentiment was tempered somewhat by political and macroeconomic uncertainties, both domestically and abroad. Of particular concern is the future interest rate environment, as some believe that recent industry performance has been driven largely by cheap debt and historically large spreads between capitalization rates and bond yields.
Looking ahead, the REIM industry will benefit if macroeconomic indicators continue to improve, and investor interest in real estate accelerates. But not all firms, particularly among those in private equity, will benefit equally. Capital flows have been fairly predictable, shifting from distressed deals to core, and more recently, from core gradually up the risk spectrum to value-add, though it is unclear how enduring this trend will be. What does seem clear is that capital is becoming consolidated among a small number of successful managers, with performance and track record as the primary factors in fundraising.
REIT Hiring Remains Active
There are interesting recruiting and hiring trends emerging among real estate investment trusts, private equity firms, and operating companies. Our data shows hiring at the senior level to be more active than hiring at middle management and lower levels. Among public firms, mid-cap REITs that have recently gone public, or that may be considering an initial public offering as they head into 2014, have been active in searches. Also active are underperforming REITs that need to change the perception in the public market, and as a result, may be looking for new leadership. REIT hiring is expected to remain steady in the near term.
On the private side, the blue-chip, global institutional names continue to focus on succession opportunities. The continuity and stability of sponsor management teams and at the board level are important considerations for investors, given the long-term, illiquid nature of real estate investments. While succession planning has always been important, it has become even more so in recent years as an increasing number of industry leaders are near or past retirement age. To illustrate, approximately 25 percent of our clients had a top-five executive leave in 2012.
In addition to succession-related hires, a select group of up-and-coming managers, as well as best-in-class operations that are transitioning from a joint venture model to a fully-integrated investment platform, continue to make key hires as many of these firms raise follow-on funds. In demand are capital raisers who can source equity directly from pension funds, foundations, and endowments. Given the fact that most of these firms have closed-end funds in which capital deployment is critical, there is also a tremendous need for senior acquisitions professionals with a proven track record of acquiring deals directly rather than sourcing them exclusively through joint-venture partners.
The trend in acquiring real estate directly is being driven by downward pressure on management fees. As a result, these firms have become, effectively, an owner/operator rather than a capital allocator. Allocations for value-added funds have increased recently as investors slowly head out along the risk/reward spectrum. Going forward, acquisitions hires should continue to increase modestly in 2014 across all levels.
Although most of the REIM hiring trends met projections and expectations, the number of development-related hires, particularly in the retail sector, was an unexpected surprise. Looking ahead, a key trend to watch will be the likely substantial increase in merger and acquisition activity this year, reflecting the ability to drive scale on the private side. Lastly, organizations will also continue to rebuild their teams at the junior and middle management levels, which is simply a reflection of how much organizations “cut their core” following the economic meltdown. More than half of the clients surveyed in late 2012 expected to hire at the middle and junior levels, and more of the same is expected in 2014.
Compensation Structures Are Shifting
Turning to compensation, structures have changed modestly and are more weighted on firm profits and fund performance. With 71 percent of firms expecting to grow headcount as noted above, compensation at the C-suite level has been trending slightly upward. However, there is clearly more weighting on long-term equity rather than annual cash compensation, driven by pressure from limited partners. We expect this trend to continue over the next cycle.
In summary, cautious optimism and improving capital flows are creating increased demand for human capital across the real estate investment industry. Provided that these fundamentals remain positive, hiring trends should continue to build momentum in 2014, resulting in new hires at the top levels as well as in key, strategic positions.
Mark Momongan is a senior director at FPL Advisory Group, a global professional services firm that specializes in providing executive search, compensation, and management consulting solutions in real estate. Contact him at mmomongan@fergusonpartners.com.
Commercial Real Estate Employment Postings Show Uptick
The commercial real estate job market continued to grow, with 3Q13 job postings up 5.2 percent over the previous quarter and up 16.2 percent year over year, according to the Cornell University/SelectLeaders Job Barometer. “Recent interest rate hikes and the impending tapering of the Fed’s quantitative easing policy have not had a significant impact on the momentum in commercial real estate job postings,” says David Funk, director of Cornell University’s Baker Program in Real Estate. “We continue to see strong growth as the industry builds its bench.”
Development Continues to Dominate
The development sector continued to be a strong contributor to overall job postings in commercial real estate during the past year. Job postings from development firms reached 18 percent in 3Q13 — more than double the same period in 2012.
New opportunities are emerging in commercial real estate as the recovery continues. “Managing current assets led the recovery, but now as firms acquire and create new assets, we see opportunities in more categories and functions and sectors within our industry,” says Susan Philips, chief executive officer of SelectLeaders.
Asset management and investments firms accounted for the largest share of employment postings (23 percent) in 3Q13. In addition, the consulting and advisory services sector grew along with the finance sector.
Looking more closely at the specific functional area of the job postings, development roles continued to dominate in 2013. Overall, development roles, including project and construction management, have more than doubled over the last year and comprised nearly 10 percent of all postings in 3Q13, up from just 4 percent in 1Q12.
Other trends include a steady increase in financial analysis postings, which totaled 11 percent in 3Q13. This demand continues a trend that started in 2009 for financial analysis expertise in investment firms as well as at development companies. Asset management roles saw the largest decline in 3Q13 as the number of postings fell below 5 percent, a significant drop from the peak of 15.3 percent in 4Q11.
Industrial Jobs Lead Sector Growth
The biggest trend of 3Q13 was the strong growth in the industrial sector, which comprised nearly 12 percent of all job postings, beating out the number of retail sector postings for the quarter. Institutional investments in the single-family asset class continued to produce job growth in 2013, averaging 11 percent of postings over the first three quarters of the year. While this is down from the 4Q13 peak of 15.6 percent, a shift from acquisitions and financial analysis postings to more property management postings is occurring as the sector matures.
Multifamily, office, and single-family homes topped the list of job postings in 2013 and combined made up almost 50 percent of all postings for the year. Multifamily and banking have both seen significant declines since 2008, but the Job Barometer indicates that office has experienced tremendous growth, jumping from about 3 percent in 2008 to 20 percent in 2013. Industrial and retail postings have also seen substantial growth in the last year of 9 percent and 11 percent respectfully.
By: Mark Momongan (Commercial Investment Real Estate)
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Education Visionary
As the commercial real estate industry looks forward to the prospects of a new year, many industry pros believe a true rebound is finally on the horizon. To maximize the opportunities that come with a thriving real estate cycle, 2014 CCIM Institute President Karl Landreneau, CCIM, director of commercial sales and leasing for the New Orleans, Baton Rouge, Alexandria, and Lafayette, La., offices of NAI Latter & Blum, is focusing his efforts on maximizing the educational opportunities CCIM offers.
Landreneau, considered an education visionary, a CCIM instructor and an active leader in the commercial real estate sector for more than 16 years, has set his sights on broadening CCIM’s reach and creating a more robust educational experience. Commercial Investment Real Estate asked Landreneau to share his 2014 strategies.
CIRE: How are organizations using the CCIM education to equip their members with data-driven analysis skills?
Landreneau: I currently manage more than 80 active agents and approximately 85 percent of them are enrolled in CCIM’s education program or have already earned the designation. The training is so valuable that NAI is working to customize the CCIM education for delivery to franchisees throughout its vast network. And, companies are discovering that the CCIM education has value beyond the brokerage community. Corporations such as GE and Pricewaterhouse-Coopers have customized CCIM courses for their employee training and development programs. They understand that CCIM’s education is unique because our instructors are also practitioners. They don’t just teach theories; they show the real-world application of CCIM’s investment, financial, and market analysis concepts.
CIRE: What inspired you to pursue CCIM leadership opportunities and ultimately become president of the organization?
Landreneau: I believe that everyone needs to give back to their profession. As a student earning the designation, CCIM was the vehicle that allowed me to improve my skills, my education, and my network. As a member of the 2006 class of CCIM’s Jay W. Levine Leadership Development Academy, I gained professional leadership experience that benefited me not only within the Institute, but also within my company and the industry. Now it’s my turn to offer something back to the organization.
CIRE: What are some of your key initiatives for the year?
Landreneau: One of my top goals is to guide the process of integrating today’s most useful technology platforms with CCIM’s analysis tools to deliver a more sophisticated educational experience for today’s practitioners. CCIM’s STDB platform is one of the most valuable technologies available in the industry and merging its tools, along with other top technologies, into the designation curriculum helps to ensure members are getting the most out of their educational experience. It also enables them to use these tools to provide top-notch service to their clients.
I also applaud CCIM’s Ward Center for Real Estate Studies for its ability to create and deliver education that meets the rapidly changing needs of industry professionals. From learning how to use high-tech marketing strategies to creating solid valuations in a challenging market, the Ward Center’s one- and two-day online and classroom courses offer some of the most timely and relevant professional development education in the market.
Finally, I’d like to help the Institute develop an online knowledge repository that offers a wide range of resources for members. These resources may include industry thought leadership such as white papers, market data such as CCIM’s Quarterly Market Trends report, and videos that share select course concepts that are relevant in today’s market. A data bank of commercial real estate information will help to further establish CCIM as the industry’s top go-to resource.
CIRE: After the education, what else does CCIM offer its members?
Landreneau: The networking opportunities at the local, regional, and national levels are one of the most valuable aspects of CCIM membership. Getting involved with your local chapter and taking advantage of its events, networking sessions, and resources is a great way to expand your professional network. And, I encourage all designees to update their online member profile in CCIM’s Find a Professional database to ensure they can be found when industry pros are searching for CCIMs in their markets.
CIRE: Why did you pursue the CCIM pin?
Landreneau: As a commercial real estate practitioner in a competitive region of the country, I knew it was important to distinguish myself and gain a competitive advantage. I also knew the CCIM designation was the highest credential that stood for professionalism and expertise in the industry. I wanted to pursue the designation and give myself that distinctive advantage.
By: Jennifer Norbut (Commercial Investment Real Estate)
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February 2014 Commercial Market Trends
February 2014 Commercial Market Trends in New Mexico
View a New Mexico Market Trends Summary Report, which includes February 2014 Market Trends. This report includes total number of listings, asking lease rates, asking sales prices, days on the market and total square feet available.
Disclaimer: All statistics have been gathered from user-loaded listings and user-reported transactions. We have not verified accuracy and make no guarantees. By using the information, the user acknowledges that the data may contain errors or other nonconformities. Brokers should diligently and independently verify the specifics of the information you are using.
