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In this bright future you can’t forget your past.
Trends: Reflecting on the Past
As much as we focus on the day-to-day political and economic crises, we need to remember that it is trends that dictate how business operates and reacts. Trends are a way to remember the past and gauge what the future could hold. And when we closely examine Montgomery County, we are reminded that our county is a snapshot of global trends and global opportunities.
Let’s take a look at a few societal trends and an interesting development trend which could lead to very exciting opportunities for the right tenants and landlords in the region.
Societal Trends Impacting Commercial Real Estate
Lately, I have been reflecting on what is next in terms of the next big real estate trend—what is going to impact how businesses plan for their spaces and create performance driven environments. So let’s take a look at a couple of trends which impacted the commercial real estate industry.
January, 2009, ADA amendments and requirements took effect impacting the commercial real estate market. Owners and developers focused their attention to developing an inclusive office environment for all employees and create spaces where all would be welcome. Design and construction turned changes in elevation, curb ramps, elevators and restrooms. This changed the industry and had a lasting impact on how we design and plan for inclusiveness.
Recognizing and planning for those with disabilities changed how office leases were done, what amenities were important and all to create an inclusive environment and advance business.
Fast forward to another subset market trend—the green, energy-efficient building.
Commercial building owners and managers will invest an estimated $960 billion globally between now and 2023 on greening their existing built infrastructure. WOW….and to think the green building trend started in the late 90s.
Industry pioneer organizations like USGBC created industry standards to help guide building owners in creating efficient and healthier spaces. And the trend took off like wildfire across the region—from tinted glass windows, to low consuming water systems, to energy efficient HVAC systems—owners constructed building improvements and tenants expected green buildings.
“Millennials” may rank as one of the most-used words in the English language in recent months, but it’s for good reason. This generation, born roughly between 1980 and 2000, make up more than one-third of the U.S. population, making them easily the country’s largest demographic.
The millennial generation’s experience has been unique, thanks to the fact that it was the first to have lifelong access to the Internet. This fact, along with all of the connectivity that it implies, has profoundly affected the cohort’s attitudes and behaviors, and this, in turn has impacted our society to a tremendous extent.
Today’s workplace, with its rooftop terraces, gourmet coffee, comfortable lounges, bike racks, and meditation rooms can all be attributed to the millennial active needs and wants. It’s one of the many ways that this generation is impacting commercial real estate. Look at the recent transactions in the market—Marriott’s move to attract the millennial workforce—changes going on in the Bethesda market to cater to the millennials needs of creating a live, work, dine city.
So, what do these three trends tell us…focusing on one market subset catapults the industry. With ADA, we had an opportunity to revitalize buildings and accommodate; with the Green trend, we made our work spaces healthier, and millennials challenged how we design workplaces and the communities which surround those workplaces. I say that our past trends, and how they have been embraced, have only furthered the industry and created economic opportunities for all.
Neighborhood Trends: Developing the Hidden Gem
In our county, there are not too many neighborhoods left for development and growth opportunities. But there is one pioneer, Stephany Yu, who is leading the charge with redeveloping the Parklawn Drive corridor with state of the art facilities and buildings to house growing, forward-thinking organizations.
She and her company have done it before and I have faith that she is going to do it again. Past trends in the county, like the revitalization of Silver Spring, and the exciting activity surrounding Pike & Rose show that taking perceived under-used neighborhoods, and investing in those neighborhoods can lead to developing thriving economic centers. The Parklawn corridor could be the next development trend in the county.
Stephany is the founder and chairman of Greencourt Group, a real estate investment and development company that has developed over 30 million square feet of residential, commercial and retail properties. Greencourt currently owns and operates more than 1 million square feet of commercial property in Shanghai, and holds more than 20 million square feet of land reserve in China.
Recently, Greencourt expanded to Washington D.C. metro area with their first project on Parklawn Drive. The Greencourt Innovation Center capitalizes on the trend of creating environments where collaboration and the entrepreneurial spirit grow.
But what is interesting is what Stephany has planned for the Parklawn Corridor to transform that corridor into a thriving district where arts, business and living come together—creating excitement, new business opportunities and growth potential for the county.
If you are curious about this project, reach out to me and come tour the next up and coming neighborhood in Montgomery County.
As the White House slowly settles down, and with the recent release of President Trump’s budget blueprint, we are beginning to see a possible direction the new administration may be taking. Key word being possible.
But what about commercial real estate-what could be next? Here are a couple of things to consider:
Lower Taxes, Less Regulation, More Lending
From the beginning of his campaign, President Trump has been a supporter of lower corporate taxes, deregulating the government, and economic prosperity. We know that rapid economic growth means that the Federal Reserve will step in to temper the growth by raising interest rates. Raising interest rates in turn will put pressure on commercial real estate yield spreads, but could also encourage more bank lending.
Could higher interest rates and a healthier economy mean more lending by banks? The Trump administration’s executive order aimed at scaling back the Dodd-Frank Act, as well as his freeze on new or pending regulations means banks should be able to do business without worrying about new restrictions or penalties for the first time since the financial crisis. Higher interest rates should also make banks more willing to lend because loan spreads will be more attractive.
As the Economy Goes, So Goes Commercial Real Estate
Typically, that which is good for the economy is good for commercial real estate. The administration’s support for lower taxes and increased infrastructure spending should spur economic growth. Dubbed by some as the ‘Trump bump’, his policies are expected to encourage more bank lending and greater activity in the capital markets.
With the ‘Trump bump’ comes very irrational and combative dialogue from the White House. The American people have not seen such an outspoken and rash White House like we have seen since January. And that makes investors nervous. The protectionist stance the Trump Administration is taking on trade and immigration is raising investor’s concern about global economic growth. And when there is concern, it leads to “pause” of investor activity. With regards to commercial real estate, the heated debate around illegal immigration, as well as the high percentage of illegal immigrants in the construction industry, might exacerbate existing construction labor shortages. If the economy grows, demand for office buildings increase, will we be able to meet the need?
What Does the Future Hold?
I have hopes that commercial real estate will continue to maintain satisfactory growth in 2017. Our industry has been driven by solid fundamentals, historically low interest rates, good value and strong total returns. The real estate market has performed well without overheating. Prices are back to pre-crisis levels for most major property types but the pace of gains has eased as investors and developers have demonstrated more discipline. These factors have helped create a stable foundation for the market and point convincingly to continued sustainable growth.
Longer term, however, most investors are focused on whether the market is getting closer to the end of its current cycle and whether it is reaching a peak. With a very outspoken, and at time irrational President and the market’s solid foundation, we expect the near-term market to be strong but beyond that caution should be exercised based on historical economic and market cycles and if interest rates are significantly raised.
Finding the Value in the Market
Value can and will be able to be found in the commercial real estate market. We have been exploring alternative property types in Montgomery County. Assets that need repositioning is a perfect target for many current investment strategies. For example, vacant office parks that are converting to laboratory space could offer investors enticingly higher returns. Every investor wants to have the ability to select an investment that is tailored to their specific needs, requirements and control. We know of those options in the market. Contact us to hear more.
I believe the future could be bright for the commercial real estate industry—but we need to be informed, cautious and prepared.
And if you are thinking about getting into the market or have concerns about your current properties, give me a call. I would be happy to share what I know, and where the market could go.
The open houses for the Bus Rapid Transport (BRT) have begun in Montgomery County last week. Which means that slowly but surely BRT will be coming to our county—and it could not come faster in my opinion. BRT will help connect businesses, provide transportation options, and expand where organizations can recruit to further their growth.
How does Montgomery County remain competitive with markets like Boston? Sure, we are able to compete when it comes to an educated workforce, access to universities and colleges, and actual space for businesses to operate. We have the distinct advantage of direct access to the federal government and agencies. If you line up the pros and cons of both markets—the winning piece would be who can solve the transportation equation the smartest and the fastest.
In the recent weeks, the mayor of Boston released his transportation plan titled Go Boston 2030 which is intended to improve transportation within the city and address a multitude of existing transportation challenges. Read the article here.
So here is the deal—it is time Montgomery County moves quickly and efficiently in solving our transportation challenges. Ease of navigating the county roads, the ability for employees to access their workplace economically and efficiently is one of the biggest recruiting challenges for major corporations. If we do not begin to move forward with the BRT and other transportation options, we will continue to lose out to other major markets—especially frustrating to me and many others because this region is ripe for explosive growth.
Compensation is important for employees, but after an initial hire the source of motivation tends to shift. While financially rewarding high-performing employees is important, there are other ways to retain your best team members. Your company’s culture is critically important. As a leader, it’s up to you to how you define it. Here at Scheer Partners, we cultivate an enthusiastic, can-do attitude and believe anything is possible.
After 25 years in business, and having attracted and retained some amazing, top-level talent, we’re offering our top five ways to cultivate a ‘performance culture’:
Sure, you can offer ancillary benefits like extra life insurance, additional health benefits like vision or dental, or even gym memberships. Or, you could go the extra mile and tailor incentives for each employee. For example, did someone recently get married? An extra week vacation could provide the time needed for a honeymoon.
No one likes to feel stuck. Research shows that employees who don’t feel like your company offers attractive career opportunities tend to leave. Make sure you have regular career planning discussions, then ensure your employees know about opportunities within your company.
There’s an old saying that someone who feels appreciated will always do more than expected. Achievement and recognition are high motivators, so take the time to publicly recognize and reward employees. Simple things like a prime parking space, a new title or even an extra day off can go a long way.
Set a good example for your team – and, set the tone. Never underestimate the power of walking into the office with a smile, and remembering to say ‘thank you.’ Employees rarely leave solely over money – often, it’s because they don’t like their boss. Having a positive work culture helps a lot, and encourages teamwork and communication.
Benefits like clear and frequent communication with your team make all the difference in employee happiness. Keep your team informed on company happenings and big-picture direction. And don’t forget two-way communication – offer opportunities for feedback, idea sharing and collaborative conversation.
At Scheer Partners, it’s important for us to create an environment that cultivates performance among our team and we try to incorporate all these ideas into our culture. That philosophy guided our recent office move which incorporated many features to improve the work environment for our team. If you’re looking for new space, please contact us.
“I did not vote for Donald Trump.” – My Nov. 9 blog post
After writing a brief post on our presidential election, I had several people ask why I took a public stance on a controversial issue. Historically, CEOs don’t often weigh in on national issues, but that has changed.
Recently, CEOs have publicly engaged in social activism and are taking positions to a greater extent than ever before. Yes, taking a stance poses risks, but it also offers advantages. Speaking to the values of the company you lead – authentically, relevantly and thoughtfully, can actually reinforce brand loyalty, particularly among millennials.
Today’s CEO has expanded from the guardian of a business, to someone who defines a brand, culture and values. And while you should carefully consider climbing the bully pulpit, the desire to speak your conscience is appropriate. In fact, many of today’s consumers expect CEOs to engage in thought leadership.
Quite often, when CEOs take a public stance on issues that align with a company’s values, brand loyalty is strengthened. Take Apple and Tim Cook, for example. While speaking out against Indiana’s Religious Freedom Act last year cost the company a $40 million project, a recent Harvard Business Review study showed “higher intent to purchase Apple products among respondents who were exposed to Cook’s CEO activism than among those who were not.”
Still, there are some important considerations prior to engaging in social activism.
First, make sure you’re truly passionate about the position and that it makes sense within the context of your business. Also ensure you’re OK with having that position in the long-term.
Second, be authentic. A public stance should truly reflect your values. If there’s a whiff of self-service, self-promotion or inauthenticity, it could hurt your company. Remember last year’s Race Together Starbucks cup fiasco? The public pegged the move as promotional – maybe even a little exploitive – and the company soon ended the program.
Third, pick and choose wisely. Consider if taking a position truly makes a difference, and then take a careful, measured and selective approach.
Fourth and final, don’t surprise your stakeholders. Try to get them behind you, which isn’t always easy. Try and connect your position to an organizational benefit, and prove that a public position provides the company greater operating leverage. Even if you cannot get your key leaders to support your position, and take it anyway, don’t let your statement take them by surprise.
As for my election post – while I publicly expressed my position, I parlayed it into enthusiasm for possibilities. It was genuine, heartfelt and tied into the values of Scheer Partners – anything is possible and an unwavering ‘can do’ attitude.
“It’s lonely at the top, but the view’s not bad.”
Often dismissed and rarely discussed, many CEOs are plagued with feelings of isolation. In fact, a survey from Harvard Business Review found that half of CEOs report feeling lonely. And while lavish salaries and corporate CEO behavior don’t often instill empathy, any leader’s isolation negatively affects decision-making, culture and performance.
Remember Enron? After bankrupting the company and resigning, CEO Jeffrey Skilling claimed ignorance when testifying before Congress. Many Americans wondered how the man at the top could know nothing of what happened beneath him
Many CEOs are ensconced in a tight-knit bubble, surrounded by sycophants and gatekeepers. Often, this entourage shields a leader from organizational problems, and offers limited and filtered information on operations, customers and employees.
Granted, time constraints necessitate a bit of gate-keeping and a good bit of delegation. But having a stable of handlers deciding what a leader knows exacerbates isolation. And usually these yes-sayers don’t push back on bad decisions.
This isolation and narrow field of vision can compromise decision-making, render leadership less effective and in short, hurt business. While an inevitable part of the job, whether it compromises your abilities is up to you.
So, what can you do to reduce executive isolation? First, you must recognize it. In the flurry of activity that accompanies the role at the top, isolation is easy to ignore. Take a minute and ask yourself if you’re feeling disconnected, if your subordinates whole-heartedly agree with you, and if you’re getting first-hand data on your organization.
Second, get out of your literal bubble. Escape the board rooms, the formal décor, the handlers. Interact with your customers, talk with lower-level teams (without their bosses present), seek anonymous feedback.
Tell your senior team to challenge you – then really listen. Encourage a culture of candor and cultivate the strength of ego to handle criticism. It’s not always easy, but it is well worth it. The best leaders have confidants who shoot straight, and keep the boss in the know.
I am always available to share how we achieve results here at Scheer Partners. I am just an email away at email@example.com.
There comes a time in every organization’s life when you’ve outgrown your space. It could be new contracts, new revenue, new opportunities. Whatever the reason, you need to hire people. And, people need space to work from.
But when is the right time to move? Having moved our company several times over the 25 years, I speak from experience.
Like getting married or having kids, there is no perfect time. There are, however, telltale signs that reveal an office move is in the best interests of the long-term sustainability of your company. Through planning and seizing the opportunity when it presents itself, a new office location can propel your company forward.
A few indications it is time to move:
Corporate Culture Needs a Makeover
Culture consists of shared values, a common language, stated expectations and tangible artifacts.
As team members have come and gone, perhaps new values have emerged. Certainly your business goals have matured and you’ve become clear about your market, your product and the real-world problems you solve. Maybe your culture has picked up a few new behaviors—increased collaboration, a need for more private meeting space, more presentation areas, a need for more visual support.
A fresh start shouldn’t be wasted. Be purposeful about beginning anew by articulating expectations.
There is no greater reset than an office move. With such change, new habits can be formed and with a little guidance from management, the team will be working harmoniously once again.
Your lease is about to expire
Do you know when your lease expires? Check now, as it may be sooner than you think.
If your lease expires in the next 24 months, that’s great. Finding the right spot, space planning, construction, and moving is a huge undertaking that will require no less than a year.
You Are Busting at the Seams
When you’ve doubled up private offices so each 10-by-10 space is home to two employees, when there are no more meetings rooms left for meetings, and when all the desk space is occupied, it’s time.
For some, this level of proximity is stimulating and can improve communication among team members. There will, however, be a tipping point, a point where people are crammed in too tightly and personal space is non-existent.
You’re Spread Across Multiple Floors, or Multiple Buildings
Years ago, you found what the ideal situation. Perhaps a few thousand square feet to start and, over time, your company began to grow.
Something to consider, a recent article appearing in the Harvard Business Review validated a few common thoughts about how employees interact:
So, what does that say about having your business on multiple floors or worse, multiple buildings? Think of the costs (and time) it involves for your employees to travel between locations to meet with the right team member. Think of how disconnected your leadership team can be from your employees by not being able to chat a quick chat by the water cooler or have a quick walk down the hallway for a conversation. Now, imagine the productivity, cost savings and efficiencies your organization will experience when located on a single floorplate.
When that day does arrive when you throw your hands up and say it is time to move, I hope the first phone call or email will be to me. Our team can help guide you in finding the perfect space, build that space to suit your needs. Contact me at firstname.lastname@example.org.
Unconventional thinking means looking at the world through an inquisitive, investigative lens, like you did as a child. And this perspective should not be limited just to your work, but permeate your general outlook on life. After all, some of the greatest inspirations and most profound unconventional ideas will come to you in moments and situations completely removed from your business. The whole world is your reservoir for unconventional ideas.
This may seem obvious, but the problem with conventional thinking is that it does not lead to truly new ideas, creativity or innovation. Yet most of us individually and collectively — in our families, businesses and communities — think and behave conventionally.
Most of the time, conventional thinking is fine. Most of your work, your operations and your social interaction can and should be conventional. Conventional usually works and rarely offends.
Conventional thinking about the competition is dangerous. You probably think your competitors — the companies you have to watch out for — are a handful of businesses similar to yours. Yet, those businesses are not really competition. You know where they stand. They know where you stand. You all do pretty much the same conventional things to deliver the same growth and pretty much operate the same way. Those companies are not your most dangerous competition. Rather, it is three millennials in their garage who are dreaming up a product that does 50% of what your product does, but 98% of what your customers want. It will be available for a fraction of the cost of your product. It might even be free. It will be so unconventional that when you first learn about it, you will laugh it off.
Just like Kodak laughed off digital photography. Just like the blacksmiths of Detroit laughed off the Ford Model T.
I wish you a year of unconventional thinking.
Take a look at how I think the county is facing their conventional challenges and where unconventional thinking has an opportunity to exist! View the Montgomery County overview here.
In the next couple of weeks, we are going to be bombarded with 100-day plans, 100-day plans for the Country, 100-day plans for the new administration, 100-day plans to meet your new year’s resolutions, and the list could go on and on.
But how can a 100-day plan work for your business?
Whatever the size of your firm, whether you’re B2B or B2C, and regardless of the industry in which you operate, a 100-day plan can guide you towards increasing profits and market share over the next 365 days.
Thank you to President Franklin Roosevelt who pioneered the concept of a 100-day plan. Now a tradition with our Presidents, the plan is used as a means of gauging effectiveness in the White House. The plan typically consists of short term goals that adhere to the long-term version. Same can be applied to your business.
What do you need to accomplish in 2017? And what steps do you need to take in the first 100 days of the new year to achieve your goals? Establishing 100 tasks which need to be done, identifying specific steps and resources needed for those tasks will guide you towards pursuing attainable objectives and start the year off with a burst of energy. And if you are like me, I am sure you can come up with 100 tasks for your business.
When the 100-day finish line is reached mid-April, you will know if you should be celebrating or if it is time to re calibrate your efforts.
So, what is your 100-day plan?