BD&C: What is happening with your corporate portfolio? Are there any strong commercial markets right now?
Samuel S. Unger: Most U.S. markets are still soft. There is some perceived bottoming in some very local submarkets in San Francisco, San Jose, and certain New York City submarkets. Downtown Seattle is tightening. Other markets have limited inventory in given classes of buildings, so there is better control over those segments. I am also surprised by how tight some of the smaller Canadian cities are. Researching the brokerage house reports looking for consensus is still helpful, as are ongoing discussions with trusted brokers. We always try to stay ahead of the requirement by trying to understand forward momentum in given markets. It’s also important to note that markets can be quite local, varying by view and size of requirement, so generalities need to be closely tempered by the requirement you are presenting to the market.
BD+C: Where is the best place to invest in real estate right now?
SU: There has been competition for trophy assets in commercial real estate, and a fair amount of money chasing discounted retail assets, according to what I hear. Unfortunately, real estate assets are very difficult to dispose of in weak markets, as too many have discovered to their chagrin. Diversification still rules.
‘Try to understand forward momentum in given markets’
BD+C: When is the commercial real estate market going to rebound?
SU: When you see three or four quarters of positive white collar job growth, you might be tempted to get out of your foxhole. But a critical caution is the fact that all markets and submarkets are local, and impacted by the movement of major companies or particular industry segments.
BD+C: In regard to commercial properties, are owners upgrading or reconstructing these properties? How long does it take for an owner to see a return on their investment after upgrading or reconstructing a property? How is this impacting their portfolio?
SU: This is a thesis question. It all depends on an owner’s portfolio, competitive pressure, leverage, and access to capital. We’ve seen a number of owners of Class A property begin to do reasonable upgrades to comply with the lower tiers of LEED certification because they believe they need this to remain competitive in the market, and we welcome that.
BD+C: Is it more advantageous to construct a new building, or upgrade an existing structure?
SU: I stress that we as an organization are not owners of buildings for reasons specific to the Ernst & Young partnership. We have a very competent advisory services business that assists owners with questions like this. As with any complex question, it all depends on the specific market and the arbitrage available in making a conversion.
BD+C: Are there particular mistakes or errors that you see BD+C readers making in regard to commercial real estate?
SU: If you are talking ownership, the first law is that real estate is volatile and illiquid, and keeps absorbing capital. The second law is to remember the first.
BD+C: How can BD+C readers—architects, MEP engineers, and contractors—work more effectively with a firm like Ernst & Young and other CoreNet members?
SU: We encourage contact with design professionals and contractors. We mandate that members of our real estate group get involved with national and local organizations, and we’re not shy about it. I encourage professionals to get involved with CoreNet. It’s important to realize that the organization encourages mutual long-term benefit—no quick sells, no heavy marketing, but a great opportunity to let people understand both the type of individual you are and something of your business over time. The people of CoreNet are also a tremendous resource, with literally hundreds of years of collective experience in the allied professions.
BD+C: What do architecture, engineering, and construction firms continually do wrong in their dealings with organizations that are CoreNet members? What mistakes do you see them making? What advice would you have for AEC firms to work more effectively?
SU: Great question, and another thesis topic. Approach CoreNet members as a long-term investment. Share experiences and understand the pressures and questions of your potential clients. Don’t talk consultant speak—if asked, talk solutions. Otherwise, grab a beer and share war stories.
BD+C: What is the most important thing you can take away from your involvement with CoreNet on both a personal and professional level?
SU: CoreNet has been a tremendously valuable resource for me. I have established friendships and had the opportunity to go beyond professional relationships with a number of our members. I have also realized that many of the issues I faced, both personally and professionally, are shared problems, with shared solutions. On a professional level, deeper discussion of the issues we face as an organization, and the similarities to the issues faced by my colleagues in CoreNet, help generate more thoughtful solutions. The opportunity to review strategies and tactics for these issues is valuable, as is the review of resources available through service providers, contractors, and suppliers. BD+C
Related Stories
| Oct 20, 2014
Singapore Sports Hub claims world's largest free-spanning dome
The retractable roof, which measures a whopping 1,017-feet across, is made from translucent ETFE plastic panels supported with metal rigging that arches over the main pitch.
| Oct 20, 2014
Institute for young innovators breaks ground at the University of Utah
The five-story, 148,000-sf building is designed to function like a student union for entrepreneurs and innovators, with a 20,000-sf “garage” that will be open for any student to attend events, build prototypes, and launch companies.
| Oct 20, 2014
UK's best new building: Everyman Theatre wins RIBA Stirling Prize 2014
The new Everyman Theatre in Liverpool by Haworth Tompkins has won the coveted RIBA Stirling Prize 2014 for the best building of the year. Now in its 19th year, the RIBA Stirling Prize is the UK’s most prestigious architecture prize.
Sponsored | | Oct 19, 2014
The Exploration Tower in Port Canaveral dazzles visitors
With a mission to provide the experience of a lifetime, the Exploration Tower at Port Canaveral, Fla., is designed to inspire, as visitors learn about the history and nature of the port and beyond. SPONSORED CONTENT
Sponsored | | Oct 19, 2014
What to do if your team is in a rut
Another brainstorming session, another slew of tired ideas. How can you push your team to be more creative and bring in new perspectives? SPONSORED CONTENT
| Oct 19, 2014
White House Visitor Center reopens in Washington, D.C.
Designed by SmithGroupJJR and Gallagher & Associates, renovated center shows public its unique role as office, stage, museum, park, and home.
| Oct 16, 2014
Must see: Illustrator interprets iconic windows concocted by renowned architects
Graphic designer Federico Babina has made a name for himself when it comes to art inspired by architecture, or more accurately, art inspired by architecture that's inspired by other forms of art.
| Oct 16, 2014
Henning Larsen Architects to design train station for planned Danish town
Danish firm Henning Larsen Architects won Frederikssung municipality’s architecture competition for a regional train station in the planned city of Vinge—Denmark’s largest urban development.
| Oct 16, 2014
Report: How to keep public libraries relevant in a digital age
Public libraries will avoid being relegated to the scrap heap of history in a digital age as long as they continue to serve as platforms for learning, creativity, and innovation that strengthen their communities, according to a new Aspen Institute report.
Sponsored | | Oct 16, 2014
Drilling deeper: The booming Bakken Shale region
The Bakken Shale region, which spans from central North Dakota to the northeastern corner of Montana, is rapidly growing as a result of the oil and gas boom. SPONSORED CONTENT