The younger couple was constantly on their iPhones do various things and they only spoke to each other intermittently and it seemed that when they did talk it was about what they were doing on their phones. 

The older couple had no visible phones and spent their meal talking to each other engaged in conversation. 

For us, my wife had her phone on the table so we could see the phone in case the babysitter was calling.  During the meal, the phone stayed in place and wasn’t used (no babysitter calls).  We had a nice meal along with some good conversation.

As I watched this play out and without trying to judge anyone, I thought about how different things are for the younger generation (yes - I feel old).  They seemed very happy doing what they were doing – so is this a good way to spend time with someone or are we losing our ability to communicate one on one or is this a new normal?   

Does this tell us anything about the young people that occupy our office and apartment buildings?  Are there subtle clues here on things we should be doing to meet the needs of the younger generation?  If the real estate decision maker for a commercial tenant is 28 years old, do we market differently to him/her than we would to someone that is 50 years old?  I think so!

Overall, I think we all had a good time that night – our path was just different.

There are many ways to reduce energy consumption in commercial properties – some are low cost/low risk while other methods are more expensive and intrusive.  Regardless of the how you get there, reduced energy consumption is not your only benefit.  More and more tenants are seeking to occupy energy efficient buildings and hope to gain more than just dollars from doing so.  Is there a PR/public perception benefit for our customers? 

Imagine an office property with 50% occupancy and little in the way of benefits or differentiation in the marketplace.  What if the property owner put solar panels on the roof and wind turbines along the perimeter of the roof line?  Even though the financial payback on an energy basis is probably too long, does it change the perception of the property and help lease the vacant space faster?  If so, maybe the payback on the investment made should be calculated with both energy savings and leasing revenue.

I’d make the case that if sold effectively to the marketplace, just a few small to mid-size leases that result from these improvements will provide a great return on investment.  How about trying something different that no one else in your marketplace is doing?  With some good planning and thoughful execution, I’ll bet it works!

So how do we connect the two – the new world of social media and the idea that it can expand our relationships to the basics of our business of owning and managing commercial real estate?  If I have a Facebook Page, Linkedin Page, and Twitter Account and use them all to promote our business, what can we expect from these efforts?  Is there a “secret sauce” on how to use these tools to be most effective and connect them to the core functions of our industry?

These are only a few of the many questions that are running through my mind these days and I have yet to come up with any real answers.  I certainly think there is a benefit to promoting our relevance and strategy with the tools of social media but it must be done in conjunction with real and progressive changes at our properties.  As I have found out over 20+ years in this business, if you do great things with your properties but don’t tell anyone, what have you gained?

Is this a good way for state and local governments to raise revenue?  Maybe for income producing properties since increasing values should be the result of higher incomes – thus more cash for taxes.  But what about the homeowner whose home increased in value, has higher property taxes, but not the cash to pay the tax?  Just because their property is worth more doesn’t mean they will get a raise at work to pay the extra taxes. 

Here’s a solution, take the assessed value out of the equation and tax commercial properties on revenue or income.  For homeowners, charge a lower or standard base rate (not based on value – maybe square feet) and then a capital gains tax if the homeowner makes money when they sell the property.  I just think having the government determine property values is a bad idea.

This is good for everyone – our guests, our environment, and our bottom line!

Here’s why this makes financial sense:

We spend $800,000 on system improvements.  We save approximately $240,000 per year in energy and other operating costs.  If we hold the property for three years and then sell the it after the third year, the payback is $720,000 in gross operating savings and the property value is increased by the annual savings divided by the sale cap rate.  If we use a 9% cap rate, the additional value on the sale would be $2.67 million. 

SO FOR AN $800,000 INVESTMENT, THE CASH RETURNED EXCEEDS $3.3 MILLION OVER 4 YEARS WITH AN IRR OF 54%!

It’s the easiest decision I made last week – definitely a no brainer. 

1. Our restaurant tenant in Rhode Island – THE DORRANCE (www.thedorrance.com) was nominated by the James Beard Foundation as one the best new restaurants in America.  In addition, their chef has been nominated as one of the best new chefs in America.  Being nominated for these awards is akin to the Academy Awards for Film so a big congratulations to The Dorrance! 
2. We are happy to welcome our newest Rhode Island tenant – TribalVision (www.tribalVision.com) to 170 Westminster Street.  They are an creative and innovative marketing firm that can help businesses define their markets and sell better within them.  We were so impressed with the firm, we hired them! 
3. We are happy to welcome some of our newest Philadelphia area tenants – Sparknet (www.sparknettech.com), 20/20 Communications (www.2020companies.com), NextGen Reporting (www.nextgenreporting.com), CrossRoads Hospice (www.crossroadshospice.com), MPG Motor Sports (www.mpgmotorsport.com), and Junior Achievement of the Delaware Valley (www.philadelphia.ja.org). 

We will continue to deliver good and positive news about our business, tenants, and new ventures as they continue to evolve. 

Willie Wonka said it best…”we are the music makers, we are the dreamers of dreams“. 

I’ll make the argument that any new office construction automatically qualifies as an A property simpy due to it being new - new systems and new construction materials.

So what happens to the existing stock of “B” buildings?  It can drop when properties slip to Class C due to neglect and lack of maintenance/improvements and/or if these properties are converted to alternatives uses (housing, hospitality).  It can increase by Class A properties slipping to Class B for the same reasons listed above.

I think it is safe to say that the overall inventory of Class B office properties is stagnant at best and dropping, albeit slowly.  Now consider if demand for these properties remains constant or grows due to their rent discrepancy from Class A properties following the needs of small to mid-size tenants. Basic economics shows increasing demand and a stable inventory of space will move pricing higher.  Now image if you can turn these Class “B” buildings into high performance,sustainable properties that offer technology solutions that increase its operating abilities, provide tenants with enhanced amenities and services, reduce costs, and further integrate the real estate into a tenant’s business?

Can we change the nature of what a landlord’s relationship is with their tenants?  Can we clearly differentiate properties and compete based on the strength of our product and the services we provide along side our properties?  Can we improve tenant retention, beat market occupancies, push rents?

Stay tuned.

Coach Paterno stood for many things but as I have read the numerous articles about him and his legacy over the past few days, a few things stood out:

• He wanted to make an impact beyond football on people’s lives. 
• He used football to teach life lessons.
• His motto was Success with Honor.
• He was consistent in his core values over a 61 year career. 

Does any of this pertain to the real estate business - How we conduct ourselves with tenants, vendors, lenders, advisors?  I’m sure it does – most of which are very obvious.  For me, the next time I find myself in a tough situation, I’m going to ask, “what would Joe do”? 

Here is a link to a recent review by “Soused Blueberries Blog – Food tales From the bosom of New England”.

http://www.sousedblueberries.com/2011/12/dorrance-providence-ri.html?spref=tw

We don’t think so!  Our strategy has four main components – one being sustainability/GREEN.  The other three are our difference makers – the way we stand out in a crowd.  With software, building automation tools, and building networks – we are transforming properties into high performance assets that have an impact on our customers (tenants).

Stay tuned for more.  2012 is the year when GREEN is not enough!