We Interrupt The Normal Bookmarks Blog Post to Bring You Some POSITIVE Economic News

January 7th, 2019

For a number of years I've curated updates in this space on the CRE world. Today, we take a short break to focus on a different topic - the economy. I'm frustrated that some media outlets harp only on the negative news at every turn. This is one of the best economies of our lifetime - please read beyond the trending and check out the good news out there. #factsmatter #don'tjustreadtheheadlines

Credit: iStock

The Labor Market Would Like You All To Stop Panicking Now Please

"Job gains were led by the healthcare industry, which added 50,000 jobs in December, as well as construction, which added 38,000 jobs. Construction employment increased by 280,000 jobs over the year." www.bisnow.com 

 

[tweet_box design="box_09" float="none"]The labor market would like you all to stop panicking now please #cre[/tweet_box]

Fed Chair in Atlanta Boasts About Economy

"...Powell said he remains upbeat and has not made up his mind about further rate hikes this year.

“There is no preset path for policy,” he said. “We are always prepared to shift economic policy and to shift it significantly.”

The Fed is “listening carefully to the message that the market is sending,” he said.

Powell spoke Friday after release of the monthly government report that showed a gain of 312,000 jobs in December – about twice as many as had been expected. The report also showed wages rising. While the unemployment rate ticked up to 3.9 percent, that increase was caused by a surge of new workers, he said.

That report was evidence that the economy is chugging along steadily and can probably more easily handle more rate hikes."  www.ajc.com

Jerome Powell

[tweet_box design="box_09" float="none"](The)..."report was evidence that the economy is chugging along steadily and can probably more easily handle more rate hikes."[/tweet_box]

Strong U.S. Job and Wage Growth Provides Assurance on Economy

"All the while, the economy kept cranking out jobs. U.S. employers added a net 2.64 million jobs to their payrolls in 2018, the best year since 2015. Payrolls have grown for 99 straight months, by far the longest stretch of steady hiring on record.

The unemployment rate ticked up to 3.9% in December from 3.7% but remains low by historical standards. The increase owed in part to more people entering the workforce, some of whom get counted as unemployed while they’re looking for work.

Stock prices, already moving up on the economic news, jumped even higher after Federal Reserve Chairman Jerome Powell said the Fed would be patient about further increases in rates this year."[WSJ Paywall] www.wsj.com

Businesses across many sectors have been searching for workers as the labor market has tightened. PHOTO: JOE RAEDLE/GETTY IMAGES

U.S. Stocks Surge on Powell Remarks, Jobs Report

"U.S. stocks bounced back from their worst two-day start to a year since 2000, soaring Friday after fresh signs of economic strength eased fears that slowing growth around the world could drag on the U.S. expansion.

The Dow Jones Industrial Average jumped nearly 750 points as better-than-expected hiring in December suggested a healthy labor market. Stocks rose further after Federal Reserve Chairman Jerome Powell said economic data suggest good momentum heading into the new year, but that the central bank is “prepared to adjust policy quickly and flexibly” if necessary.

 

The combination mitigated investors’ worries about an economic slowdown. Those fears sent waves of volatility sweeping through stock and bond markets in recent weeks..." [WSJ Paywall] www.wsj.com

Q and A on the Big December Jobs Report

"The big news is that the jobs market apparently didn’t get the memo that the U.S. economy was barreling toward a recession. In fact, the jobs numbers came in a lot stronger than expected. Payrolls were up 312,000 in December, compared with expectations for about 180,000, and bringing the full count of jobs added for 2018 up to 2.6 million jobs, the strongest year for job gains since 2015. Wage growth accelerated slightly and, at 3.3 percent (before inflation) for mid-level workers, tied an earlier cyclical high. Weekly hours edged up slightly, jobs gains for the prior two months were revised up, and 70 percent of private industries added jobs on net, a high share for that metric.” www.washingtonpost.com

[tweet_box design="box_09" float="none"]The big news is that the jobs market apparently didn’t get the memo that the U.S. economy was barreling toward a recession. In fact, the jobs numbers came in a lot stronger than expected.[/tweet_box]

Your success blesses others. I wish you a great a hugely impactful week!

Ken’s Ten Trends; The Latest on Corporate Workplaces

“We are planning spaces now for those who are in high school” - David Kamen, Chairman of CoreNet Global, in a preview of the Future Forward 2025 reportI recently returned from the confab of all things corporate real estate – the 2018 edition of the CoreNet Global Summit, which occurred in Boston. The theme, “What’s Next? Exploiting Uncertainty,” certainly summarized the feeling of many of the 3,000 plus attendees. The U.S. economy is robust, and real estate types are super busy finding sit/stand desks for all those butts. However, the fears of something bad in the future are gathering like clouds on a summer day. "Winter is coming, better prepare now," said one CRE executive.At the conference, I listened carefully and took copious notes. Below is my attempt to boil it all down into 10 trends:

1. Coworking becomes legit in corporate America- multiple CRE executives at major companies told me they are going to make some portion of their portfolios into a co working environment. The coworking craze is rapidly moving beyond the small, independent jobbers and into the mainstream. Over the next five years, corporate real estate professionals are set to dramatically increase their use of coworking spaces to house employees, according to a survey conducted by Cushman & Wakefield at the CoreNet Global Summit. The results so far, indicate companies utilizing co working have doubled over the past two years. When asked what percentage of a global workforce use or will use co working on a regular basis, respondents said 11% are using today, 17% in two years and nearly 25% in five years. The survey also revealed that 75% of those polled said the main benefit of utilizing coworking was the ability to ramp up or down a corporate real estate portfolio.
2. White label coworking will come roaring out of the gates in 2019– private label offerings from landlords, service providers of all kinds and others will flood the market. The market is reacting in lockstep to what the existing competitors have created – and the profits realized. However, one of the challenges to these newcomers is the ability to offer flexibility to users. Cool coffee and free beer are part of the allure to those who occupy the spaces, but variable commitment periods are what makes CFOs smile.
3. Lili pads and flexibility are what occupiers are jumping to – Speaking of the happy CFOs, with so much uncertainty in the economy (either up or down) leadership at some of the world's largest users of space are seeing shorter-term commitments/management agreements and are willing to pay more to have the option to grow or go.The ideal lili pad could be a spec suite in a building, but with a short and highly flexible lease term.
4. Work “how” not work “place”– Happiness in the workplace has to do with the ability to make choices regarding where you physically work in the office. The ability to choose to perform your work in different environments increases retention and overall satisfaction, according to surveys. As my friend Bryan Berthold, Managing Director of Workplace Strategy at Cushman & Wakefield says, “I didn't take away your office. I gave you a building.”
5. Want to come work here? –  I also saw in stark relief what we have all likely experienced in the current environment: labor rules the world. While some companies are locating on the beaten path in major cities, others are pivoting to lower-cost opportunities. “More arbitrage opportunities (exists) than ever before,” said David C. Smith, Vice President, Americas Head of Occupier Research for Cushman & Wakefield. “Growing educated workforce in secondary and even tertiary cities allow companies to keep their gateway offices and expand new departments in cities like Nashville, Boise, Phoenix, Charlotte, etc.” Whatever the location, there are still better and worse places to be (sub-markets and building types.) The fact of the matter is corporate America is scrambling to find someone – anyone – who can come aboard and work on the latest project the sales team just closed.
6. Engagement is the new KPI– Employees want to be inspired by work that matters. Millennial workers seem to be asking in lockstep, “What are we trying to accomplish?” Corporate real estate leaders are trying to deliver spaces that support and emphasize the mission of the work occurring in the place. Cushman & Wakefield’s Berthold says the workplace, “Should be authentic, encourage innovation (and) should be a place where long-term friendships are fostered. Paramount to the needs of this group is that work is something to experience…the richness of leading a life where one’s work is as rewarding as one’s play is not your father’s office. It is your daughter’s.”
7. Campsites and Open Houses* define an era of corporate openness to the community. A Campsite can occur when two companies are working on a large project together. Instead of Skyping, one company will send a team to the other to embed for 90 or 120 days. Culturally, teams can work together better by being in the same place for an extended period. Open House describes a scenario where corporates are opening up their campuses to the community. A great example of the phenomena is NCR’s HQ in Atlanta, which has a classroom in its lobby. The room can be reserved by anyone in the community, including Georgia Tech professors. In an Open House, CRE executives are attempting to build community relations and also to have potential new workers see their culture.
8. This is the golden age of PropTech(but humans will continue to be needed.) One example of the burgeoning property technology market is machine learning for a design perspective in which we move away from 2D plans to building rich data models. Also, high volume, high repetition tasks like financial analysis will be automated. The organizers of the conference programmed some fascinating sessions on AI and automation that took advantage of proximity to some of the world’s leading thinkers on the subject. In Boston, you can find a lot of very smart human beings who can talk about smart machines. I think technology will assist us in making better decisions and absolutely make us more efficient. In the short term, however, I don’t think Siri will replace a broker, end user or landlord. When it comes to large, game changing decisions, people still want to deal with people – supported by great technology.
9. The digital natives known as Gen Z will change the workplace again. Cristina Banks, PhD, director of the UC Berkeley Center for Healthy WorkPlaces, presented her research on 400 respondents who are Gen Z. Here is a summary of who they are: Born between 1996 and 2010 (oldest just turning 23) they are 64.6 million people or 20% of the U.S. population.

Some of the traits she observed:

1. • Tight benching is not what Gen Z’s want – they do want lots of sunlight and portable desks in the workplace
   • Want a sense of place and connection to natural light in this digital world
   • This group will be financially conservative – they watched their parents suffer through 2009. They are also highly motivated to be financially successful.
   • 100% wanted a human receptionist
   • Digital sophistication is valued but not at the expense of face-to-face interactions
   • They think about safety and security a lot (think school shootings)
   • Assigned seating will come back – “We want our own space and the ability to make it our own,” they said
   • Technology is assumed to be great and easy to use
   • Wellness and mobility are emerging, and they want an active work environment. “Bring your authentic self to work,” one said.
   • An egalitarian approach to office – everyone should have the same look and feel

In short, Dr. Banks said this generation “want’s it all,” their own safe, well lighted space but also the ability to be mobile at the same time.

10. The office as a destination - the  amenity war rages on We have finally reached the point where leadership has to ask "pretty please will you come into the office?" Real estate directors are taking keen notice of the newest available and refreshed product. Developers of new office assets are striving to build or adapt “authentic” buildings that consist of “real” materials like wood and often have a historical connection, in an attempt to market to those end-user leaders. Also, we are at a level of hyper convenience and comfort today, in part to compete with the coworking providers. The amenities go well beyond a fitness center and include robust recreational areas, food and beer, concierge services, pet and child care, and curated gardens to grow fresh fruits and vegetables. In short, there is a competition to see who can make the workplace feel most like home (please keep your shoes on there, mister.)

To sum it all up, there seems to be uncertainty around the corner, but the economy is super-duper just now. Real estate leaders report that their CFOs aren’t so much worried about cutting cost as “making the right investments” for their workforce. Workers are demanding a lot these days, and companies are willing to do what it takes to keep them happy.Would you pass the almond milk, please?Campsites and Open House concepts were first discussed in an HBR article entitled “Why Companies Are Creating Their Own Coworking Spaces published 9/24/2018

West Bound and Down - Twelve Days without an iPhone

I have a confession to make. For more than 17 years, I have been connected to the grid. Except for sleep, I was always tuned on. Yes, even on vacation, at night and certainly on weekends.I bet I’m not alone in this admission, but at least I can publically declare my addiction to connectivity. I was like a real estate Waffle House; always on and available. Some will say I was like their hash browns as well; scattered, smothered, covered and chopped – but that’s another story.But for 12 days in June, I had no iPhone, no computer, heck, not even a tin-can with a string. I accompanied my 15-year-old son Jonathan and his Boy Scout crew for a hiking expedition in the beautiful Sangre de Cristo Mountains of North Eastern New Mexico to Philmont Scout Ranch.I’m proud of the 93 miles we hiked, the trials we endured, and the trails we climbed. We had an amazing time overcoming the obstacles together and more than one mountain top experience. By the way, I know why they call it that – the whole mountain top thing - adrenaline and views over a 50 mile horizon are an awesome thing.Should it Stay or Should it iGo?I thought long and hard about this trip. I don’t mean what to pack on my back, although that got a lot of attention. I had a tough decision to make on my iConnectivity. Should I take my iPhone in my pack or leave it in base camp?Even in the wilds of New Mexico, one can get a signal at high altitudes. If I took it with me, I could make emergency calls, if need be. I’d have a compass, and plenty of eBooks to read in my tent at night. I could use the torrent of apps available for barometers, measure our distance covered, and perform all manner of important tasks. I could have a digital Swiss army knife (and yes, I could bring a solar charger to keep the thing going).Oh, and I could check email.I love my job, I love my clients, and my team had some very large transactions on the bubble. I really, really wanted to stay in the loop. I almost caved and brought the machine with me. There are SO many critical reasons to stay connected.I realized, though, that I would be bringing a Pandora’s box of information into God’s Country. I began to understand that, for me anyway, bringing an iPhone “back country” would be the same as taking a phone call in the middle of a sermon at church. I’d mar a great experience with my son, and wrap my head around work problems instead of seeing the world one step at a time through his eyes. That Swiss army knife would cut apart my experience with my son and the other Scouts.Radio SilenceBam! The base camp locker door closed and the deed was done. I’d have no access of any kind for 12 full days. We put on the packs and headed to the busses that would take us to where our trek would begin. I’m glad they didn’t take my blood pressure at that point.It had an immediate impact; and at first it was intensely negative. Uncertainty and doubt hit me. What had I done? What if I missed some major news item? I'm sure some client will need something urgently - probably right this moment! By the way, what do you do when you‘re waiting in line with nothing to occupy your time? Fortunately, there was no turning back on my information desert and I simply had to accept my decision.After a couple of days, I began to relax and get into the groove. And then it began to hit me: the power of full engagement in a task you care deeply about, with someone you love is an amazing experience. I learned to function without a device and I am a better man for it. My son and I had the time of our lives, and I am immensely thankful for our uninterrupted time together. He is too.What I LearnedAfter reflecting on this experience for almost two weeks, I learned that you can, that you must, unplug occasionally. Just a few weeks ago I would have (and did) scoff at the very idea. I am now a full on convert to strategic digital vacations. They clear the mind, cleanse the soul, and allow one to have rich and meaningful conversations with those close to you.

I have a great team behind me, and I’m thankful especially to Alysen Thompson for digitally backing me up. The piece of mind I got from Alysen, Sam Hollis, Sarah Momberg and Clint McKellar on my team was priceless. They brought me peace and confidence for 12 days at Philmont.

I also learned that the world goes on without you. This is a sobering thought, because we all believe that the rat race will come to an end without us involved. But it is a true and helpful perspective, at least for me, in the midst of our busy lives.

So, I am slowly reengaging in the digital world. I now have a newfound respect for the power of single tasking and focusing on the really important things in this life.

Hug your kids, your spouse or your pal this weekend and turn the machine off. Take it from me and my iSeperation: your digital audience will be there on Monday. Be present in the moment, and you will create memories and relationships that will last well beyond that silly text message. And on occasion, may I recommend that you simply take a hike!

Posted July 11th, 2012