Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. The New Reason Workers Say They Come To The Office? To Actually Focus On Their Work: Survey

Event space, hotel lobby, living room—companies are rethinking how they use their workplaces, drawing inspiration from non-offices for a new hybrid work era. But while businesses try to design more social spaces, they shouldn’t forget that—more than anything else—employees want a place to get their work done efficiently, a new survey by design firm Gensler suggests.

“The research, released Tuesday, surveyed more than 2,000 U.S. office employees between June 14 and August 7. Workers said the top reason they come to the office is “to focus on my work”—a shift from the emphasis on socializing and meeting face-to-face, and a “surprise to suddenly see,” says Janet Pogue McLaurin, global director of workplace research at Gensler.”

In 2020, U.S. workers had ranked “focus[ing] on my work” just fourth on a list of key reasons to come to the office, Gensler’s research found, behind socializing with colleagues, impromptu face-to-face connections and “working in-person with my team.”

2. From Exit to Entrepreneur

At 4 p.m. on the last Friday of every month, 40 founders gather in Atlanta Tech Village’s conference room with dozens of pizzas, IPAs and wine. A year ago, it was just four people on ATV's roof. Most are buzzed by 6 p.m. It loosens them up. It unleashes their egos — a necessity for founders in this competitive startup scene. 

“At the center of it all is Sebastian Builes, founder and CEO of Arcum, who started these monthly “Founders Meetups” shortly after setting up shop in the Village. The idea was straightforward: gather entrepreneurs together to talk of their stories and struggles. It has become more important to blow off steam and build courage as the tech sector goes through the largest wave of layoffs since the dot-com bust. ”

Builes shares office space on ATV's fifth floor and is a fixture at most every local startup event, shaking every hand with a warm grin. He's popular. 

3. Investors Grow More Confident Fed Will Pull Off a Soft Landing

A few months ago, Wall Street rebuffed the idea that the Federal Reserve would be able to pull off a soft landing. Now, a growing crowd is betting on exactly that happening.

“Mutual funds and hedge funds managing roughly $4.8 trillion in assets have been putting money into stocks that stand to benefit from inflation cooling, interest rates going down and the U.S. economy avoiding a recession, according to an analysis by Goldman Sachs Group Inc. ”

The investors have larger-than-average positions in shares of industrial, materials and energy companies, Goldman’s analysis found. All three groups tend to be sensitive to changes in the economy, meaning investors’ bets should eventually pay off if the U.S. can avoid a deep and prolonged downturn, or a “hard landing.”

4. Investors Yank Money From Commercial-Property Funds, Pressuring Real-Estate Values

Big and small investors are queuing up to pull money out of real-estate funds, the latest sign that the surge in interest rates is threatening to upend the commercial-property sector.

“Blackstone Inc. last week said it would limit the amount of money investors could withdraw from its $69 billion flagship real-estate fund following a surge in redemption requests. Starwood Capital Group shortly after notified investors that it was also restricting withdrawals in a $14.6 billion fund, according to a person familiar with the matter.”

The Blackstone and Starwood funds are the two largest nontraded real-estate investment trusts, a popular investment structure with wealthy individuals. 

5. Decline in Commercial Real Estate Transactions May Just Be Getting Started

Transaction volume has held up well on a trailing four-quarter basis. Across the four main property types, investment activity was only down 6% quarter over quarter as shown in the chart above, and volume was still quite positive year over year in the third quarter. However, the past four quarters incorporate record sales volume reached in the fourth quarter of 2021. On a straight quarter-to-quarter comparison, commercial real estate transaction volume in the third quarter was about 25% lower than in the third quarter of 2021, and history suggests that sales volume will drop even lower.

“The blended average capitalization rate across the four main property types has narrowly inverted against BBB-rated corporate bonds, and in the past, the narrower the premium between cap rates and BBBs, the more investment property sales decline.”

Although the premium between BBB-rated corporate bonds and cap rates will probably revert back to positive next year, the change in transaction volume tends to lag by about six months, meaning that today’s inverted cap rate spread will affect volumes most heavily six months from now.

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