Features

Joseph Smith “Challenging” would accurately describe the past few years in the hotel industry, with many owners in underleveraged positions on historically performing assets. For hotel management professionals, the question of how to quickly turn things around for a struggling property is paramount. These days it often is not enough to make gradual changes and long-term investments; many hotel owners need results now as hotels struggle to boost net operating income. It requires competent, bold leadership to immediately impact bottom-line results. A hotel turnaround an all-inclusive solution that covers asset quality, service delivery, revenue generation and capture, accurate and detailed forecasting, margin controls tied to forecast models, and a comprehensive analysis of challenges and opportunities. Leaving one of these elements out of the equation will lead to mixed results. Only management companies with nimble, aggressive and dedicated professionals can drive the necessary change. All too often, the management team of an underperforming asset resorts to a single focus on expense cutting to offset a lack of execution on the revenue side of the business; the result is a downward spiral for the asset. As a wise hotelier once said, “Continue focusing on expenses only and you will get sales down …

Matt Valley Today’s extremely low interest rates pose a danger to commercial real estate investors, particularly those with billions of dollars to deploy such as pension funds and sovereign wealth funds, warns Ethan Penner, founder and president of CBRE Capital Partners. In order to receive a reasonable rate of return, these investors are being “crowded out” of low-risk investments and forced into high-risk investments. The 10-year Treasury yield, a benchmark for commercial real estate finance, currently is hovering around 2 percent, not far from its record low. “There is almost no way to invest large amounts of money in today’s market — specifically in today’s real estate market — and not be set up for a major disappointment sometime soon,” remarked Penner during his keynote address at the Commercial Real Estate Investment & Finance 2012 conference. Law firm Morris, Manning & Martin along with France Media’s InterFace Conference Group hosted the day-long event at the Grand Hyatt in Atlanta. “The major disappointment may take the form of economic non-recovery, it might take the form of very, very high interest rates, which will render your returns very, very inadequate,” explained Penner. “I don’t know what [factor] it is going to be, …

Barry B. LePatner, Esq. With needed construction projects proceeding despite the ongoing slowdown in the economy, negotiating construction that ensures completion on schedule and without avoidable cost overruns can be a considerable task for most owners, developers and lenders. Fortunately, a few carefully considered steps can be taken to ensure the financial health of your projects by following the Four Golden Rules of Construction Cost Certainty. The U.S. population is poised to grow by 100 million through the year 2050. The net result is that we will be embarking on a $25 trillion building spree for new schools, hospitals, roads, offices and residences nationwide to accommodate this growth. But critical to this national endeavor is that we build anew without the recognized inefficiencies of our construction industry, where nearly 50 percent of all labor costs pay for waste and corruption, rather than completing a project. There is simply no reason for new construction projects to begin without cost certainties built into the contract. To address the fact that contractors too often provide bids based on incomplete design documents and low-ball the contract price — only to subsequently seek profits on unwarranted change orders and delay claims — our firm has …

Dan Marcec On September 11, 2001, the confidence inherent in the American spirit was shaken considerably, which without a doubt extended to the economy and the real estate industry. With two of the country’s — and indeed the world’s — iconic office buildings directly destroyed, the Lower Manhattan commercial market not only took a physical hit, but also a psychological one. REBusinessOnline takes a look at Lower Manhattan today and the steps it took to reinvent — and at the same time reestablish — itself as a destination market for growth and development. In The Aftermath As a result of the 9/11 attack and its subsequent fallout, Lower Manhattan lost more than 12 million square feet of space — nearly 26 million square feet was either destroyed or damaged, says Tara Stacom, vice chairman with Cushman & Wakefield, who is also responsible for leasing One World Trade. Because of the immediate flux in space, there was an obvious impact on vacancy and rental rates in the aftermath. Interestingly enough, in mid-2001, the Lower Manhattan market had an unusually low vacancy, hovering around 6.5 percent. According to Stacom, 7 to 9 percent is considered equilibrium, where there is balance on both …

A Q&A with Chris Roth In June 2010, President Obama sent a memo that proposed $8 billion in real estate cuts for the federal government by the end of 2012, to be overseen by the General Services Administration (GSA) and the Office of Management and Budget (OMB). At the time, there was wide speculation on how this might affect the commercial real estate industry. So a year on and a year closer to the proposed deadline, REBusinessOnline (REBO) checked in with Chris Roth, managing director at Jones Lang LaSalle and the national manager for the firm’s contracts for GSA tenant representation services for federal agencies that work through the GSA for their real estate needs. REBO: What is the current state of President Obama’s proposal to cut the federal government’s real estate spend? Roth: With so much going on with the debt ceiling, and everyone is wondering what part of the Civilian Property Realignment Act [CPRA, a bill proposed by Rep. Jeff Denham (R-CA)] is going to play, not much has happened yet. Something is definitely going to happen, but we’re not certain of the extent of it. REBO: What is your perspective on the market for federal space, and …