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Real Estate Think Tank Preview

Interest rate policy and city center development catalysts will be among topics at ACREcon.

ACRE Executive Director Grayson Glaze hopes for an improved market, following interest rate and election uncertainties.

ACRE Executive Director Grayson Glaze hopes for an improved market, following interest rate and election uncertainties.

The 17th Annual Alabama Commercial Real Estate Conference & Expo, set for February 10, has a new venue — The Club atop Red Mountain in Birmingham. With its wide vista of downtown, the setting is fitting not only considering the wide swath of commercial development on view, but also because of the theme of the conference: vision.

“This year’s program is designed to help players in the commercial real estate industry develop a clear and sustainable vision for their business,” says Grayson Glaze, executive director of the Alabama Center for Real Estate at the University of Alabama. “Interest rates, regulations and the most recent election cycle brought uncertainty to the CRE market. Our hope is that 2017 will be the beginning of a new and better vision for Alabama’s commercial real estate market.”

ACRE celebrated its first 20 years during the past year. Glaze says the center has expanded its presence and reach by adding student interns, articles, videos and a new media suite. “We are looking forward to the next 20 years serving Alabama’s commercial real estate industry,” Glaze says.

Among the speakers at ACREcon will be Brian Bailey, a commercial real estate expert with the Federal Reserve in Atlanta, who will be presenting an economic outlook for the commercial sector in 2017.

While key government reports that will help shape Bailey’s presentation weren’t available at press time, Bailey did say he expects the trend of foreign capital being invested in commercial real estate to continue, at least in the short term. For the past four years a surge of money has been coming in from across the globe, including Canada, China and Europe. “The United States is seen as a stable place to invest, and commercial real estate is seen as a good investment,” he says.

Bailey expects commercial lending rates to stay relatively stable in the short term, barring the unforeseen, because a number of commercial lending trends have played out, and he believes lenders have adjusted their rates accordingly, he says. He didn’t expect the December Federal Reserve Open Market Committee meeting would affect commercial rates significantly.

Because of stricter government regulations on risk retention requirements for commercial mortgage backed securities, investment bankers who put together commercial loans that feed those types of securities reduced their lending volume in 2016. The commercial banking sector stepped in to take advantage of lending shortfall with interest rates boosted to reflect that. “It’s a question of supply and demand, and banks are capitalizing on it,” Bailey says.

Another continuing trend Bailey will discuss is how telecommunications, e-commerce and other efficiency-improving technology trends are affecting commercial real estate. Employers of office workers are finding they need less space per employee, for example. Growing e-commerce might lead to the development of less retail space and more warehouse and distribution space. “Technology is changing all the time, and there will be an impact on future development,” Bailey says.  

Job growth has been “slow but robust during the economic recovery,” Bailey says, and he is hoping end-of-the-year job reports and retail sales will show the trend of economic improvement continuing. “Two-thirds of the economy is consumer spending,” he points out.

Urban planner, designer and author Ryan Gavel will discuss his groundbreaking work with the Atlanta Beltline greenway and urban renewal zone at ACREcon. Gavel will also host an urban development panel discussion. Gavel, the founding principal at Sixpitch, is known for his work in site design, infrastructure, concept development and public policy.

Gavel shared his concept for the 22-mile Atlanta Beltline transit greenway, which he calls “catalyst infrastructure” in his master’s thesis in 1999. Gavel had a vision of converting the old railroad bed around the city into a recreation route for walking and biking. Since then, a $4 billion public-private investment has laid the groundwork for the beltline’s popular mainline trail and generated $3.1 billion of private sector redevelopment, helping create a healthy commercial real estate market. “The beltline is transforming the lifestyle of Atlanta’s downtown neighborhoods,” Gavel says. “It’s improved the quality of life for residents and enhanced their sense of community.”

Atlanta’s Beltline greenway space has attracted private investment into the area’s commercial real estate.

 

Gavel’s work for the beltline has been honored with numerous awards and has been covered by national and regional media. Author of the new book “Where We Want to Live,” (St. Martin’s Press, 2016), Gavel frequently shares insights from his work and research on similar infrastructure projects around the world at conferences and other events.

He is pleased by urban renewal efforts in Alabama, applauding the catalyst infrastructure of Railroad Park in Birmingham as an example and recognizing the trend is growing throughout the state. “People are discovering new uses for old infrastructure and transforming their cities and towns in the process,” Gavel says. “This is a cultural movement and we’re going to see it continue to gather momentum.”

Among ACREcon’s other notable speakers will be Debbie Phillips of The Quadrillion, a business consulting firm based in Stockbridge, Georgia. Her company provides training, marketing and advisory services to large and small companies. Phillips is known for her high-energy, motivational presentations for business leaders. 

“I love the theme of ‘vision’ for this year’s conference,” Phillips says. “Many times a company is all over the map when it comes to what employees are doing, and the vision of the company is taken for granted. We get distracted by the small things instead of having a crystal clear vision of where we are going.”

Phillips believes the conference will offer attendees a chance to focus on what they want to do in the coming year. “It will allow them to take a day for self-reflection and renewal, which is so important for keeping your edge,” she says. “I am passionate about business, and it’s my job to get everyone’s blood pumped up.”

One of the biggest challenges for companies in today’s competitive and ever-changing business environments is to help ensure their self-managed work teams maintain consistency in the level of product and service quality, she says. “Company leaders want to allow teams the freedom to play in their genius zone, but they also want to ensure their brand’s reputation,”
Phillips says.

Among the strategies owners and managers can use to promote and create brand quality and consistency is to develop “the mindset of a leader” in their employees, Phillips says. 

It’s also critical that company leaders communicate well, being clear about expectations and upfront with employees. 

To grow, a company must build processes that allow the business to be “scalable.” Company leaders also should look at developing talent from within rather than always going outside to meet new needs, Phillips says. “Instead of investing in training, companies poach high performers from their competitors by offering them incentives, such as a $10,000 salary hike,” she says.

That can be a flawed strategy for several reasons and tends to undermine company loyalty, she says. It sends the wrong signal to current employees who are hoping to move up. It also takes time for a poached employee to become familiar with the company’s culture and perspective. “Growing your own talent often is a more profitable idea,” Phillips says. “But many companies often don’t have the patience to do it.”

Kathy Hagood is a freelance contributor to Business Alabama. She is based in Homewood.

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