Confessions of a Commercial Real Estate Consultant
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CCIM has just released the video interview with Greg Lindsay, author of Aerotropolis: The way we will live next from the CCIM Live 2011 conference held in Phoenix last month.
Earlier this year I wrote my review of this fabulous book which can be read here.
Greg’s powerpoint webinar from August 2011 is available at the CCIM website.
Aerotropolis, the way we’ll live next
Authors: Greg Lindsay & John D. Kasarda,
Publishing Info: Farrar, Straus and Giroux, Nonfiction, First edition published March 1st, 2011
As an international instructor for the CCIM institute I discovered that the book, Aerotropolis: the way we’ll live next dovetails nicely with what the just-in-time delivery model as a primary driver of demand for industrial space that we teach in the CCIM 102 course, I would highly recommend it to anyone in commercial real estate.
As a rabid book consumer, I will easily digest about 100+ books a year, and without a doubt, Aerotroplis: the way we’ll live next has become not only my favorite book of this year, but one of my all time favorite business books. It is one of those rare books that I thoroughly enjoyed reading that I found myself moderating how much I could read daily so I can push the ending of the book out as long as possible.
My favorite magazine, The Economist recently offered a glowing review of Aereotroplis, stating “In Aerotropolis, John Kasarda of the University of North Carolina and his co-author, Greg Lindsay, convincingly put the airport at the centre of modern urban life.”
The theme of the book is that successful cities of the future will be wrapped around successful airports and those cities that can’t adapt may be passed by. Its authors state the books hypothesis as an equation related to time “The aerotropolis is a time machine. Time is the ultimately finite commodity setting the exchange rates for all the choices we make.”
Author and reporter, Greg Lindsay, expands and expounds on the John Kasarda’s original idea that airports are the highways of the future. As a former Fast Company and Wired magazine reporter, Mr. Lindsay racks up the frequent flyer miles talking with civic leaders, CEO’s and company logicians as he interviews them on their home turf about the importance of air transit to their communities, companies or supply chains future.
As a fellow traveler, I reminisced about Mr. Lindsay’s travels to well-known airports like Chicago’s O’Hare, Atlanta’s Hartsfield, Amsterdam’s Schiphol, or even Hong Kong’s International, but I was green with envy over his trips to Dubai’s Al Maktoum International Airport or South Korea’s Incheon airport and adjoining master planned Songdo International Business District. One story of Mr. Lindsay tracking his gift of flowers from the Aalsmeer flower auction in Amsterdam to his mother’s front porch will endear Mr. Lindsay to the reader as an extremely diligent reporter and respectful son. Even more surprising than his few thousand mile journey for flowers was his mother’s reaction.
Some of the books concepts in the book are eye opening such as “The world’s urban population is poised to nearly double by 2050, adding another three billion people to places like Chongqing. We will build more cities (and slums) in the next forty years than we did in the first nine thousand years of civilized existence. The United Nations predicts the vast majority will flood cities in Africa and Asia, especially China.”
Or this quote about South Korea “South Korea’s capital is the archetypal twentieth-century megacity, doubling in size every decade or so since 1950 to twenty-four million inhabitants—the second most populous on earth after greater Tokyo.”
Or my favorite quote about a Chinese based manufacturer: “We had barely crossed the border before he opened his laptop and began walking me through the true costs of those shipments. He’d built a widget calculating every conceivable variable: the weight, volume, value, and quantity of the products in question; the lead times for sourcing and building them; time spent in transit; their shelf life; the spread between paying his vendors and being paid himself; the cost of money in the meantime; and the cost of returns. An entire calculus, in other words, underlies the pivotal question of our era: What is the price of speed? The widget’s answer: slow is more expensive. The only thing faster than a FedEx 777 Freighter out of Hong Kong is the velocity of money, and the last thing Casey wants to pay for are the days his parcels are stuck on a boat. Obsolescence sets in the moment they leave the factory. “Revenue evaporation,” he calls it. “Air freight is key,” he muttered while running the numbers. “We like to work with products that can go by air. We build them in Shenzhen, and they’re in New York two days later. Time is often our number one currency, and the dollar is second.” ”
And this quote summarized the breath taking feelings I experienced in my many visits to China for CCIM’s education program: “China is placing the single biggest bet on aviation of any country, ever. Even before the crisis and China’s subsequent stimulus, the central government announced as part of its Eleventh Five-Year Plan that it would build a hundred new airports by 2020, at a cost of $62 billion. The first forty were ready last year. The vast majority lie inland, hugging provincial capitals and secondary cities bigger than any in the States. Full-scale aerotropoli are planned for China’s western hubs, Chongqing and Chengdu, and its ancient capital. Besides airports, China laid as many miles of high-speed railroad track in the last five years as Europe did in the last two decades. The trains, in turn, are meant to keep people off the highways, to which China’s adding thirty thousand miles—enough to eclipse the American interstate highway system. China’s planners have internalized the lessons of America’s Eisenhower-era infrastructure boom, designing a world-class system for moving people and goods quickly, cheaply, and reliably across any distance, whether locally by highway, regionally by rail, or globally by air. The plan is to pick up and move large swaths of the Delta hundreds or even thousands of miles inland. There is nothing to stop them.
And this quote on where the future global cities will be “Finding another five hundred million passengers 7should be easy. China has anywhere between 125 and 150 cities with populations greater than a million. The United States has nine; Europe, thirty-six. When the first phase of China’s airport-building boom is complete, the number of hubs handling thirty million passengers annually—more than Boston’s Logan or Washington’s Dulles—will have risen from three to thirteen, all of which will be the host of aerotropoli. By the time they’re finished in 2020, 82 percent of the population—1.5 billion people—will live within a ninety-minute drive of an airport, nearly twice the number today.”
The book dovetails nicely with some of my other favorite business reads like Marc Levinson’s “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger” and Sasha Issenberg’s “The Sushi Economy: Globalization and the Making of a Modern Delicacy” both of which deal with just in time delivery and creating new markets.
Additional topics addressed in Aerotroplis include Peak Oil vs. Peak Food, globalization as a tool to pull the poor into the middle class vs. the carbon footprint of globalization via air travel, and the true cost of air travel in both economic and environmental terms.
If you enjoy Aerotroplis as much as I did, you might also read the June edition of Southwest Airline’s Spirit magazine as Mr. Lindsay has recently penned an article titled “Corporate Latter”. In this article he builds on the concepts discussed in Aerotroplis and discusses how technology has allowed us to shift away from being tied to an office, setting up shop at any location (http://www.spiritmag.com/click_this/article/the_corporate_latter/) . One economic development guru and author, Mark Lautman, is pushing this idea as the next evolution of cutting edge business recruitment – to scale down the benefits big corporations receive so communities can chase the highly mobile, quality of life comes first businessperson/consultant who eventually expands their business and hires staff. According to “When the Boomers Bail: A Community Economic Survival Guide”, this segment of our economic businesses is one of the fastest growing.
Not only would I highly recommend you read Aerotroplis, I would encourage you to purchase copies to share with your family, friends and clients as the conversations started from the concepts in the book are engaging, enlightening and very relevant to anyone with commercial real estate.
Todd Clarke CCIM
Aerotropolis can be purchased at: http://www.amazon.com/Aerotropolis-Way-Well-Live-Next/dp/0374100195/ref=sr_1_1?ie=UTF8&qid=1306590616&sr=8-1
The city of Albuquerque is looking for development teams to redevelop the historic De Anza Hotel. A full copy of the RFP can be found by clicking here and a copy of the market study we did for the City can be found here.
Of the many consulting assignments I’ve had the pleasure to work on, this was one that I probably learned the most. Our stakeholder sessions included some of the original employees who worked at the hotel in its hey day and remember the pink cadillac the owner used to pickup VIPS as well as the numerous political announcements made there.
Something very unique to the hotel is the priceless artwork embedded in the main common area space. The original developer, CG Wallace, hired native american’s to depict an medicine ceremony with life size Shalako dancers. To the best of historian’s knowledge, this artwork is the only piece like this that can be found off of a reservation.
After many months of strategizing, negotiating, researching, and putting together our cases for our client’s, Cantera Consultants & Advisors Inc. recently settled all of its cases on the controversial apartment property tax lightning cases for 2010 (click here to read the summary).
In a recent (and copyrighted) Albuquerque Journal article, The Bernalillo County Assessor has indicated that she intends to roll back the 2010 values on all apartments that were raised more than 3% over their 2009 values.
If you own an apartment that experienced an increased of more than 3% in value (over 2009), and you did not file a protest by May 20th of 2010, there is one additional option available to reduce your property taxes for 2010 – you can file a claim of refund.
While this is a normal a service we offer our clients for contingency fee, in this unique situation, I believe the work we (and others) have done for our client’s this year has laid the foundation for the remaining apartment owners who haven’t filed to seek a refund.
If you meet the following criteria, you might be able to handle this case yourself:
– If you are the owner of a property not held in a partnership or corporation, you can represent yourself at district court to seek a refund of your property taxes.
– If you have already paid your property taxes, the full amount (not the first half installment)
– If you fill out a claim of refund (again, its more than a form, it is a lawsuit)
– If you file, in person, and pay the filing fee
In New Mexico, a claim of refund is lawsuit against the county, in which you, as the property owner, claim that you have overpaid the county in property taxes.
While I am not an attorney, and cannot offer any legal advice, I have been involved in a handful of claim of refunds and I can tell you that you can go to the district court website at www.nmcourts.gov and search the cases for the name “Karen Montoya” (our current assessor) and request a copy of a claim of refund from the court (you must do so in person, and they will charge you a copy fee) and use it as a model for your claim of refund.
You can also download Chapter 11 of our book “Understanding NM’s Property Tax System -2010 edition” that includes a blank form that we’ve used before. The deadline to file the lawsuit is 60 days after the property tax bills were sent out.
When filling out the form – be sure and look up your property’s property tax bill information at Bernalillo County’s website. Part of the form requires that you calculate what your property tax bill should be (based on 2009 values + 3%) vs. what it was on the actual tax bill.
Most tax consultants, such as our selves, are also working with attorneys and can provide assistance, but this maybe one of the rare situations, where everything has already been resolved (thanks to those owners who filed protest, and there consultants/attorneys who worked through the cases in 2010), that an owner maybe able to simply handle this themselves.
****disclaimer – in case I haven’t made it totally clear – this information is provided as a public service, and it not intended to offer legal or real estate advice. Going to court without legal representation is not a wise idea.
Almost a year ago, I wrote about the devastating fire at the Castle apartments. Located on Central Avenue at about 15th street, the apartments were incredibly well built, had an appealing interior design and finish and were well loved by anyone who has ever lived there.
Although several local developers looked at ways to save the structure and renovate the building, it was demolished this week. The following photos are pictures I took when I toured the property with the owners a few years ago and/or recent photos of the demolition.
KRQE website has coverage of the fire and the demolition.-
All that remains today are the original carriage houses, now car garages to the south of the original structures.
As one of Albuquerque’s finest apartment structures, you will be missed.
The juxtaposition of news story about the economy are interesting – on one hand the Federal government has declared a victory on turning around the economy, on the other, those of us in the commercial real estate business know that until there is transparency in the lenders holdings, the loans will not flow, the capital markets will not return, and the transaction volume will remain virtually non-existent.
Good news from the Albuquerque Journal (need I say anymore?)
The not so good news about capital markets in the commercial real estate world, from yesterday’s RealShare conference titled Warning Signs.
The Wall Street Journal had a dour article on the ballooning balance of commercial backed securities.
President Truman once asked an economist his opinion –the economist replied with something like “on one hand it could be good, on the other hand it could be bad” to which Truman quipped “next time bring me a one handed economist”
In a copyright story by the Albuquerque Journal, the headline read “State: Almost Half of Class of 2008 Didn’t Graduate” and was followed by “Roughly half the students who should have graduated with the class of 2008 failed to do so, prompting a call to action by the state’s education secretary.”
While the headline is alarming, the data underneath it is suspicious.
How do I know? I worked as a consultant a couple of years ago on an education study for a developer to understand what was gonig on with APS enrollment.
In meeting wiht APS staff demographers, it came out that they didn’t track APS students once they left the system. So if you move to Los Lunas, you didn’t graduate, if you change schools to St. Pius, you didn’t graduate, if you move to Boston, attended and graduate from M.I.T., negotiate world peace, and win the Nobel Peace Prize, yes, you guessed it, APS believes you “didn’t graduate”.
Assuming 5% of all American’s move in any given year, and a four year high school attendance, fully 20% of the APS students could have “not graduated”.
Maybe its time for APS to spend some time and money and track its most precious resource, its students…
Fire last night destroyed one of Albuquerque’s best loved medium sized apartment communities- the Castle Apartments. Located between downtown and old town at 1410 Central SW, the 20 unit apartment community caught fire around 8pm and continued to burn in the Wednesday morning.
Built in 1922, the 15,150 square foot apartments featured amazing built-ins and was considered by many of its former residents, some of the nicest apartments in the Duke City.
Located just east of former mayor, Franz Huning’s estate, affectionally known as Huning Castle. The old Huning Castle estate was replaced in the a few years ago with the
As smoke blanketed downtown Albuquerque, News reports last night mistakenly indicated the newwer Huning Castle apartments were on fire, but later corrections indicated that residents from the Huning Castle apartments called in to the fire department about the fire at the Castle apartments.
Fortunatley no lives were lost, and our condolences go out to the families that own this historic gem and the residents who called it home.