Knowledge Leader - Fall 2009

Knowledge

Leader Fall 20 09

Colli ers i nte rnati ona l proper ty m agazine

Emerging Trends New Opportunities on the Horizon

Effective Networking Make the Most of Meet and Greets

Lease Administration Forensic Accounting at Work

FirstService Building a Brand

Put Me in, Coach

Creating a Coaching Culture

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Contents 4 Outlook 20/20

Scientific breakthroughs by Massachusetts Institute of Technology’s Dr. Robert Langer could help shape the commercial real estate world. BY RANDY WOODS

6 Spotlight

Warsaw’s Deloitte House sells for $165 million; taking the economy’s vital signs; Q&A with Colliers Meredith & Grew Senior Vice President Kristin E. Blount

10 B2B Networking strategies that really work.

BY HEIDI STOUT TRETHEWAY

12 Working Space In today’s economic times, are clients still looking for environmentally friendly spaces?

BY KERRY ALEXANDER

14 Bank Notes

18 Construction Zone

From hospitals to sports arenas, H. Ralph Hawkins has built an architectural firm based on integrity and innovation.

BY CHERYL REID-SIMONS

22 Above Standard Performance Is now the time to invest in commercial real estate? We asked Standard Life Investments (Real Estate) Vice President Peter Cuthbert. His answer may surprise you. BY TERESA KENNEY

26 Emerging Trends Industr y experts reveal new opportunities in today’s turbulent market.

BY HEIDI STOUT TRETHEWAY

31 CSI (Cost-saving Intelligence) for Tenants

Don’t invest in commercial real estate until you read this. BY JACK M. COHEN

Colliers’ forensic accounting team provides clients with cost-cutting tools to save money on their leases. by RANDY WOODS

15 Sound Off

38 Executive Travel

FirstSer vice steps out of the shadows to take on commercial real estate’s big three.

BY KERRY ALEXANDER

16 Follow the Leader

Tips to help you create a coaching culture at work. BY MARY JANE PIOLI

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Layovers in these international airports have their perks. BY Annika Hipple

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40 In Focus

Focusing on opportunity instead of obstacles is a smarter strategy in a recession. BY DOUG FRYE

17 Happenings

Snapshots of Colliers’ events across North America.

knowledge-leader.com Colliers international Spring 2009

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Volume 3 u Number 3

Teresa Kenney Editor

Kerry Alexander Associate Editor

Amy Wallace Art Director

Heidi Page Project Manager Contributing writers

Kerry Alexander, Jack Cohen, Doug Frye, Annika Hipple, Teresa Kenney, Mary Jane Pioli, Cheryl Reid-Simons, Heidi Stout Tretheway, Randy Woods Proofreaders

Kerry Alexander, Lilium Pierson, Heidi Stout Tretheway This magazine is published by CMN, Inc., the largest independent member firm of Colliers International and a subsidiary of FirstService Real Estate Advisors.

Doug Frye PRESIDENT & CEO, COLLIERS MACAULAY NICOLLS, INC. CHAIRMAN, COLLIERS INTERNATIONAL GOVERNING COMMITTEE CHAIRMAN, COLLIERS USA BOARD OF DIRECTORS President & CEO, FirstService Real Estate Advisors

To order more copies, learn about advertising options or subscribe to Knowledge Leader, visit Knowledge-leader.com.

Tiger Oak Publications 1518 First Avenue, Suite 500 Seattle, WA 98134 Knowledge Leader is published quarterly by Tiger Oak Publications, Inc., with offices at 1518 First Ave. S., Suite 500, Seattle, WA 98134; 206.284.1750. Š Tiger Oak Publications, Inc. All rights reserved. POSTMASTER: Send address changes to: Knowledge Leader, Colliers International, 601 Union Street, Suite 5300, Seattle, WA 98101. Publications Mail Agreement No. 40064408. Return Undeliverable Canadian Addresses to: Express Messenger international, P.O. Box 25058, London, ON N6C 6A8. Printed in USA.

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Outlook 20/20

h ot to pi c s m a k i n g h e a d l i n e s to day

Real (Estate) Science Scientists like MIT’s Dr. Robert Langer are Bioengineering the Future of Commercial Real Estate.

By Randy Woods

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Dr. Robert Langer (right) holds more than 750 granted or pending patents in the area of biotechnology and is considered one of the most important inventors in biotechnology today.

He will speak at the 2009 CREW Conference General Session in Boston on Oct. 2 about how developments in materials science will reshape the commercial real estate landscape.

Dr. Robert Langer is hardly a commercial real estate expert. The internationally renowned chemical and biomedical engineering professor at the Massachusetts Institute of Technology (MIT) measures his work is nanometers and RNA rather than square footage and I-beams.

But the amazing breakthroughs he has made may indirectly lead a new wave of economic and real estate development nationwide.

The impetus for much of this potential development, Langer says, will come from the emerging science of nanotechnology. By manipulating unfathomably tiny structures measured in billionths of a meter—about 40,000 times smaller than the width of a human hair— scientists are finding ways to not only reshape materials, but also to alter their basic physical and chemical properties.

Nanotechnology is ushering in a new revolution in materials science. “Rather than taking materials from off the shelf, we look at them more fundamentally,” Langer says. “We first ask, ‘What do we want from a material?’ and then we synthesize it from scratch, making it optimal from a chemical and biological engineering standpoint.”

By working on a molecular level, scientists such as Langer are creating materials that can change their shape and behavioral characteristics and improve their functionality. With nanoscience, it may become possible to, say, turn a waterabsorbing material into a water-resistant material with the flip of a switch, or perhaps by changes in light or temperature.

Last year, Langer—who already holds more than 750 granted or pending patents in the area of biotechnology—was awarded the 2008 Millennium Technology Prize for his development of biomaterials for controlling drug release in the body and the regeneration of human tissue.

Today, he is considered one of the most important knowledge- leader.com

inventors in biotechnology and heads the largest biomedical engineering lab in the world at MIT. Langer’s innovations not only treat cancer, they also enhance the effectiveness of cancer-fighting drugs by providing a more direct delivery system.

He has found a way to encase molecules of drugs inside thin, nano-scale polymer structures that allow the drugs to target only cancer cells. The biodegradable polymers can be customized for various types of treatments and activated to release precise amounts of drugs via ultrasound, electrical or magnetic pulses over long periods of time.

Because of these advances, major medical breakthroughs are on the horizon. Langer predicts that even in the next five years, we will begin to see more effective therapies for illnesses such as ovarian, prostate and brain cancers.

Langer’s work has also led to advances in tissue engineering. By placing certain stem-cell growth stimulating molecules in nano-scale “scaffolds” adjacent to damaged tissues, he and his team are able to stimulate new tissue growth. “We’ve already been able to make new skin for burn victims,” he says. “But now we’re seeing some breakthroughs in animals in the treatment of spinal cord injuries and the growth of organs, such as liver and heart tissue.”

But how will these microscopic structures affect the macro world of commercial real estate? As more advancements are announced, he says, new facilities must be built, not only for lab research but also to manufacture new pharmaceuticals and medical equipment.

In spite of the current economy, there is still growth in certain technology clusters around the country, especially those located near leading engineering universities such as Harvard, MIT, CalTech and Stanford. As a result, Boston is still one of the largest technology research markets in the U.S. But the demand for biotechnology and nanoscience is also leading to an explosion of

growth in other areas such as San Diego, Seattle and Austin, Texas.

More real estate development is sure to come, he says, as new nanomaterials hit the market, reinventing the way we manufacture our products. For example, Langer sits on the scientific advisory board of mNemoscience, a German company that is trying to commercialize BioSMP, a strong, shape-changing biodegradable material that can be used in various medical products, such as surgical sutures and vascular stents. Dr Langer is also an advisor to Alnylam Pharmaceuticals, which is using nanotechnology to create gene therapy treatments that can “silence” certain disease-causing genes via RNA interference.

While curing the world’s diseases is the scientific Holy Grail, Langer notes that the path toward medical cures can have many unexpected offshoots into the more prosaic—but still profitable—fields like consumer products.

Take the beauty industry, for instance. Using polymer technology, Langer has worked with a Cambridge, Mass.-based company called Living Proof to help eliminate frizzy hair. The resulting product, “No Frizz,” uses an engineered polymer to coat hair fibers with a durable hydrophobic layer that prevents hair from swelling up with moisture in high humidity.

“Before us, everyone had used silicone for 40 years to deal with frizz,” he says.

As can be seen from Langer’s wide-ranging work, the applications of bioengineering have the potential to impact virtually every aspect of modern life, from life-saving drugs to the latest hair styles. “All of this work with biomaterials will have a huge effect on the economy,” he says. “I foresee lots of continued growth in real estate in the form of both new research centers and the development of commercial products.

It’s very exciting.” K L Colliers international Fall 2009

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spot l ig h t the people, places

» international

and events shaping the industry

news

Green office building in Warsaw sells for $165 million Colliers represented the seller in the largest real estate transaction in Central and Eastern Europe this year.

Colliers International has arranged Central and Eastern Europe’s largest commercial real estate transaction to date for 2009: the sale of the Deloitte House for $165 million. The newly constructed, 226,000-square-foot, Class A office building, located in the central business district of Warsaw, Poland, is also the city’s first certified green building. The property officially opened in July 2009.

Colliers Warsaw represented property owner Skanska, the world’s fifth largest construction company, on the landmark transaction. The buyer is a fund managed by Deka Immobilien, a German-based international investment management firm.

Colliers also serves as property manager for the fully leased building. The global financial services firm Deloitte is the anchor tenant.

“Deloitte House is a best-in-class product in the European Union’s economy,” said John Banka, a director of Colliers International in Poland. Banka arranged the transaction together with colleague Neil Gregory-Eaves, a director of Colliers International in Central & Eastern Europe (CEE). “With known Skanska quality, an excellent CBD location and Deloitte as an anchor tenant, the new owner is well-positioned for long-term success,” adds Gregory-Eaves.

Originally called Atrium City, the building was renamed Deloitte House when that firm signed on as the anchor tenant, taking 148,000 square feet.

The sale ranks as the fifth-largest office sale in Europe, the Middle East and Africa in 2009 to date, the year’s largest transaction in Central and Eastern Europe, and one of the top 12 office trades globally, according to data supplied by industry research firm Real Capital Analytics.

Colliers operates three offices in Poland: Warsaw, Krakow and Wroclaw.

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Deloitte House is a 226,000-square-foot, Class A office building in Warsaw, Poland.

» Industry

Update

Transaction News Birtcher Acquires 21.6-Acre Site for $20 million Birtcher Development & Investments, in partnership with Cornerstone Real Estate Advisers, LLC, has acquired a 21.6-acre site in Anaheim, Calif., for $20 million. The two companies were represented by Senior Vice President Clyde Stauff in Colliers International’s Irvine office and Senior Vice Presidents Patrick Remolacio, based in Colliers’ Irvine office, and Bret Hardy, based in Colliers’ Downtown Los Angeles office, both of whom also head Colliers’ Integrated Real Estate Solutions group.

The firm plans to develop a build-to-suit facility for Northgate Gonzales Markets, a family-owned Latin American market.

Development is scheduled to start in the fourth quarter of 2009. Northgate Gonzales Markets signed a 15-year lease to occupy the future Northgate Gonzalez Market Support Center.

The build-to-suit lease transaction was valued at $69 million.

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» insider

tips

Economic Checkup Taking Our Economy’s Vital Signs. BY James cook

» financing

Environmental Champion MHPM CEO appointed to Round Table.

Franklin Holtforster, president and chief executive officer of

MHPM Project Managers Inc., has been appointed to the National Round Table on the Environment and the Economy (NRTEE) by Canada’s Environment Minister Jim Prentice.

NRTEE’s members are drawn from distinguished leaders in business and labor, universities, environmental organizations, Aboriginal communities and municipalities who offer different perspectives on issues of environmental concern.

Holtforster has actively championed LEED (Leadership in Energy and Environmental Design) certification for building performance in more than 50 projects across Canada and encourages all MHPM professional staff to obtain LEED Accreditation.

Just as a paramedic in an emergency situation does not have the time to give a patient every medical test, a professional cannot dig into every bit of economic data. But we can run a quick check of the economy’s vital signs. Here are our favorite U.S. economic indicators: •

•

•

•

The University of Michigan Consumer Sentiment Index uses a phone survey to measure the attitudes of the American public.

That mood tells us if we can expect an uptick in consumer spending. The last cyclical peak of sentiment was in January 2007. Consumer sentiment ticked up in June and then down again in July. Returning upticks represent consumer optimism which is expected to translate into growth.

Non-farm employment figures are an easily understood window into the health of the economy. Employment rates will rise after the economy expands. Employment figures continued dropping through the first half of 2009. A significant employment uptick will be a first sign that a commercial real estate (CRE) recovery is on its way.

CRE sales volume is a direct indicator of the current health of commercial property investment. CRE lags behind much of the greater economy. For the overall economy, it tells us where it’s been, not where it’s going. Commercial sales volumes have inched up in recent months; however, they are a fraction of the volumes seen in 2007 and 2008.

Vacancy rates offer another reliable CRE pulse-check. In nearly all U.S. sectors, commercial vacancies in the first half of 2009 are rising.

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Colliers international fall 2009

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spot l ig h t »Q&A

executive insight with:

Kristin E. Blount senior vice president, Colliers Meredith & Grew

Who were your mentors?

I think my most inspirational mentor has been Tom Hynes, the chairman and chief executive officer of Colliers Meredith & Grew. I have spent the last 12 years working directly with Tom. His work ethic, moral compass and general respect for others is second to none. And despite his commitment to excellence in his job, his family always comes first.

Favorite business book?

If you could have dinner with any business leader, who would it be and why?

Orit Gadiesh, chairman of Bain & Co./U.S. Ms. Gadiesh is one of the most effective and strategic corporate leaders in the world.

Driven by her “true north” approach, Bain has had tremendous success with its resultsoriented philosophy. As a service provider, this is also the “true north” of Colliers. She is a woman who has overcome obstacles and excelled in all that she has done. She also cares about the community, finding time to serve on various academic boards as well as the World Economic Forum.

Words to live by?

I’m torn between two phrases: “What you conceive in your mind and believe in your heart, you will achieve,” and “Things work out the best for those who make the best of the way things work out.” I believe in the power of positive thinking, but I also believe that when things don’t go our way, we need to pick ourselves up and keep going.

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My favorite business book was not written by a business guru, but rather by UCLA coaching legend John Wooden. My favorite of his books is Wooden on Leadership which he co-authored with Steve Jamison. The book provides practical advice and solutions on building great teams and structuring your priorities.

What do you see as new industry trends to note?

I think that there is more accountability in our business as we move forward. While relationships continue to drive new business efforts, we need to deliver results for our clients. This means working in multidisciplined teams to ensure that our clients have the highest quality service. It also means that we need to be educated on the trends in our clients’ businesses, understand how the numbers work, communicate effectively, and think proactively.

What did you want to be when you were young?

My father is an attorney, my mother is a residential real estate broker and they also developed single family homes and small strip shopping centers. I knew that I would work in real estate when I grew up.

Biggest accomplishment so far in your career?

I have been fortunate to work on some of the largest and most complex transactions in the Boston market over the years, but I think the greatest career accomplishment was when I went to graduate school. I was 30 years old and working in Meredith & Grew’s property management department, managing the firm’s largest portfolio when I had an epiphany. I wanted to be responsible for my own destiny—to work in an area where my compensation would be dictated by how hard I was willing to work.

Two weeks before the deadline, I applied to Massachusetts Institute of Technology’s prestigious Master of Science in Real Estate program and was accepted with a full academic fellowship. My husband and I sold our house and moved the family into an apartment closer to school. I completed the program with honors. It gave me the skills I need to do my job well and, more importantly, gave me the confidence to take risks.

Who are your role models?

I have two sets of role models. First, my parents: They are hard-working people with unquestionable ethics. They taught all six of their children not just to work hard, but also to cherish our families and to give back to our communities.

Second, my CREW (Commercial Real Estate Women) colleagues. In a field that is clearly male-dominated, this group of high-powered women inspire me every day. They are pioneers and trail blazers and have paved the way for the next generation—leading by example and giving back. K L knowledge- leader.com

B2B

B u s i n e s s to B u s i n e s s Ti p s

Business Connections From Focusing on A specific color to Sending a Moody Blues Album, Experts share their strategies for effective networking.

By Heidi Stout Tretheway

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Experts say preparation and strategy are the keys to turning a casual meeting into a profitable business opportunity.

Networking pros start with a clear goal in mind, such as connecting with five specific event attendees or developing eight new leads.

“If I’m going to an event where I don’t know anyone, I pick a color,” says Cris Schulz, advertising director of the Daily Journal of Commerce (DJC) in Portland, Ore., and president of the American Marketing Association of Oregon.

“If I pick pink, I make sure I meet everyone wearing pink—pink tie, pink handbag, pink shirt,” she explains. “It pushes me to meet people I might not otherwise approach.”

Some events post registered attendees online in advance of the event, which can be a fertile source for identifying your best targets and researching them in advance.

Schulz, a networking pro and author of a monthly networking newsletter, also suggests arriving early to read the name tags. knowledge- leader.com

“I always save a seat—I might not know who I’ll fill it with, but once people arrive, I can say, ‘Here, I saved you a seat,’ to ensure we’ll spend significant time together during that event,” Schulz says.

Once you’ve approached someone, “the single most important point in networking is to find common ground quickly,” says Bob Potter, managing principal of R.A. Potter Advisors, a marketing and sales strategy consulting firm.

“Don’t sell your product first; create the relationship first.”

Questions like, “How did you come to join your firm?” and “Did you grow up and do your schooling here?” will help you find commonalities. To steer the conversation toward business, Potter suggests an open-ended question about what’s changing in their industry.

Schulz also seeks out the speaker early. “More often than not, during his or her presentation, the speaker will mention, ‘I was talking to Cris at the DJC, and she said…’ and it tells the whole room that I’m there.”

If you are one of the many people who feel intimidated by a large room, what is the best way to start networking?

• Ask to be introduced. Ask a mentor, colleague or client to introduce you to people he or she knows at the event.

• Ask to meet. Call or e-mail a likely event attendee and let him or her know you would like to meet at the event.

• Team up. Choose a businessperson who has similar target clients, such as a land-use attorney teaming up with a contractor. Then work the room together. knowledge- leader.com

“The single most important point in networking is to find common ground quickly.

Don’t sell your product first; create the relationship first.”

Bob Potter, managing principal, R.A. Potter Advisors POTENTIAL PITFALLS

FOLLOWING THROUGH

Some of the biggest mistakes in networking are wasted opportunities. “Some employees view events as break time, and most people treat it as a reactive, catch-as-catch-can,” Potter says.

Smart managers set expectations for their salespeople by requesting they share the event content with their colleagues, make a minimum number of new contacts, or report on specific follow-up and conversion.

Many teams of coworkers tend to socialize with each other, rather than work the room.

At a seated event, avoid buying a table for your firm. Instead, ask the event host if your company can place individuals at multiple tables.

“Being passive is deadly,” Potter says. “Even when someone takes your card or collateral and seems very interested, to assume they’ll call is a fatal mistake. People appreciate being approached.”

Schulz says the biggest mistake is failing to be a genuine networker. “Shut up and listen to the other person, hear what their needs are, and follow up on some of these needs or make a business connection for them,” she says.

She does this by asking everyone, “How do I recognize when I meet a good prospect for you?”

She has become the ultimate connector between business leaders, and in doing this, increased her own company’s revenue by an average of 37 percent annually in the past four years.

A final pitfall Schulz identifies is getting sidetracked at a networking event—you’re focusing on one person, but other people pass through your field of vision and wave or say hello.

How does Schulz handle it?

“I wave back to acknowledge them, but I don’t speak,” Schulz says. “Then I immediately redirect my eye contact back to the person in front of me and say, ‘I apologize. What were you saying?’ and use their name. I let them know they have my full attention.”

Following the networking event, immediately connect with those you met and ask for the action you would like them to take—whether that’s a formal meeting, coffee or lunch, or an invitation to connect on LinkedIn or to attend another event.

Also make sure to follow up on promises, such as “I’ll e-mail you our report on that.” Jog your memory by marking on the back of their business card what you’ve promised to do.

Some of the most memorable connections I’ve made at events were unique statements that showed people had listened: •

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•

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At a “Rainmakers” event, a fellow honoree learned I collected vintage pottery.

She sent me a small vase with a letter of congratulations.

At a “Women in Business” event, a printing vendor heard about my home improvement project. She sent me a small tool, together with samples of her print shop’s work.

At a marketing event, I told a public relations agency executive that I’d met the drummer of the band Moody Blues at my hotel the night before. She sent me a copy of his album together with a pitch for my business.

At a “Grip-n-Grin” political event, a title officer and I discussed our favorite lunch place and their signature soup. She sent me the recipe and her business card.

These individuals exemplify successful networking—making a connection, making an impression, and then making a pitch for business. In addition to their creative approach, they made it easy to connect with them—and refer them—with up-to-date Web sites and professional profiles. K L Colliers international Fall 2009

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Working Space

s m a r t d e s i g n f o r t h e wo r k p l ac e

The Future of Green In today’s economy, are tenants looking to save the environment or dollars?

By Kerry Alexander

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When sustainability first made its foray into commercial real estate, it was more trend than trade. And now, with the economic slump, the “cool” factor of green has, well, cooled, for many property owners.

Roger Bilstad, senior vice president for Colliers International’s Real Estate Management Services (REMS), admits there are hurdles to overcome in this market. “It’s hard to get traction on green right now in property management.”

Bilstad believes that had the U.S. not found itself in a financial debacle, sustainability would have remained a major driver. “Over

the past 20 years, there’s been a strong focus on lowering expenses, especially around energy consumption.” But, he says, “right now, owners are hanging on for dear life.

Unless there is immediate payback, green is not a priority.”

According to Bilstad, tenants are looking at best pricing, not best practices. Green buildings typically command higher rents. In today’s market, that can be a leasing limitation as many companies who were previously keen on green aren’t seeking out sustainable space.

While private sector demand has slowed, knowledge- leader.com

Opposite page: The glass atrium of CalPERS headquarters (left) in Sacramento, Calif., is LEED Gold certified. Updated, more energy-efficient heating and cooling systems (upper right) are one of the sustainability features added to the Credit Suisse property in Toronto, Ontario. The cherry paneling and doors of CalPERS interiors (below right) are FSC (Forest Stewardship Council)-certified wood.

This page: The Credit Suisse building at 160 Bloor Street in Toronto’s mid-town is slated for LEED-EB (Existing Building) Silver certification in 2010.

government regulations are heating up.

California has mandated that state-owned buildings must be LEED (Leadership in Energy and Environmental Design) certified.

Other states are following suit.

Jim MacKenzie, senior vice president of maintenance operations for Colliers International, says it’s the same in Canada. “We’re seeing more local municipalities adopting LEED design requirements in their construction bylaws. The city of Vancouver has set LEED Gold as the minimum design standard for their new public buildings.”

CalPERS was one of the first organizations to embrace green mandates. Colliers has provided property management for the

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Sacramento, Calif.-based pension fund firm since 1998. Tracey Lee manages the company’s headquarters—two buildings that comprise more than 1 million square feet. The first was built in 1986. The newer building, completed in 2005, is LEED-New Construction Gold certified.

“We really got started in green management practices when CalPERS asked us to be part of the construction planning committee for the new building,” says Lee. “Back then, LEED was a very new concept.”

Once into the process, Colliers began also looking at ways to green the existing CalPERS building. “There are a lot of low-cost or no-cost systems that can be put into place in older buildings to improve performance,” notes Lee. “Chemical-free cleaning and environmentally friendly paper products, HEPA (high efficiency particulate air) filters, low VOC (volatile organic compound) products, desk-side recycling, energy-efficient light bulbs—all of these things were fairly easy to implement.” The building is now slated for LEED for Existing Buildings: Operations & Maintenance (O&M) Gold certification.

Bilstad and Lee agree it’s important for service providers to walk the walk, not just talk the talk. The Colliers REMS team occupies a green building and has implemented many of the green practices they advise for their clients. Lee says clients are starting to ask for reports on sustainability from their providers.

“It’s not just, ‘do you have a policy?’ It’s ‘show us your numbers.’”

Pauline Fowles is a senior property manager for REMS in Toronto. She says there are a number of new LEED Silver and Gold buildings in downtown Toronto under construction that are competing for tenants. As a result, many owners are focused on greening existing buildings to retain their tenants. Fowles manages Class A office buildings for Credit Suisse in mid-town Toronto and is aiming for LEED for Existing Buildings Silver on one of the properties by the end of 2010.

Fowles says due diligence is critical and advocates long-range planning as part of the greening process. “We looked at building

Colliers International’s Real Estate Management Services TEAM occupies a green building and has implemented many of the green practices they advise for their clients.

code changes that impact the environment, energy consumption, water consumption and the life cycle of existing heating and cooling systems. Everything we budgeted for we thought about in terms of LEED.” MacKenzie says that more clients are bringing providers into the sustainability discussion earlier. “We have a number of clients who’ve invited us into the pre-development process.”

He says this helps ensure a more seamless integration with the building’s maintenance and operations, which can reduce operating costs over the life cycle of the building. “Take low-flow and dual-flush toilets for example.

Buildings use a lot of water, so they’re a good solution. But it’s also helpful to know that they offer greater reliability when they are located in close proximity to the main drainage risers.”

Bilstad says that even though landlords and tenants may be putting green on the back burner in the short term, property managers shouldn’t shy away from the topic with clients.

“If you want to be a legitimate contender, you have to be green. Without it, you won’t remain competitive,” he cautions. “When contracts come up for bid, consideration will be given to providers who have knowledge in environmental management.” K L Colliers international fall 2009

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Bank Notes

Commercial Financing News

Risky Business In today’s economic climate, Before investing in commercial real estate, make sure you properly analyze and price your risk. By Jack M. Cohen, CRI, CMB Do you think the collapse of the real estate

marketplace is determinism (by design) or randomness (everything means nothing)?

We cannot deny that we have experienced a “bubble.” A bubble merely transfers a share of the future demand into the present. It’s linked with dramatic valuations and always debt-funded. It is this “bubble passing” that now forces us to consider that our individual business plans need to change.

A long period of healthy economic growth convinces people to take bigger and bigger risks.

In the fall of 2008, former Federal Reserve Chairman Alan Greenspan insisted that the precipitating factor of the 2008 crisis was the failure to properly price risky assets. As you consider your play in this real estate cycle, consider your capacity to evaluate, analyze, identify, assess and price risk. You must consider the partners who have provided equity capital to your individual business plans as well. Without goal congruence as it relates to evaluation, analysis, identification, assessment and the ultimate price of risk, the proverbial rug is likely to get pulled out from under your business plan.

It’s bad enough that we stand on shifting sands vis-à-vis the regulatory ground rules that our government seems to be placing upon us.

As we stabilize housing, fix the banking system, get credit flowing and re-regulate the financial markets, remember that hope and fear are inseparable. We need to ensure that those who provide the equity for America’s deleveraging are in sync with the real estate owners and operators as to how they identify, assess and price risk. We believe that investors like risk (volatility of outcome) so long as they can price it; what investors hate is uncertainty—not knowing how big a risk is. Markets buy and sell risk that is wanted and unwanted.

Real estate is about risk shift, and the marketplace is where this shift (for price) takes place. Today, however, capital “markets” seem to be an oxymoron. We don’t see capital flows 14

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returning to the levels we experienced in 2007.

The combination of devaluation of assets, lower loan–to–value (LTVs) and decreasing velocity of transactional turnover should cover all but about $50 to $70 billion of the capital needs of our industry. We don’t see securitized mortgage lending returning until there is stability in the interpretation of mark–to–market valuation, as well as sale treatment by the accountants on the balance sheets of our financial institutions.

Pricing, of course, will be critical for the “new securitized world” given the volatility (risk that must be priced) bond buyers have experienced since June of 2007.

Today, the market doesn’t know what to expect.

There is regulation uncertainty and there is a fear that regulation will change, leaving us regulation by deal. Can and will the government change the rules controlling the business community on a whim?

Money supply’s effectiveness depends on how quickly people spend it—that is called velocity. If people horde cash, velocity falls and more money is required to keep the economy moving. As velocity continues to fall faster than the Fed can pump up the money supply, our government must spend on goods and services. Yet Congress does not have its own stash. Every dollar it injects into our economy is taxed or borrowed out of the economy. Our economy has stalled, with insufficient aggregate demand. With a decline in demand for goods and services, sales fall. Production is cut, people are laid off, unemployment rises and declining profits further depress demand, creating a vicious circle. We have to increase demand through consumption, investment, net exports and government purchases. Cheap credit—the usual route to recovery— has failed to work. Lenders have pulled back. Borrowers are focused more on paying down debt and building up savings. Keynesian economists advocate

increasing government spending to combat economic downturns and generate jobs.

Motivations matter. Banks, whether they are local, regional or national, interpret “troubled assets” and the use of TARP (Troubled Asset Relief Program) or PPIP (Public-Private Investment Program) money differently. “Toxic” to a local bank may be acquisition, development and construction loans for home builders, while “toxic” for the largest banks in the globe may be mortgage securities. The motivations of banks differ from life companies (regulated by 50 different state regulators), which are different from the motivations of a securitized lender (and whether we are dealing with a trustee, a master, a primary, a sub, or a special servicer).

In this marketplace, knowledge, motivation and relationships matter.

Our future gets clearer every day. If our crisis was caused by a dramatic under-pricing of risk, resulting from a combination of endless supply of capital and an insatiable appetite for leverage, then our future is one of lower leverage, greater transparency, greater regulation and an organized marketplace where transactions are done responsibly. Regulation has the tendency to create accounting rules and capital requirements that aggravate financial retrenchment during a slowdown and financial access in a boom.

All real estate makes money; the only question is who owns it at the time. K L

Jack M. Cohen, CRI, CMB is chief

executive officer of Cohen Financial, a national real estate capital services firm recognized as one of the nation’s largest originators of commercial real estate financing. For more information, visit cohenfinancial.com.

knowledge- leader.com

Sound Off

S t r at e g i c T h i n k i n g

New Kid on the Block FirstService Real Estate Advisors is an Emerging leader in global real estate services. By Kerry Alexander In June 2009, Dylan Taylor was appointed U.S. president of FirstService Real Estate Advisors (FirstService REA)—a new player in the global landscape of commercial real estate.

Formerly flying below the radar as the parent company for a number of top brands in the industry, including Colliers Macaulay Nicolls (CMN)—the largest member firm of Colliers International—FirstService is stepping out of the shadows to unite its brands together with the bold goal of taking on the “big three” in real estate.

According to Taylor, purchasing decisions for real estate services are becoming more centralized.

“What it’s going to come down to are classes of providers—the big three or four and the boutique firms; there will be no in-between in the industry,” predicts Taylor. “Providers will either have to go the way of full integration and a more global approach to servicing clients or stay small with low overhead and a local focus.”

For FirstService REA, the target is the former—to become one of the top three global providers of real estate services. The firm is already the fourth-largest from a revenue standpoint. The focus now is on building the company’s brand profile, client base and service delivery platform.

“We have a collection of companies that are the best of breed and offer services that are integrally important to clients,” says Taylor.

“Our objective is to integrate them into a seamless delivery experience.”

Taylor notes that some industry insiders may say that the internal structure of an organization doesn’t directly translate to the client. “It does,” affirms Taylor. “What’s unique about FirstService REA is our equity model. Each of our key business lines has a direct stake in the company.”

“When you create greater ownership inside, it translates to better service outside,” he adds.

“We’re able to attract the best people and offer knowledge- leader.com

premium services to our clients. It’s a boutique philosophy within a global framework.”

Taylor’s first order of business is to leverage his experience in workplace solutions and property management to build a stronger platform for these services lines for FirstService REA in the U.S. The trend in property management is moving toward institutional-grade services, says Taylor.

“Major institutions are increasingly controlling more real estate,” he explains. “They are looking for a provider who can service these portfolios nationally.”

“When you are dealing with major institutions, you have to have high standards that extend to all aspects of the management process— accounting, technology, procurement, call centers,” adds Taylor. And market share. “You have to be in the key markets where your clients do business.”

In addition to trends affecting institutions, there are other trends affecting corporate clients.

Right now, according to Taylor, the focus is on leveraging spending. Companies are looking at ways to apply efficiencies to the management of their assets.

“Workplace Solutions isn’t just about having multiple arrows in your quiver. It’s about a comprehensive, fully integrated approach that includes all services lines such as project management, lease administration, strategic consulting, portfolio planning, financial engineering, valuation and facilities management.”

Taylor emphasizes that account management

is crucial for success. “Clients get a single point of contact with knowledgeable people trained to be leaders of that operating model. Services are integrated with operation controls in place and key performance measures.”

While the market is moving toward single providers, Taylor cautions against confusing this with service bundling. “Bundling follows the idea that it’s price driving the decision. This is not the case,” advises Taylor. “Corporate clients are interested in integrated services because it provides better solutions and better outcomes.”

The key is to design these solutions with customization at the core. “Clients aren’t lowering their expectations. They still want services tailored to their needs. They just want them applied to a much larger footprint.”

According to Taylor, the reason some companies fail at workplace solutions is that they lose sight of the client. “Their approach is, ‘We do all these things. We’re the biggest, we’re the best. Tell us what you want.’”

Taylor advises a pull versus push strategy.

“Ask the right questions: What are your issues?

What are you struggling with? We’ll design a solution that is tailored to your needs.”

“As service providers, we want to do an outstanding job for our clients,” says Taylor.

“As leaders, our responsibility is to make sure there are no obstacles in the way of making this happen. When you give people the right tools, it empowers them to deliver solutions in the most effective way possible.” K L

Dylan Taylor is president of U.S. operations for FirstService Real Estate Advisors (FirstService REA), an emerging leader in the global real estate industry. As the fourth largest real estate services firm in the world, FirstService strategically brings together industryleading providers in their area of specialization to meet the needs of occupiers, developers and owners of real estate. In the U.S., FirstService REA businesses include CMN, Inc., the largest member firm of Colliers International, FirstService Williams Real Estate, Cohen Financial, PGP Valuation, PKF Consulting and MHPM Project Leaders.

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Follow the Leader

Pr o f i l e i n l e a d e r s h i p

Put Me in, Coach Creating a coaching culture within your organization can create powerful, sustainable results.

By Mary Jane Pioli “Performance will always be at its best when staff, shareholders, directors and even customers share the same values,” notes Sir John Whitmore, a leading international business consultant, sports psychologist and former race car champion. But how do you accomplish this? One powerful strategy for creating highperformance results is to introduce coaching behaviors to your organization.

Determine when you are leading and when you are managing and know the difference.

According to author and management consultant Peter Drucker, “Management is doing things right; leadership is doing the right things.”

Listen. Stephen Covey, who wrote the bestselling book The 7 Habits of Highly Effective People, says it best: “Seek first to understand, then to be understood.” Start by listening—what you have to tell your team and customers may be much more powerful once you do. There are many levels of listening, including listening to the words spoken and unspoken. According to Drucker, quite often the most important thing in communication is hearing what is not said.

Build relationships; don’t just manage tasks.

Business is relationship-based first, task-based second. Tasks will be completed with ease and success when relationships are humming.

Learn versus judge. Choose when to go down the learner path (choice) or the judger path (react). According to Marilee Adams, PhD., chief executive officer of the Inquiry Institute—a training, consulting and coaching firm based in New Jersey—by choosing the learner path, we can create thoughtful choices, be solution-focused, and develop win-win relationships with our internal and external 16

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audiences. Learner questions include: What assumptions am I making? What are they thinking and feeling? What can I learn? What am I responsible for? What is possible? What are my choices? What’s best now?

Judger questions, on the other hand, include: Whose fault is it? What’s wrong with me?

What’s wrong with them? This perspective leads us to automatic reactions, blame focus, and win-lose relationships.

Observe yourself and others throughout the organization. When and where are you as a leader most energized and effective? How can you lead from this place of effectiveness and determine where and how to delegate for best results?

Reflect. Reflection is imperative for effective leadership. It is the glue that binds the communications, plans and actions. “Follow effective action with quiet reflection. From quiet reflection will come even more effective action,” says Drucker.

Discover your strengths, individual team member strengths, collective team strengths and company strengths. Lead from this place.

Be aware that each strength also has a shadow side. For example, a team member may be an exceptional researcher and data collector. The shadow side of this strength often appears when he or she is unable to move into action because of the perceived need to collect more data. Create teams in which members’ strengths complement each other to help keep the movement flowing in a positive direction.

Use powerful language. This is a very important skill to model as it creates positive habits. Talk to your team members about what you want, not what you don’t want. Train them

Talk to your team members about what you want, not what you don’t want.

to think in terms of what works and what is the desired outcome or state of being. One simple tactic is to eliminate the word “should” from your vocabulary altogether. Start by replacing “should” with “could.” “Coulds” are full of possibility; “shoulds” are draining.

Ask powerful questions. As with powerful language, this is a habit that you develop. One tool to start with is to frame questions from a “what” perspective versus a “why” perspective.

For example, “What can we do to help this customer feel better about the service we are providing?” Conversely, “Why are we not addressing this customer’s issues?” Listen carefully to the answers of these powerful questions.

“No” can be a strategy. Say no until yes makes sense. Turn no into know.

Building a coaching culture in your organization can be a competitive advantage. It can help you attract and retain the best talent, respond to customer’s needs in a timely and appropriate manner, and build an organization or team that is committed to performing at its best, no matter what the circumstances. K L

Mary Jane Pioli

is an executive coach, group facilitator and business strategist.

Her company, M.J. Pioli and Company, is based in Seattle. For more information, visit mjpioli.com. knowledge- leader.com

Happenings

For the fifth consecutive year, Colliers’ Portland office sponsored Portland Business Journal’s “Top 100 Fastest Growing Private Companies” event. The event, which attracts more than 800 attendees annually, celebrates local companies that have the highest cumulative growth over three years. Pictured from left to right: Josh Williams, Eve Alexander, Karen Baines, Jerry Matson, Tyler Dean, and Dave Rademacher.

A G a l l e ry o f e v e n ts

Colliers’ property management group in Vancouver volunteered time and money in support of Habitat for Humanity. Fourteen people took part in the build and raised $1,250, which was matched by Colliers for a total donation of $2,500. Pictured here are, clockwise from top, Ashwini Chandra, Cheri Dudley, Mihaela Varga and Brandy Randsalu.

The Colliers EMEA Conference was held in June at the Intercontinental Hotel in Warsaw, Poland. Moderator Mark Pepper, MP Associates, provides an overview of the conference program.

Office leasing specialist Ian Bradley from Colliers Edmonton gives an overview on Edmonton’s office market at the 2009 Colliers Real Estate Review.

Colliers Canada President David Bowden, left, and Tom McClocklin hosted a general meeting in Halifax in June.

The meeting included a panel of clients who shared business interests and answered questions posed

by Colliers professionals.

Conference guests enjoy dinner and networking at U Kucharzy restaurant.

Colliers leadership discussing opportunities to create exceptional client experiences in an interactive panel session during a four-day Colliers University professional development program. The event drew 59 Colliers professionals from 18 countries.

From left to right: Craig Robbins, Mark Noble, Scott Addison, David Bowden, Stew Gall (moderator).

knowledge- leader.com

The EMEA Retail Business Team brainstorms ideas in their breakout session.

Colliers Calgary presents Safe Haven with a check for $61,500 from Colliers’ 16th Annual Charity Golf Tournament. From left to right: Karen Sherbut, CoFounder, Safe Haven Foundation; Chris Law, Vice President/Partner, Colliers Calgary; Brenda Finch, Director of Marketing, Safe Haven Foundation; Arthur Boone, Operations Manager, Colliers Calgary; Joe Binfet, Managing Director, Colliers Calgary; John Sherbut, CoFounder, Safe Haven Foundation.

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Construction Zone From hospitals to sports arenas, H. Ralph Hawkins has built an architectural firm based on integrity and innovation. By Cheryl Reid-Simons

Inspired by a personal tragedy, H. Ralph Hawkins (above right) and his architectural firm, HKS, Inc., has designed patient-centric health care facilities like the Seattle Children’s Hospital’s Janet Sinegal Patient Care Building (shown here and right).

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knowledge- leader.com

Were it not

C o u r t e s y o f H K S INC .

for a personal tragedy early in his life, H. Ralph Hawkins might be a residential architect today. Instead, he is one of the preeminent health care facility architects in the world, and chairman and chief executive officer of HKS, Inc., one of the largest architecture and engineering firms in the United States.

And his talent—not just for architecture and design but for finding a way to survive adversity—is helping him steer HKS through the toughest economic perils of a lifetime. “This recession is not like anything I’ve ever seen,” Hawkins says. “It is global, and it is going to profoundly change the way we do business.”

Hawkins grew up in Fort Worth, Texas, the son of a local homebuilder. “My dad encouraged me to be an architect primarily because I was always drawing what I saw around construction sites.” In high school, he excelled in an architectural drafting class. The teacher, Billy Bob Harris, had a profound impact on the young Ralph Hawkins, who drew up house plans as much for fun as for class. “He told me, ‘You are really very special in this area,’” Hawkins recalls. As a junior, Hawkins was given the school’s top drafting award, something that usually went to seniors. “It seemed like such a big thing to me,” he says of the honor.

But unfortunately, the award wasn’t the most significant event of that year. Hawkins’ sister, Cindy, had Alport Syndrome, a hereditary knowledge- leader.com

condition that affects the kidneys. “I’d been in and out of the hospital with her,” Hawkins says, recalling his sister’s battle with the disease. She suffered acute nephritis (inflammation of the kidneys) during his junior year in high school and died. She was only 19.

But it wasn’t so much her death as it was her struggles with the disease that impacted Hawkins. The whole notion of patient-centered care was as foreign to the hospitals 40 years ago as an MRI or any number of other modern staples of care. Hawkins remembers hospitals where children were banished to waiting areas, the atmosphere was sterile and worried families and patients alike were made to feel unwelcome and uncomfortable.

“It forms the trajectory for the rest of your life,” he says of the experience. “I really developed an interest in how hospitals were designed and functioned.”

By the time Hawkins’ own battle with Alport Syndrome resulted in a kidney transplant 16 years ago, “everything that happened to me happened in a hospital I designed,” he says. “I

told them which suite I wanted…it was kind of fun.”

Hawkins, 58, started on his professional path at the University of Texas at Arlington, earning a degree in architecture. His next stop was Rice University, which had a joint program with the University of Texas in health care design. He earned a Master of Architecture from the University of Texas Health Science Center in Houston and a Master of Public Health from Rice University with a letter of specialty in health care facility design. He soon joined HKS as an intern in 1973. It was an internship that would dramatically impact HKS’ direction—though no one, least of all Hawkins, realized it at the time.

“When I started, they weren’t even on the map in terms of health care design,” Hawkins says. “Last year we were ranked number one in the world in heath care facilities. In fact, the health care group is now the largest component at HKS.” Hawkins was named president and CEO of HKS in 2001.

“I thought I was probably going to form Colliers international Fall 2009

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that won’t change even when the economy booms again. “We’re going to come out as a much more nimble firm as far as getting projects built.”

That’s already a significant part of HKS’ reputation, explains Nelms. “They’re known as a very good ‘design within a budget’ type of group. Value becomes even more important when things are tight.”

HKS is also taking a lead in green buildings, which Hawkins believes will be increasingly in demand. He doesn’t bother getting into a debate about global warming because green buildings are critical, regardless of whether carbon emissions are impacting the world’s climate. “It all goes back to energy cost,” Hawkins says. “Sixty percent of the energy used in the world is used by buildings…as architects, that makes us very relevant and responsible.”

Nelms agrees that sets both companies apart.

“I can offer a client a whole menu of things,” affirms Nelms. “I can offer ways to quantify and manage their leases. If they want to buy a building, I can help them find a building to buy—we have project services, including a construction function. We can manage a project from inception to completion.”

That ability to respond to changing needs and demands will set companies apart as the economy struggles to come back to life. “A lot of people are counting on the stimulus package as the savior of our profession,” Hawkins cautions. “It’s not going to be…we can’t count just on government.”

That doesn’t mean HKS doesn’t expect to see some federal dollars. “They have to build housing, schools, hospitals and, strangely enough, sports venues,” Hawkins says. “Back in the time of the W.P.A. (the Works Progress Administration of the Great Depression), over 2,500 sports venues were built in the United States.”

That’s an arena HKS is well-positioned to compete in, having designed, among other venues, the new 3 million-square-foot Cowboys Stadium—the largest in the NFL. The building features the world’s largest single-span roof structure, retractable end-zone doors (to match the retractable roof) and the world’s largest center-hung video board.

Through this economic downturn, HKS is finding new ways to cut costs for clients while continuing to produce top-quality work.

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HKS designed the new Cowboys Stadium.

At 3 million square feet, it’s the largest stadium in the NFL.

“It’s just phenomenal,” Hawkins enthuses. “I cannot even envision a venue like that being built in the next 20 years.”

The size is astonishing on its own. “You can put the Statue of Liberty and the Empire State Building inside,” Hawkins says. But, despite its scale, the stadium isn’t just a concrete and steel behemoth. “You would think you’re in a Four Seasons Hotel,” Hawkins says, noting the extensive use of marble and other materials not normally associated with a football stadium.

It’s the kind of high-profile project that has helped HKS become a top-tier architectural firm worldwide. Not that they’re resting on their laurels. “We’re in the top 10 architects in the world now,” he says. “We want to be in the top three.”

And while marquee projects like Cowboys Stadium get lots of attention, Hawkins is just as proud of HKS pro-bono efforts, including a Ronald McDonald House, a women’s shelter and even graphic designs for a wall at a center for people with speech and hearing disorders.

Those are all part of an HKS commitment to the “1% Solution.” HKS gives employees one percent of their time to do pro bono work. “All of us are feeling a community responsibility,” Hawkins says. “And it’s also part of making HKS a great place to work.”

Just as Hawkins works to make HKS a firm with high employee loyalty and retention, he relies on those employees to make it a company clients want to stick with as well. It’s just as important to retain a client as it is to win over a new one, he says.

“We are a service business,” Hawkins says. “The only thing we have to focus on is how to provide the best service. Eighty to 90 percent of our business is repeat because of that philosophy.” K L knowledge- leader.com

B l a k e M a r v i n , H K S INC .

my own firm,” Hawkins says of his early days at HKS. But he soon figured out he didn’t need to. “Really, I could do almost anything I wanted right here within the walls of this company,” he says. “That entrepreneurship attitude still exists.”

If an employee has a plan to pursue something new for HKS, they are encouraged to do it, Hawkins says. “Sometimes it succeeds, sometimes it fails. But it’s good experience.”

Jim Nelms, executive vice president in Colliers International’s Dallas/Fort Worth office, says the firm is known for being “real big on out-of-the-box thinking, creativity.”

Colliers brokers around the country have worked with HKS architects for years. “They’re the go-to guys for the right kind of projects for our clients,” Nelms says. HKS and Colliers collaborate across the country on their services, particularly with their international resort and health care practices.

That willingness to try new arenas has contributed to both the diversification that is helping the company through the economic downturn and to the sense that HKS is simply a great place to work.

Given the investment in training that HKS makes with each employee, retention was enormously important in the years when architects were in short supply. Even now, with unemployment in the profession in the double digits in many markets and HKS forced to reduce its staffing, Hawkins is mindful of that investment in talent. “An ex-employee asked if we could create a Web site on LinkedIn called “Team Ex-HKS” so we can direct job opportunities to them (laid-off employees) as they arise.”

“You try to keep them connected to the firm so you can bring back those people that you’ve trained when things turn around,” Hawkins says. That training has real value. He tells of an e-mail from a laid-off architect. “He was up against 15 other people for a job, and because of his training at HKS, he was able to get the position.” Hawkins hopes to start rehiring some of that talent at HKS. “I see a glimmer of light.”

Through this economic downturn, HKS is finding new ways to cut costs for clients while continuing to produce top-quality work—and

e v o b a Standard Performance Standard Life Investments (Real Estate) Vice President Peter Cuthbert reveals why investing in real estate now is the smart thing to do.

By Teresa Kenney 22

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Standard Life Investments (Real Estate) United Kingdom and European portfolio includes 10 Gresham (opposite page) and Charles Street (right), both in London.

Disregard the naysayers. Forget the doomsday headlines.

When it comes to real estate, Peter Cuthbert, vice president of real estate for Standard Life Investments (Real Estate) Inc., says now is the time to invest.

“We continue to believe in real estate as an asset class in the long run. Current market conditions represent an excellent opportunity to build for the future,” says Cuthbert. “Currently, we manage $17 billion in real estate worldwide across 18 different property funds, and we have our sights set on expanding further, including building on our growing presence in Canada and entering the U.S. market.”

While in today’s economy that might seem like a bold statement, consider the firm’s success to date. The company manages the $470 million Standard Life Real Estate Fund, which has a track record spanning more than 25 years, delivering an average annualized return since its inception of approximately 10 percent with only limited use of debt.

“We have never had a negative calendar year return, even through 2008, so we are working very hard to keep that record,” he notes. In fact, on a standing investment basis (excluding cash and short term securities) the portfolio of real estate assets within the Standard Life Real Estate Fund has out-performed its benchmark—the IPD Canadian All-Fund Universe—over three, five and eight years.

Even during the first quarter of 2009, when the global economy showed no sign of recovery, the majority of the company’s funds in the different knowledge- leader.com

asset classes outperformed their respective benchmarks. Clearly, Cuthbert’s confidence in real estate is anything but brash—it’s based on years of experience through numerous real estate cycles.

“If you go back 18 months, investors—in response to a highly competitive market— were being forced to base their buying on increasingly more aggressive cash flow projections. They were assuming full and rapid lease up of vacant space at ever-increasing rental rates and effectively ignoring capital provisions for major repairs and maintenance items such as roofs, elevators and paving with the expectation that future growth would make up for it. They were paying futures that ultimately did not materialize,” says Cuthbert. “Today, it’s more like the downturn of the early ‘90s, when you could purchase properties low and then ride the upswing. Today, when I look at a building, I’ll pay you for the income and tenants in place, not for the vacant space; and I get full consideration for any deferred maintenance and major capital repair items.”

His company is the Canadian real estate management subsidiary of Standard Life Investments, which has approximately $281 billion of global assets under management.

Headquartered in the United Kingdom with a

real estate management team based in Toronto, Standard Life Investments markets primarily to institutional investors and is traded on the London Stock Exchange.

“We’ve done a good job through this cycle in protecting our portfolio and have held the confidence of our investors. We are in a strong position to succeed through this downturn, and we are introducing a new fund in October 2009 that will take advantage of this economy—one of the greatest opportunities to present itself in a decade. There has never been a better time to set the table for future growth and deliver strong returns to our investors,” says Cuthbert.

One of the key reasons Cuthbert says he remains bullish on the real estate market is simple: All enterprise requires shelter.

“Some trends are here to stay, and urban intensification is one of them. The major cities and economies that underpin them aren’t going to disappear. Businesses need shelter, and we are in the shelter business,” says Cuthbert.

“Every time we look at an asset, we look beyond its basic form in order to understand what its specific function is within its local market and enhance it or reposition it if it’s not performing to its highest potential,” he explains further.

“What I love about real estate as an asset class is that it’s malleable. You can reposition or replace Colliers international Fall 2009

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a building on a well-located piece of land to better reach its potential and align with the urban form evolving around it. You can repeat this process over and over. It is this durability and substance of value that draws pension plans to real estate.”

To make sure their investors are wellinformed, Standard Life values its portfolio at least once per quarter, and during the volatile conditions of the last eight months they have valued assets monthly so anyone interested in investing with them will get the most current value, says David Bowden, president of Canada for Colliers International.

“In the real estate business, most value just once a year. As an investor, if you’re not valuing your portfolio regularly, you could be paying a premium,” says Bowden.

As a result of their sound management, Standard Life has retained all of its major clients during the current economic meltdown.

This is particularly impressive when you note

that the company’s funds are open-ended, so investors can obtain all or part of their money at any time.

“Through solid research and prudent management, we have remained open and have not lost a major investor, providing cash liquidity to all of our investors who required it for rebalancing purposes,” notes Cuthbert.

“Investing in an open-ended fund is a real advantage for investors. Typically, when you invest in a real estate fund, it’s a closed fund, so you are required to stay with them for a specific duration of time,” explains Bowden.

Bowden also notes that Standard Life’s global reach allows the firm insight other companies might not have. “One of their competitive advantages is they are a global leader in real estate asset management. They see events occur in one part of the world before they occur in Canada and, as a result, they can take corrective action.

The mix of properties is so aggressive; they stack up well against their competitors,” he says.

“Some trends are here to stay and urban intensification is one of them.

The major cities and economies that underpin them aren’t going to disappear.

Businesses need shelter and we are in the shelter business.”

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Peter Cuthbert, vice president, Standard Life Investments (Real Estate) Inc. knowledge leader Fall 2009

Standard Life’s partnership with Colliers is also part of its success formula. The company outsources the property management of its portfolio—a service bid that was won by Bowden’s team at Colliers.

“We have chosen as a base operating platform to focus our internal resources on those elements of real estate management that drive value and performance, and we have outsourced elements such as day-to-day property management to expert external service providers to make sure our programs are robust and our properties receive the very best service. Other companies may have that task carried out by internal departments. The worst thing you can have is an attachment to a property because your employees are running its day-to-day operations.

By competitively bidding the service, we create a transparency for our stockholders,” says Cuthbert.

“As a result, our partnership with Colliers has been well-appreciated. One of the things they have brought to the table is flexibility and a willingness to mold their offerings to our needs.

It’s been a collaborative process and it’s a model that works.”

Currently, Colliers manages approximately 4 million square feet across Canada with an emphasis on Toronto and Montreal. The majority of the property is industrial, with a retail and office component.

“Standard Life is a pure asset manager, which allows them to be very objective. Their intention on working with us was to form a partnership, and it’s working very well,” says Bowden. “Their expectations are high—which you would expect from a partner—and they are very results-oriented, which as an investor is something I would require. Peter and I speak every few weeks to strategize for the future and make sure that we are delivering. They are an excellent partner to work with—it’s certainly been enjoyable.” knowledge- leader.com

Standard Life Investments (Real Estate) portfolio in Canada includes (clockwise from top left) 2311 96th Street in Edmonton, Alberta, Price Chopper in Sarnia, Ontario, 50 Acadia Avenue in Toronto, Ontario and the CEVA Logistics building in London, Ontario.

When it comes to choosing his internal team or outsource partner, Cuthbert looks for one thing: a passion for real estate.

“My philosophy is simply, ‘Why get out of bed in the morning if you can’t do it better?’”

Cuthbert explains. “I saw an interview with Michael Phelps (the eight-time, Olympic gold medal winning swimmer) prior to his wins at the 2008 Olympic Games in Beijing. The interviewer asked him, ‘What makes you think you can break Mark Spitz’s record (of winning seven gold medals at the Olympics)?’ The underlying question was really, ‘How could you be so arrogant to think you can win eight gold medals?’ His response was basically, ‘Why wouldn’t you try to be better?’ If people didn’t strive to do more, civilization wouldn’t advance.

I take that same philosophy to work with me.

And I hire people who bring that same mindset to their work as well.”

It’s that desire to do more that is the impetus for a new fund that Standard Life is introducing to the market later this year.

“We have a proposition to go out and build another fund with larger assets—$25 to $70 million per asset—focusing on major urban knowledge- leader.com

markets with more of an office/retail slant than before. We will be introducing debt to this fund,” says Cuthbert.

Cuthbert continues to be positive on the U.S. and Canadian markets and believes there is never a better time “to set the table for future growth to deliver strong returns to our investors.”

“We have an office in Boston that researches the markets in Canada and the U.S. Based on that research, we are looking to invest further in the next 12 to 18 months,” says Cuthbert.

“This downturn represents a good opportunity to build our presence in North America. The

U.S. commercial market is well-regarded internationally—there is a consensus building that the fall has been so dramatic that the opportunity to take advantage of a recovery will be larger in the United States than elsewhere.”

The company’s entrée into U.S. commercial real estate will no doubt receive a warm welcome.

“We are very optimistic about the future and believe that recent significant in-flow of new investment capital to our firm is evidence that we are doing a good job,” says Cuthbert. “And I believe that if you do things well, people will find you.” K L Colliers international Fall 2009

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Emerging Trends

Industry experts reveal new opportunities in a turbulent market.

By Heidi Stout Tretheway

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Hockey great Wayne Gretzky is often quoted for his strategic approach to the game—a strategy, he said, that was his father’s advice: “Skate to where the puck is going to be, not to where it has been.”

Business leaders who take this strategy

to heart won’t just slog through an economic meltdown but will instead prepare their businesses to skate to the puck—that is, go where the activity is going to be.

To uncover the bright spots in real estate and the array of property services tied to it, Knowledge Leader spoke with Colliers business line leaders to learn more about where the activity is now, and where it is expected to be in the future.

No matter the commercial real estate service or situation, experience matters.

“Experts will inherit the market,” says Craig Robbins, president of U.S. Brokerage Services for Colliers International. “The future will be much more competitive and more of an expertise-based market. That trend is emerging from all client types, demanding more from every service provider.”

As a result, business line leaders from Colliers’ key services—brokerage leasing and sales, property management, valuation, mortgage financing, project management, and hospitality consulting—are positioning their specialists to capture these emerging opportunities. knowledge- leader.com

BROKERAGE Robbins says Colliers’ typically even

distribution between sales and leasing activity has shifted to a larger proportion of leasing activity. Although leases are prompted by expirations, sales are usually consummated by lenders who bring buyers and sellers together—and right now, few make that link.

Leasing motivations vary from market to market, Robbins says. “In some markets, business owners are upgrading space from Class B to Class A for the same price. In other markets, most businesses prefer to stay put and negotiate a longer-term lease at the same price.”

On the sales side, the driver for acquisitions in the past was access to capital. “When the capital flow was strong, the action was in repositioning and flipping property,” Robbins says. “Now, the action is in strategic operations.”

Robbins is seeing increasing demand for on-the-ground experts to lease and manage, “not just from afar, but from people who intimately understand the market. These people can do what needs to be done to fill the property, keep it full and create a prosperous property model.”

Ultimately, Robbins says, “No one’s getting a big lick off the ice cream cone in this market.

You just nibble away to create profit.”

Emerging activity includes closures of car dealerships, making land available for repositioning or potential redevelopment.

Many service providers are thriving on bank work from foreclosures and distressed assets.

However, it’s unclear when these assets will actually change hands in a sales transaction.

In the next year, Robbins expects to see substantial activity in alternative energy, particularly in markets known for innovation Colliers international Fall 2009

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“Experts will inherit the market. The future will be much more competitive, and more of an expertise-based market. That trend is emerging from all client types, demanding more from every service provider.”

Craig Robbins, president, U.S. Brokerage, Colliers International or experimental research, such as Arizona, Silicon Valley and Los Angeles.

The owner-user category is also likely to emerge much stronger. “The values are getting into the range where acquisition makes sense, and tenants can be the highest bidders,” Robbins says.

Institutions may also play a greater role in future acquisitions: Thompson Reuters reported that several large investment firms intend to raise capital through public offerings.

The planned IPOs could launch what some investors and bankers think is REIT (real estate investment trust)-driven. This summer, eight REITS filed initial public offerings to raise more than $4.9 billion.

PROPERTY MANAGEMENT No longer can owners rely on appreciation

to drive up value; instead, they must focus on efficiencies that boost net operating income (NOI).

“Our managers are spending a large amount of time re-forecasting NOI for asset managers,” says Norm Scott, senior vice president of Real Estate Management Services for Colliers in North America. “Knowing the tenants, their business and ways to reduce operating costs are all keys to accurate forecasting.”

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Colliers real estate managers deploy programs to increase tenant retention and carefully balance tenant relationships while many tenants are defaulting or requesting rent relief. “The manager has become a workout specialist,” Scott adds. Colliers has hired experienced receivership managers to meet regulatory requirements.

Managers also work closely with leasing agents to close deals, such as finding creative ways to differentiate a property and communicate its benefits to the prospect.

In the institutional arena, large owners are starting to outsource property management.

For example, earlier this year, the commercial real estate development company Panattoni distributed a request for proposals for a 38 million-square-foot industrial and business park portfolio throughout the United States.

Colliers won the eastern portion of this twopart assignment.

RREEF, a leading real estate and infrastructure investment group, announced that it is planning to outsource management of its nationwide, 153 million-square-foot portfolio, which includes 112 million square feet of industrial space, 35 million in office, and 12 million in retail.

Scott attributes this kind of institutional outsourcing to cost-cutting. Outsourcing property management reduces personnel costs and eliminates much of the associated overhead.

VALUATION and relationships are changing the game in valuation, says Kenneth Harrison, president of PGP Valuation, Inc. “In 2007, all of PGP’s top 10 clients were lenders, but 2009 has been a transition away from the traditional lending clients, where

Integration

valuation was a commodity,” he says. “Today, our business is more high-level consulting, legal and government work, with an emphasis on major client relationships through integrated services.”

Harrison notes that PGP’s two largest clients this year include a government institution providing oversight and a world-leading pension fund.

“High-end institutional buyers have become increasingly significant clients, as they seek to leverage their cash positions to take advantage of increasing yields,” he says.

Harrison adds that PGP has also seen a large increase in troubled asset valuation with groups like LNR, Wells Fargo and U.S. Bank. Lenders are now soliciting valuations to assess the risk associated with the potential for foreclosing on portions of their portfolios. Lenders are also responding to pressure from banking regulators to increase their reserves.

“There are a surprising number of private equity groups that are cash buyers in the market,” Harrison observes. “This group sees valuation fundamentals overly affected by the lack of funds for lending, and it largely waited out 2008 in anticipation of a fall in values, which is just now occurring.”

PGP has proposals out to some of these groups, and expects this will be an expanding sector of business. Another increasingly significant slice of business will be federal, state and local governments, and commercial mortgage-backed securities (CMBS) loans that will come due in the next year.

“Lenders will, in most cases, have to refinance these properties or extend the loans,” Harrison notes. “In either case, a valuation will be required, resulting in a return of some demand from lenders.” knowledge- leader.com

CAPITAL MARKETS The greatest activity in capital markets financing is in two areas: special servicing and consulting on loans that need modification or are under water.

In the case of loans in default or in trouble, a special servicer is required to work out the payment and collection process.

Jack Cohen, CEO of Cohen Financial, says there is a small window open now to move into the special servicing arena. That’s because most special servicing companies are created by owners of the junior piece of a bond stack, and the vast majority of these owners are crippled by the financial meltdown.

“This opportunity requires skills tied to loan workouts, primary servicing and dealing with foreclosed assets,” Cohen says. “The special servicer would ultimately hire a leasing manager or disposition broker, which makes it especially important that our integrated platform includes brokerage, management, valuation and capital.”

Cohen Financial, which shares the parent company FirstService Corp., with PGP Valuation and CMN, Inc., the largest member firm of Colliers International, is rated as a primary servicer

by Standard & Poors and is working to acquire a special servicer rating as well.

One of Cohen’s chief concerns for the future is the level of understanding government leaders have about the intricacies of the capital markets. “There are so many factions with

knowledge- leader.com

competing interests,” he notes, speaking by phone from a Washington, D.C., meeting on just this issue. “And no one really understands the depth of the problems in the system. A poorly devised plan could stall or crater our financial infrastructure further.”

Cohen cautions owners that the freefall in property values may continue, as these values are tied tightly to the stability of the capital markets. He predicts another three to five quarters of declining prices.

“The buying community isn’t ready to face this,” Cohen says. “It’s ‘pretend and extend’ lending, or put another way, ‘a rolling loan gathers no loss.’

The lending community is continuing to extend loans with hope the market will change, but the losses will catch up with them.”

HOSPITALITY CONSULTING One year ago, the majority of activity in the hospitality sector of commercial real estate focused on development and acquisitions, says David Arnold, co-president and chief executive officer for PKF Consulting in its eastern region.

Now that capital has largely dried up, the shift in business is toward third-party due diligence on behalf of owners.

“We’re providing services for distressed assets, both for owners and lenders, to answer their questions about market positioning, operations and opportunities,” Arnold says. “We keep thinking a significant wave of transactions is coming [due to

loan defaults], but it hasn’t hit yet.”

Arnold says many lending institutions have non-performing or troubled hospitality property loans. The vexing question for lenders is whether to let the owner continue to operate the asset, or if the lender is better off taking back the property. Many lenders have limited knowledge of hospitality properties, and special servicers may be overwhelmed.

“We work with both the lenders and those responsible for disposing of assets,” Arnold explains. Historically, 30 to 40 percent of PKF’s business was in valuation, but this activity was largely dormant last year due to the capital markets crisis.

“When you don’t know what a property’s worth, you don’t know what to do with it,” Arnold says.

But as lenders and owners gain confidence in the credibility of the new market rates and values, Arnold expects transaction volume to pick up.

In the next year, the hotel industry may experience a moderate recovery, opening an opportunity for acquisitions. “Our services will guide buyers through the due diligence process to identify the best assets, determine the right price, and assess whether renovation of the physical property, its brand or its service mix are in order,” says Arnold.

What makes PKF poised to ride the upswing?

“We know where to tap the expertise,” Arnold says. Once again, the experts will inherit the market. K L

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CSI (cost-saving intelligence)

for Tenants Colliers’ forensic accounting team Provides clients with cost-cutting tools to save money on their leases.

By Randy Woods

knowledge- leader.com

Colliers international Fall 2009

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A

few years ago, a Colliers International client that leases office space in Winnipeg, Manitoba, faced a puzzling problem with its monthly bills. To cool off high-speed copying machines in its reproduction room, the client used a water-cooling system to remove excess heat. Each month, however, the water bill for the property was an astounding $3,000.

To uncover the culprit of the high bill, the

client turned to Colliers’ Lease Audit Services department in Toronto to see if there was a deeper issue with the way the landlord was billing the company. Colliers auditors found that the problem was caused by the simplest of errors.

The water usage had been logged by hand in a notepad as gallons, but the meter was actually displaying numbers in cubic meters.

“After that was discovered, the bills went from 32

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$3,000 down to $100 per month,” says Frank Iannarilli, lease audit specialist at the Colliers International Toronto West office.

Such stories, Iannarilli says, are becoming more commonplace as clients look to Colliers to ensure that they haven’t paid more than is required under their lease agreement. “We’ve never been so busy,” he says. “In the last six months, we’ve been engaged in 80 audits. In past years, we’d do maybe 20 audits over six months.” knowledge- leader.com

“In an era when appraisals and refinances are on the upswing, companies are turning over every rock on expenses,” says Tom McEfee, managing director of Colliers’ Corporate Lease Administration Group in Sacramento, Calif. “Business has more than doubled so far in 2009. About 75 percent of the calls we get are questions about lease audits.”

“Tenants usually have no experience dealing with landlord billing,” Iannarilli notes. “But these costs are often the second- or third-highest costs next to payroll and health care.”

Amazingly, McEfee says, 50 percent of all the leases analyzed by his staff of 20 real estate specialists have some kind of error. “Tenants are used to just paying bills that are given to them.

Landlords don’t have the incentive to explain it to them unless the tenant asks, and most tenants don’t have the time.”

Colliers’ Lease Administration Group, which covers all of North America, offers a menu of leasing services to more than 30 national and multinational corporate clients. All told, the group has more than 100 million square feet of commercial space in its portfolio.

Even in this early stage of the process, significant cost savings can be found. For one bank client that had recently purchased 13 branches, McEfee’s analysts discovered that the lease for one of the new branches, written 20 years ago, had an “option to cancel clause” that had gone unnoticed. He also discovered that the client had been paying far more than market value on the property. By exercising the hidden clause and renegotiating the lease, the bank client was able to avoid $250,000 in excess lease payments had the lease continued for the next decade.

Phase 2: Rent verification Once all the lease data is consolidated, the lease administration team can then enter the next phase, which is the monthly verification of the client’s billings and payments. “This is the bread and butter of our operation,” explains McEfee.

Due to the recent waves of staff cuts in accounting departments, many clients no longer have the manpower to analyze monthly bills from landlords. As the staff shrinks, some clients find that they have no accounting system written down. “Most [tenants] also have two or three other jobs, so they don’t have time to question anything,” he adds.

To combat this brain drain, McEfee’s clients have all their lease expenses sent to the Sacramento office, where they are entered into Colliers’ enterprise system and validated against the lease agreements. “A lot of people think that billing is all automated and routine, but there are maybe dozens of changes to watch for every month,” he says. “Also, landlords often see multiple leases [for a single client] as one whole. If there’s a certain expense for one lease, they sometimes just split it all up evenly across the other properties, and that’s where problems can occur.”

Lease abstractions At the start of the three-phase lease administration process, the first thing that McEfee’s specialists do is come up with an abstract that lists all of the various components of a client’s lease portfolio, including the number of properties, the payment schedules and the accounting statements required for Sarbanes-Oxley compliance.

Often, this is a manual process, merging many physical documents onto a single, third-party database.

“You’d be surprised to see how many clients just have lease payment schedules on an Excel spreadsheet or, even worse, in a shoe box,” he says. Many state-of-the-art hospitals today, he says, still do not use an enterprise system and continue to write specific check requests via a paper tracking system.

Much of this process also involves the analysis of complex lease clauses, McEfee explains.

Because commercial real estate is constantly being sold, the abstract process helps track the frequent changes in ownership and takes into account the new interpretations of each new owner. knowledge- leader.com

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“Tenants

are used to just paying bills that are given to them. Landlords don’t have the incentive to explain it to them unless the tenant asks, and most tenants don’t have the time.”

Tom McEfee, Col liers Inter nationa l Cor por ate Lease Administr ation Grou p

One of the most dramatic savings McEfee has seen for a single client came last year for 24-Hour Fitness health clubs, which was able to shave $1.2 million off its lease payments over the past five years. Rather than one big blunder, there were “a multitude of little things” that were found in the leases of the more than 400 properties involved, he says. “It’s really a nickel and dime game,” he adds. “But that’s our expertise, and it can add up quickly.”

The monthly verification process can also help landlords as well as tenants. One nonprofit health care provider that had been subletting its leased space had never established a formal set of rent rolls for its properties or conducted operational expense billing. Because of this, the company failed to notice that the sublet space had increased from 3,000 square feet to 15,000 square feet over a period of 18 to 20 years. “We found that more than $1 million in rent was never billed,” McEfee says.

Phase 3: Lease audits Unlike the monthly verification efforts,

which tend to handle day-to-day operations of large portfolios, the lease audit process is a more focused, holistic look at potential long-term problems with a lease.

“We’re more forensic,” Iannarilli says of his lease audit department. “We’ll do a detailed critical analysis of all the lease documentation in relation to the landlord billings as part of our preliminary review, then, if warranted and with client approval, complete a review of a landlord’s books and records and compare those 34

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costs against benchmarks of other offices in a particular region, depending on class and size.”

In the past five years, Iannarilli estimates that audits conducted by Colliers have saved clients more than $1 million. Just last year, one of his audits led to a $500,000 recovery for an office tenant with multiple leases between 2004 and 2008. The landlord had charged fees erroneously for a lobby renovation project and included certain personnel that should not have been on the lease.

“You can have three or four audits in a row and find nothing, and then see one that saves $500,000,” he explains. “But it’s a no-risk, contingency-based service, so we don’t charge a fee if we don’t find anything.” Unlike other auditors, he adds, his office doesn’t take a percentage of the “going-forward savings,” so all of the lease savings that would be accrued in future years would go to the client.

Powerful tools “It doesn’t take much economic prompting to get people to notice these savings,” Iannarilli says. “Colliers brokers are using audits with their long-standing clients to say ‘I’ve got this other tool to help you out if you need it.’

It really makes a difference over several years if you have small profit margins.”

Colliers’ Cost Containment Program (CCP) utilizes lease audits and abstracts to identify cost-saving opportunities. “Businesses at this time are looking for ways to save money.

CCP takes advantage of this by offering to save money on their leases. It’s a three-tiered approach utilizing ‘lease abstract,’ ‘lease audit’

and ‘strategic lease restructuring.’ There are no costs to the tenant. The abstract is free and the lease audit is done on a contingency basis. The third component or ‘strategic lease restructuring’ done by the broker identifies opportunities for leverage with a view to a renegotiation of the lease,” explains Iannarilli.

Lease administration can also reap huge cost savings via the identification of redundant systems, advises McEfee. With Colliers handling the billing of several properties at once, one international client was able to take 10 divisions with independent regimes and consolidate them into one system with no reduction in the level of service.

In the coming years, McEfee sees an increasing need for lease administration as more recessionrelated layoffs continue. This loss of an internal support structure will cause a “quagmire of defaults” unless lease administration is maintained. Audits “are now becoming an everyday thing,” he says. “Over the next year, expect clients to be checking everything on every lease.”

At the same time, landlords are starting to push back against this increasing scrutiny by tightening up leases, Iannarilli says. “They’ll add clauses that say all lease statements should be ‘final and binding’ or that you have only 30 days to raise an objection,” he explains. “That period goes by so quickly; by the time it’s billed it’s too late.”

For those tenants who are concerned about the complexities that lay ahead with multiple leases, McEfee says his Sacramento office is in their corner. “Lease administration is all we do,” he says. “We’re just leveling the playing field for the tenant.” K L knowledge- leader.com

Investment/Leasing Opportunities a listing of colliers international properties

Industrial Property

New Retail/ Commercial Development

For Sale And/Or Lease Baie d’Urfé, QC, Canada

Up To 75 Acres Bridgewater, NS, Canada

• 210,160 SF freestanding industrial • • • •

property (subdivisible) Ceiling heights 24 feet - 40 feet Current tenant occupies approximately 90,000 SF until December 31, 2020 Possible rail access Ample parking available

• Strategically located off Highway 103.

• Parcels available range from 1 to 17

acres.

Norman S. Laff • 514.764.2824 norm.laff@colliers.com

• Prices range from $102,000

Arnold Fox • 514.764.2823 arnold.fox@colliers.com

• Other retailers in the area include

Eliza Mocanu • 514.764.2825 eliza.mocanu@colliers.com

• Excellent opportunity to control one

to $950,000

Wal-Mart and Canadian Tire

of the newest highway retail and commercial developments in the area.

www.colliersproperties.com/555lee

Former Commerce Drive-In

Tolko Industrial Facility

15 ACRES Available Commerce Twp., MI

Stand-Alone Bldg W/ Excess Yard & Rail Greater Edmonton, AB, Canada

15.68 acres for development. Site to be rezoned to B-3; General Business. Located at SWC of Richardson & Union Lake, lighted intersection with nearby extension of M-5 hwy. giving easy access to I-696, I-96 and I-275.

• 132,995 sq.ft. under development • • • • •

on 28 acres Flexible completion options Extensive site improvements Site to be serviced by CN Rail Additional land available Excellent access to Edmonton Proper and Alberta’s Industrial Heartland.

I-90 Lake Place II

Ka Makana Ali’i at Kapolei

Class A Lease Opportunity I-90 Corridore Issaquah, WA

Where Life Meets Style In Hawaii Kapolei, HI

• 1,284 - 18,600 SF office space • • • •

Rod Connop • 780.969.2994 rod.connop@colliers.com Sean Day • 780.969.3002 sean.day@colliers.com

Randy Thomas • 248.540.1000 randy.thomas@colliers.com

available in multiple suites within beautiful corporate campus Excellent freeway visibility and access to I-90. Shared conference room; onsite workout facility with showers Near top-ranked Swedish Medical Center and numerous retail amenities.

5 parking stalls per 1,000 SF Many private offices, abundant southfacing natural light.

Greg Taylor • 902.422.1422 greg.taylor@colliers.com

Terry Wirth • 425.453.4541 terry.wirth@colliers.com Sam Ziemba • 425.453.3130 sam.ziemba@colliers.com

DeBartolo Development presents Ka Makana Ali’i—a 1.5 million SF mixed-use regional center centrally located in West Oahu. Upon completion, the project will be the third-largest shopping center in Hawaii and encompass a department store-anchored shopping village, neighborhood convenience and promotional retail centers, two business hotels and an office building.

Nathan Fong (B) 808.523.9740 nathan@colliershawaii.com Jon-Eric Greene (B) 808.523.9700 jeg@colliershawaii.com Kelli Y.Wilinski (S) 808.524.2666 kelliyw@colliershawaii.com

Investment/Leasing Opportunities a listing of colliers international properties

CenterPoint Corporate Park

14 th Avenue 38 Acres Industrial/ COMMERCIAL Land Markham, Ontario

Most Prestigious Puget Sound Office Park Kent, WA

CenterPoint Corporate Park consists of 435,894 SF of Class ‘A’ office space in three buildings providing the convenience of location, accessibility and visibility.

CenterPoint Corporate Park is one of the Puget Sound Region’s most prestigious office park through its full line of on-site ammenities and services that enable tenants’ productivity in their professional and personal lives.

• OP general industrial and business

corridor area

• Close proximity to Hwy 407 &

McCowan Interchange

Michael George • 206.223.1268 mike.george@colliers.com Nick Fletcher • 206.624.7401 nick.fletcher@colliers.com

• +/- 1,200 feet of 14th Avenue

frontage

• Rectangular, level, immediate

development

Jon Brohman • 416.620.2861 jon.brohman@colliers.com

www.centerpointcorporatepark.com

8030 Esquesing Line

Major Industrial Development

Amb Milton Crossings Business Park Milton, ON

728,411 SF (Divisible to 116,000 SF) Brampton, ON, Canada

MILTON

401

BUSINESS PARK

• 300,000 SF of brand new construction • • • • •

available for lease; divisible to 140,000 SF First class distribution facility with Highway 401 exposure Excellent shipping – 30 truck level doors, expandable to 38 Trailer parking – 32 positions (expandable) 30’ clear height and ESFR sprinklers Column spacing – 37’ x 40’ (50’ staging bays)

• Developed by Blackwood Partners • Close proximity to 2 major

Gord Cook • 416.620.2831 gord.cook@colliers.com

intermodals, Pearson International Airport and the US border • Rail served • Up to 189 dock level doors and 224 trailer parking positions

Ian Gragtmans • 416.620.2883 ian.gragtmans@colliers.com

Graham Meader • 416.620.2841 graham.meader@ colliers.com

400,000 SF Distribution Facility

Gateway South Distribution Center

7200 West Buckeye Road Phoenix, AZ

970,075 SF Industrial Bldg. For Lease San Bernardino, CA

• • • • • • • • • •

Sale or Lease Divisible to 50,000 SF Two spec suites - ±1,600 SF each 32 ft. clear height 72 dock-high doors 8 ramps to grade Trailer storage – 109 positions 3,000 Amps, 277/480 V power 60’x52’ column spacing A-1 Zoning, City of Phoenix

Don MacWilliam 602.222.5059 don.macwilliam@colliers.com Payson MacWilliam 602.222.5060 payson.macwilliam@colliers.com

Colin Alves • 416.620.2848 colin.alves@colliers.com

Gateway South Distribution Center is a speculatively built, cross dock, state of the art, free standing Industrial project.

This 970,075 SF building completed construction in November 2007, and is currently available for Lease.

Peter McWilliams 909.605.9400 peter.mcwilliams@colliers.com Michael McCrary 909.605.9400 mike.mccrary@colliers.com Ruben Goodsell 909.605.9400 ruben.goodsell@colliers.com

Investment/Leasing Opportunities a listing of colliers international properties

608,470 SF Industrial Building

University Heights Square 23 Acre Retail Lease Opportunity Saskatoon, SK

Prime La Distribution Facility For Lease Santa Fe Springs, Calif.

• • • • • • • • • •

Approx. 31k SF of Two-Story Office 24’-26’ Minimum Clear Height 91 Dock High Loading Doors 12 Rail Doors - UPRR Rail Service 8 Grade Level Loading Doors Via Ramp Office and Warehouse Restrooms 2,400 SF Maintenance Shop .60/4000 GPM Sprinkler System Secured Concrete Yard Access to 5, 605, 91 and 105 Freeways

Clyde Stauff • 949.724.5543 clyde.stauff@colliers.com www.colliersproperties. com/9400santafesprings

Deer Park Golf Course, Mountain View Meadows & RV Resort

Located at the corner of Attridge Drive and McOrmond Drive. Surrounded by five (5) established neighborhoods along with the nearly completed Willowgrove.

The build-out of the Evergreen neighborhood will begin in 2010, creating additional traffic on McOrmond Drive. 23 acres of retail development (+/-246,000 SF of development) Fully serviced site and ready for development. Projected retail growth in Saskatoon (09) is 5.3%.

Ken Suchan • 306.221.1825 ken.suchan@colliers.com Keith Webb • 306.222.0774 keith.webb@colliers.com www.colliers.com/Saskatoon

Manchester Industrial Park Toronto, ON, Canada

300+ Acres Spokane, WA Beautiful and striking views are not the only thing attractive about the 300+ acres at Deer Park Golf & RV Resort.

The opportunity includes an 18-hole golf course, a 9-phase residential community, restaurant/club house and over 100 RV pads. Just 15 minutes north of Spokane, WA. Purchase price is $15 million.

Arvin Vander Veen, SIOR 206.654.0521 arvin.vanderveen@colliers.com Joel Shabel 253.680.6615 joel.shabel@colliers.com

Torrance Pointe

Mark Sevenpifer 416.620.2828 mark.sevenpifer@colliers.com Albert Maierhofer 416.620.2830 albert.maierhofer@colliers.com www.manchesterindustrialpark.com

Uptown 200,000 Sf Of Class “A” Office Space Victoria, BC, Canada

For Lease In Renovated Office Campus Torrance, CA

Torrance Pointe is a 3-building Office Campus with outstanding access to 405 and 110 Freeways and minutes of LAX Airport. The buildings have been completely renovated with updated lobby areas and elevator cab treatments. The property offers lush landscape elements with an outdoor courtyard. Free parking at 4/1,000 and no Gross Receipts Tax in Torrance make this a very attractive property!

Panattoni Development Company is pleased to present: • 576,000 SF and 253,000 SF available for Sale or Lease • First class distribution facilities with flow through shipping • 1 shipping door per 5,000 SF • 229 trailer parking positions • 32’ clear height and 54’ bays • Close to Intermodal Terminal • Possible rail access

J. Eric Lastition eric.lastition@colliers.com Geoffrey Ludwig geoff.ludwig@colliers.com Gregory Walsh gregory.walsh@colliers.com Douglas Brawn douglas.brawn@colliers.com 310.787.1000

Being positioned as a true urban centre, Uptown is one of the most significant developments of its kind in North America, and will be the largest mixeduse centre in Victoria, BC. Totalling over 880,000 SF of multi-level, retail and office space on 19 acres, Uptown is being built to LEED Neighbourhood Gold Standard.

Available for occupancy spring 2010.

Robert D. Law robert.law@colliers.com Grant Evans grant.evans@colliers.com www.shopuptown.ca

Executive Travel

h i g h - e n d t r av e l

Five Star Layovers These international airports make waiting in airports well worth the wait.

By Annika S. Hipple For most people, airports are just places to get through as quickly as possible. However, at some of the world’s top airports, the amenities and services rival those of five-star resorts. Here are a few airports where a long layover may not be such a bad thing after all. In fact, you might even be slightly disappointed to hear your flight called.

Seoul Incheon International Airport Check any list of the world’s best airports and Seoul Incheon invariably appears near the top.

Bright, clean and easy to navigate, Incheon offers plenty of comforts for layovers, including an upstairs relaxation level with showers, reclining lounge chairs, free Internet computers, TVs and a massage parlor. For a proper sleep, there’s a transit hotel at either end of the terminal. Duty free shopping leans toward high-end apparel, jewelry, cosmetics and perfumes, but if those aren’t for you, there are other ways to pass the time. How about a round of golf at the 18-hole putting course and driving range? Or why not 38

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catch a free musical performance at one of the Korean Traditional Culture Centers?

Changi Airport Singapore Travelers go crazy for Singapore’s Changi Airport—another frequent list-topper. For rest and relaxation, there’s a transit hotel with three locations inside the terminal, as well as specialty lounges offering nap rooms, showers and spa services. You’ll even find a fitness center, a rooftop swimming pool and themed gardens featuring koi ponds, butterflies, sunflowers and other plants.

Adults and kids can while away the hours at the free gaming rooms, music stations, movie theaters and TV lounges. Changi also boasts free Internet access and a huge selection of shops and restaurants. And if all that’s not enough to keep you busy, passengers with layovers of at least five hours can sign up for free, two-hour Singapore tours (subject to entry visa requirements).

Hong Kong International Airport Like Incheon and Changi, Hong Kong International Airport sets a global standard that few airports can match. Efficient and modern, the airport is a destination in its own right, with a movie theater, nine-hole golf course, sports simulators, Playstation games and filmand aviation-themed entertainment centers in the public areas. Transit passengers can take advantage of several pay-in lounges and shower facilities, as well as free rest areas with reclining chairs and miniature gardens. There’s also free wireless Internet access and great shopping and dining—not to mention massage and reflexology services that will magically smooth away the aches and pains of travel.

Dubai International Airport For shopping, it’s hard to beat the huge, awardwinning duty-free marketplace at Dubai International Airport. Not only can you find an incredible array of merchandise, but the shops knowledge- leader.com

North AMERICA

Left to Right: Changi Airport, Singapore; Seoul International Airport; Amsterdam Airport Schipohl.

actually offer some surprisingly good deals. For non-shoppers—or those whose feet or wallets need a little rest—lounges at either end of the terminal offer reclining chairs suitable for napping. Another option is to relax in the pool or whirlpool spa at the G-Force Health Club, which also offers fitness equipment and massage services. If a real bed is what you crave, there’s a deluxe hotel inside the transit area.

Amsterdam Airport Schiphol Schiphol earns widespread praise from travelers for its services and civilized atmosphere.

Quiet upstairs lounges offer chairs designed for napping, and showers are available for passengers who want to freshen up. Schiphol also has two hotel options within the transit area, one with standard rooms and the other with cabins similar to train compartments.

To pass the time, there are plenty of dutyfree shopping and dining options, as well as spa services including a variety of massages.

If you’re feeling lucky, stop by the Holland Casino, with five gaming tables and more than 100 slot machines. Travelers with plenty of time can even catch the train straight to the heart of Amsterdam from the station directly below the airport. knowledge- leader.com

Honorable Mentions Many travelers consider Malaysia’s Kuala Lumpur International Airport to be right up there with Asia’s top three. KLIA offers an in-terminal transit hotel and a five-star luxury hotel adjacent to the terminal. There’s also free Internet, plenty of shops and restaurants, and a reflexology and massage center to help you relax before your next flight.

In Europe, Zurich Airport typically ranks among the world’s best for its efficient service and comfortable facilities, including day rooms, showers, and a pay-in rest area with reclining chairs. If you’ve got a longer layover and want to see the sights, it’s easy to catch a train for the short ride into the city. The trademark Swiss punctuality means you don’t have to worry about missing your flight due to rail travel delays.

Munich International Airport is also widely considered one of the finest in Europe, particularly for shopping and dining. The airport even has its own brewery and beer garden. The central atrium hosts special events, including a Christmas market. Two locations offer arcade games, slot machines, and other games. Massages and other spa services are available in the transit area, and there’s a five-star Kempinski hotel located between the two terminals. K L

North America’s airports can’t yet compete with the world’s best, as few offer the range of services found at the top facilities in Asia and Europe. Still, they are getting some things right, and recent construction projects around the U.S. and Canada have focused on upgrading and expanding outdated terminals.

Among domestic U.S. airports, travelers praise the clean and bright Detroit Metropolitan Wayne County Airport for its variety of sculptures, colorful lighting and fountains, as well as its shopping and dining options. The Portland International Airport also earns good reviews for its spacious architecture, free wireless Internet access and diverse restaurants and shops—including multiple outlets of the famous local bookstore Powell’s. Oregon’s lack of sales tax makes shopping here even more attractive.

In Canada, Vancouver International Airport, one of the West Coast’s busiest airports (queues for Canadian immigration can be very long during peak hours), earns positive reviews for its integration of nature through waterfalls, streams and forest landscaping. Add some beautiful carvings and other works

by Northwest First Nations artists and you have an airport that truly reflects its British Columbia setting. The Fairmont Hotel in the pre-security area is a luxurious option for long layovers and has a full-service spa and health club which are available at drop-in rates for non-hotel guests. Several post-security branches of the spa offer manicures, pedicures and chair massages.

Colliers international Fall 2009

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In Focus

CEO NOt e s

All the Right Moves The current recessionary climate, while

not the bleakest in history, is pivotal in that it has shaken the foundation of what many have considered to be resilient industries. Even the most astute companies are scrambling to regroup and, in some cases, retrench. The flip side of this coin is that change is imminent— and the companies that embrace this will be the ones that emerge stronger and better.

Stewart Gall, a partner in the business coaching firm, Shirlaws, advises clients on finding growth opportunities in different market cycles. He says, to prosper, companies should create different market strategies in boom times and in downturns.

For example, in a down market, product innovation is a more competitive advantage than product extension. New business is likely to come from investing in existing relationships versus sourcing new leads. Well-thought-out resource allocation is critical—and goes beyond cost-cutting. Building capabilities and human capital are also smart investments, ensuring you have the best people on board who can power through the change and deliver solutions. Companies that embrace these philosophies are the ones that will not only survive, they will thrive.

Colliers is one of those companies. We are in a unique position in this recession, free from the burdens that are paralyzing many of our competitors. And we’re using this leverage to act on the right opportunities for our stakeholders and our clients.

Why is Colliers so well positioned? In part, because of a business model we put in place in nearly five years ago when FirstService Corporation acquired a majority interest in CMN. This partnership has proved invaluable, allowing us to evolve not only in terms of where we do business but how we do business. As a result, 40

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knowledge leader fall 2009

in addition to brokerage, we now offer a full suite of services through our partners: valuation and appraisal (PGP), capital markets financing (Cohen Financial), hospitality and leisure property advisory (PKF) and project management (MHPM). We also expanded into tier-one markets like Boston (Colliers Meredith & Grew) and New York (FirstService Williams).

While this growth was exciting, it brought us to a crossroads. We wanted to capitalize on the strengths of the Colliers brand and the reputations of our partner firms, but we also desired to create a more cohesive picture for our clients about who we are and what we offer as a company that differentiates us from our competition. And we needed to operate beyond the boundaries of our network to make it simpler and easier to refer business and enter new markets.

In June 2009, we took the first steps to making this happen. FirstService Real Estate Advisors (FirstService REA) launched in the U.S., and Dylan Taylor was named president. Taylor’s first order of business is building out two key services lines: workplace solutions and property management. Building out our capabilities in these key areas will be the foundation of a new market delivery system that will enable us to better demonstrate to our clients the comprehensive resources we offer locally and globally and deliver more integrated solutions.

The landscape of commercial real estate is changing. On one hand, it is still inherently local. Clients seek advisors who have specific knowledge of a market demographic or sector.

But companies rarely do business in one location anymore. They are diversified, with assets and operations in multiple markets, nationally and internationally. They need a provider that is also diversified yet still offers assurance that they will receive the same caliber of service

across multi-market transactions.

Colliers is positioned to be that provider.

We’re delivering a more cohesive and memorable experience for our clients by removing the barriers—physical and financial—that hinder collaboration. No other real estate firm operates this way in a global space, giving us that edge over the competition.

We’ve always been a grassroots organization that believes the best ideas come from those closest to the business. This won’t change, nor will our entrepreneurial spirit, local market knowledge, and strong commitment to corporate social responsibility. We will continue to be guided by the same high standards of a partnership culture, empowered through shared equity and the freedom to operate in the best interests of our clients and our communities.

I’m excited by the possibilities that will emerge from this new platform. More importantly, I’m excited for our people and for our clients to experience genuine partnership under this model. It’s a new way of doing business in this industry and will definitely change how we approach transactional real estate. And in today’s market, change is a way of life. K L knowledge- leader.com

rick dahms

Focusing on opportunity instead of obstacles can be the smarter strategy in a recession. By Doug Frye