Knowledge Leader - Spring 2010 by Colliers International

Knowledge

Leader Spring 2010

Colli ers i nte rnati ona l proper ty m agazine

Paradigm Shift Stockbridge Capital Group Positions Itself for Success

Why ‘Y’?

The New Generation at Work

Big Oil/Small World An Interview with Economist Jeff Rubin

Wired Workspaces Technology in Real Estate

CSR

A Deeper Shade of Green

Contents 4 Outlook 20/20

Economist and energy expert Jeff Rubin paints a picture of what our economy could look like post triple-digit oil prices. By TERESA KENNEY

6 Spotlight

Colliers partners with solar energy leaders in Arizona. A look at how port cities are faring across the United States. Q&A with Scott Addison, executive managing director with Colliers International’s Toronto office.

10 Personal Biz

Our top 10 must-have iPhone apps (plus a few runner ups). By DURGESH SHARMA

12 Working Space

Colliers International’s Studio team helps companies discover their properties’ true potential. By KERRY ALEXANDER

14 Wired

Industr y experts examine how technology is changing how and where we work. BY TERESA KENNEY

19 Industrial Strength Retail New trends are emerging as retailers face rising transportation costs and surplus merchandise. BY CHERYL REID-SIMONS

24 B2B

Engaging Generation Y in the workplace. By CHRYSTAL LEBLANC AND LEX PERRY

14 4

26 Risk & Reward

While other fund managers are shuffling their investment advisors, Steve Steppe of Stockbridge Capital Group is gearing up for success. BY HEIDI STOUT TRETHEWAY

30 Bank Notes

Do today’s financiers have what it takes to turn the real estate market around? By JACK M. COHEN

32 Follow the Leader

Understanding how markets move in a recession can help you catch the first wave of recover y. By STEWART GALL AND GINA DANFORD

33 Behind the Scenes

U.S. and Canadian business profiles, featuring the Orlando Corporation and NewMark Merrill Companies.

38 CSR

Sustainability pioneer David Gottfried continues to push the green envelope.

by Niki stojnic

40 In Focus New partnerships position Colliers as a global industr y leader. by dOUG FRYE

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Cover Photo by Eric Millette Photography Colliers international Spring 2009

Volume 4 u Number 1

From the Editors’ Desk

Dylan Taylor and David Bowden Executive Managing Editors David Bowden, CEO

Dylan Taylor, CEO

IN BETWEEN THE LINES

Teresa Kenney Editor

Kerry Alexander, Kristen Okerman Associate Editors

Amy Wallace Art Director

We are entering a different era for doing business. Consumers and companies are

shaking off the paralysis of the recession and are eager to embrace change and move forward. While “conservative” may still best describe the market, it is not without opportunity. Product innovation is in play, our financial markets are slowly rebuilding, consumers are beginning to spend again and companies are hiring. But it is far from business as usual. Our workforce is changing and today’s customers and corporate leaders are driven by different motivators. As we look to engage with the next generation of business, what can we expect? What is the “new” market for real estate going to look like? We dedicated our Spring 2010 issue of Knowledge Leader to addressing this paradigm shift and to looking more closely at what changes are on the horizon and how we can be at the forefront of this change. In this issue: • Economist Jeff Rubin predicts buying local will make a comeback as oil prices make transporting goods too costly; • Green is far from fading, which doesn’t surprise advocate and author David Gottfried; • Financial expert Jack Cohen asks: Can capital emerge from the rubble to rise again? • Our “Wire”’ feature story highlights tech trends that are changing when, where and how we do business; • Business coaching experts from Shirlaws reveal how you can “catch the first wave” of recovery; • In our cover story, Steve Steppe shares Stockbridge Capital Group’s strategy for performing well against the odds; • In “Industrial Strength Retail,” experts discuss a new model for moving merchandise. We hope these articles, and the others in our paradigm shift issue of Knowledge Leader, inspire you to embrace the change coming our way and discover a new way of accelerating your success in 2010. While each market will adapt and adopt change at a different pace, overall, we expect great things to happen in the coming year.

David Bowden, CEO Colliers International – Canada *Effective April 21, 2010

knowledge leader spring 2010

Dylan Taylor, CEO Colliers International – USA*

Heidi Page Project Manager Contributing writers

Kerry Alexander, Jack Cohen, Gina Danford, Doug Frye, Stewart Gall, Teresa Kenney, Chrystal LeBlanc, Lex Perry, Cheryl Reid-Simons, Durgesh Sharma, Niki Stojnic, Heidi Stout Tretheway Proofreaders

Kerry Alexander, Jennifer Garton, Lilium Pierson, Heidi Stout Tretheway This magazine is published by Colliers International

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 three times annually by Tiger Oak Publications, Inc., with offices at 1518 First Ave. S., Suite 500, Seattle, WA 98134; 206.284.1750. © 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 cs m a k i n g h e a d l i n e s to day

It’s a Small World Author, economist and energy expert Jeff Rubin paints a picture of what our economy could look like, post triple-digit oil prices. By Teresa Kenney

In today’s global economy, the Atlantic

salmon you purchased from your neighborhood mega-market might have had quite an interesting journey on its way to your dinner table. First, it was caught off the shores of Norway, where it was frozen and shipped to a larger port and an even larger ship, which transported it to a processing plant in China. There, it was thawed, deboned, filleted, re-frozen and packaged before being packed onto yet another ship and exported to North America. Post trans-Pacific voyage, it was delivered to your favorite supermarket and displayed under a “Fresh Fish” sign. And all just a mere two months or so after it was plucked from the icy waters. According to economist and energy expert Jeff Rubin, that’s all about to change. And the impetus for the change is oil—triple-digit oil prices to be exact. For 20 years, Rubin was chief economist at CIBC World Markets—the investment subsidiary of the Canadian Imperial Bank of Commerce—before resigning his post to pen Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization. He 4

knowledge leader Spring 2010

was one of the first economists to accurately predict escalating oil prices at the start of the 21st century; in his book he outlines what the world will look like as transporting food, goods and, yes, even ourselves, becomes more and more cost-prohibitive. “Distance costs money. As transportation costs become more important than labor costs, the whole idea of a global economy will stop making sense regardless of whether we move our [products] by truck, rail or air,” Rubin explains. He points out that the changes are already happening. “We are starting to see the relocation of a lot of industries,” says Rubin. “In a commercial sense, we may find demand in an industry that we have written off prematurely. The steel industry is one that most people thought was long gone. When oil prices rose above $100 per barrel, U.S. steel production suddenly went up and steel imports from China suddenly fell.” The same is true of food, like the aforementioned, well-traveled salmon. While buying local, seasonal fare is a growing trend, Rubin states it will soon become a necessity. “In 1980, Ontario grew 45 percent of its own food. Today it grows 20 percent,” he notes. In a regional economy, Rubin says, that will have to change. “More of the land that was

developed for suburban sprawl will have to be returned to agriculture.” He also notes that some industries will continue to be outsourced—call centers, for instance, remain less costly to operate overseas for some companies. But for products that are cost-prohibitive to ship, such as furniture, Rubin says that “at the end of the day, it will be cheaper to produce locally even with higher wage costs.” To keep the North American market competitive, Rubin believes governments must insist on a “carbon tariff.” “What we have to do is put a price on admission first. If we are going to place a carbon tariff on our own emissions, everyone else [who is exporting goods to North America] will have to play by the same rules, or we will never be able to compete,” explains Rubin. “You can’t ask our industries to pay twice—first by paying a carbon tax on their own emissions and second by losing market share to underpriced imports from countries that don’t have to pay for the carbon they emit.” Those carbon tariffs, he asserts, will likely be introduced by state and provincial governments before being adopted by federal governments. As a result of a shrinking world economy, Rubin says opportunities for the commercial real estate industry “are going to lie in growing urban density.” knowledge- leader.com

Economist jeff rubin (right) explores how growing oil prices will result in a shrinking economy in his book Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization.

“[Escalating] oil prices will fuel growth in urban areas. There will need to be massive investment in public transit, and some cities will have to be rezoned for much greater density—this is where the opportunities are,” he predicts. Rubin says each North American market will have its own challenges in addressing escalating oil prices and adapting to shrinking economies. “A city like Los Angeles, for instance, that is so spread out and relies on private transportation will have a harder time

[adjusting to a regional economy] than a city like New York or Toronto. [Conversely] people in California don’t burn oil for heating but people in the Northeast do. So in that respect [the Northeast region] will be more challenged.” Far from a dystopian society, Rubin’s book is tentatively hopeful. “Triple-digit oil prices don’t have to be apocalyptic unless we insist on consuming oil like we did in the past. This doesn’t need to be an economic calamity. We may find that a smaller world is a better world,” he says. K L

Book excerpt: Why Your World is About to Get a Whole Lot Smaller If you own a widget factory in Chengdu, you are probably starting to worry about the extra shipping costs that come with rising oil prices. Looking at the transport costs that come with triple-digit oil prices, your competitive disadvantage would be the same as having to pay a 20 percent tariff on the widgets you export to the U.S. while your Mexican competitor would be free to sell its widgets duty-free in the American market. Those are the kind of cost advantages that will move your widget factory from Chengdu to Mexico in a hurry. And the same logic that will have companies relocating from China to Mexico will have others moving north from Mexico. Crown Battery Manufacturing recently did just that when it relocated jobs from its plant in Reynosa, Mexico, and repatriated them to its Ohio home base. If you are making a 29,000-pound battery to run underground mining equipment in southern Illinois, even a 2,000-mile trek from a plant in northern Mexico may now be too costly at triple-digit oil prices. To learn more, visit Jeff Rubin’s blog at jeffrubinssmallerworld.com. K L

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Colliers international Spring 2010

spot lig h t the people, places

and events shaping the industry

» Innovation

Here Comes the Sun Colliers partners with industry leaders on renewable solar energy. The Colliers Greater Phoenix office has published a comprehensive examination of the solar energy industry in Arizona entitled Solar Energy Network—Partners for Change. This 40-page report is a collaboration between Colliers and 25 public- and private-sector experts and visionaries who are playing a critical role in creating a renewable energy future in Arizona. The report points to multiple factors that position Arizona to become the leader in solar energy. Matt Fitz-Gerald, senior associate with Colliers International in Phoenix, worked in partnership with industry experts to illustrate the scope of current and future efforts to expand solar energy in this Southwest state. 6

knowledge leader spring 2010

“Arizona will become the major solar energy hub of the Southwest in the United States,” notes Fitz-Gerald. “It has the business infrastructure, skilled and available workforce, economic climate, and tax and investment incentives to attract solar energy companies and provide them with a competitive edge.” Fitz-Gerald adds that the report also emphasizes the commitment and cooperation among the public, government, university, non-profit, and private industry sectors to support renewable energy initiatives and programs in Arizona. To view or download Solar Energy Network—Partners for Change online, visit colliers.com/phoenix.

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» insider

tips

Import(ant) News When it comes to the recession’s impact on U.S. port cities, all is not equal. The recent recession has caused industrial markets in major port cities more than their share of pain. But not all port markets have been affected equally. Industrial markets that focused on burgeoning imports, such as Los Angeles/Long Beach, New York/New Jersey and Seattle/Tacoma, have been disproportionately impacted in the downturn. Meanwhile, ports with a greater focus on exports, such as those in Houston, Miami and Fort Lauderdale, Fla., have been less affected.

Containerized waterborne traffic increased 60 percent from 2001 to 2007 as the nation’s trade deficit ballooned. While the economic downturn has decreased industrial demand nationwide, having decreased occupied square feet by 1.15 percent from 2007 to 2009, the effects are more acutely felt in port markets, which have decreased by 1.43 percent. Various measures of international trade point to a small rebound that began in early 2009, but few expect a return to the consumer-driven import trade surge that occurred between 2005 and 2007. A shrinking trade deficit is anticipated as foreign exports claim a larger portion of U.S. net exports. This will benefit industrial landlords in export-focused regions. For more information on this and other timely industry research, subscribe online to Colliers’ research series at white.papers@colliers.com.

According to Colliers International research on U.S. port markets: • The period from 2001 to 2007 saw a 60 percent growth in global trade flows. • Trade flows decreased 15 percent from 2007 to 2009, and have returned to 2005 levels. • Containerized trade is concentrated in 10 key port markets that make up 90 percent of activity. • Industrial port markets have been hit hardest, as trade patterns have changed. • Trade has been improving since bottoming out in early 2009. Top 10 U.S. Maritime Container Ports

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Colliers international spring 2010

spot lig h t » Q& A

executive insight with:

Scott Addison

executive managing director with Colliers International’s Toronto office

create. Another is “I do not like that man. I must get to know him better,” attributed to Abraham Lincoln. Words to live by in our industry, which demands cooperation.

What was your first job?

Who are some of your heroes?

Biggest accomplishment so far in your career?

Ronald Reagan, Margaret Thatcher and our former Prime Minister Pierre Elliot Trudeau— all leaders with strong convictions. What is your favorite business book? What are you currently reading?

Colliers Toronto managing director, Scott Addison, was recently honored with the 2009 Carolyn Noffsinger Award for his business and community leadership. Named after one of Colliers’ most inspirational leaders, the award is Colliers’ highest leadership honor. Knowledge Leader sat down with Scott to learn more about the people and events that have helped shape his life. If you could have dinner with any business leader, who would it be and why?

Jack Welch, former chairman and CEO of General Electric. I’ve always admired the leadership and innovation he showed at General Electric. I think he is one of a few people who was such a dominant business player and shaped the company in a dramatic way. Words to live by?

“The mould of a man’s fortune is in his own hands” by English philosopher and statesman Francis Bacon. You’re responsible for your own actions and your own success, and that’s what I believe you should live by. One of the reasons people are drawn to real estate is that it’s an industry you can really thrive in and don’t need a lot of capital to get into to be successful. Everybody has the same tools starting out, and it’s effectively what you 8

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SuperFreakonomics by Steven D. Levitt, the follow up to Freakonomics. I like these types of books because they look at everyday situations and common problems or myths in the market from a different perspective and disprove them. Part of a business’ success is the ability to look at challenges in a different way and come up with a solution that may sometimes be out-of-the-box. Books like SuperFreakonomics resonate with me. In Toronto, we’ve gone through a number of years of change when we were looking to merge all three of our offices into one budget. People would say “you can’t do that,” or “that’s not the way things were.” We really had to rely on our overall goals, as well as the fact that we knew it was time to do something different. In the end, this had a significant impact on our business. What do you see as new industry trends to note that either clients or agents should be aware of?

In respect to opportunities or new directions for Colliers, they are unlimited. Residential marketing is something that could pick up in Toronto, especially given our current residential development market. I also see Colliers providing non-traditional service lines that are different from most commercial brokerages. Project management is a good example of that and should be something to keep an eye on in 2010. What did you want be when you were young?

A millionaire, as well as a professional hockey player.

My first job was working on a barge that delivered sand and gravel to island cottages. On the return trip, we pumped out septic systems.

Seeing so many people succeed. Colliers has become a very large brokerage company in Toronto, and throughout my career I’ve seen people attain some fantastic lifestyles. It’s seeing this balance that has been a really great accomplishment for me. Another accomplishment has been growing a performance culture in Toronto where people collaborate, share information, celebrate others’ successes and recognize everyone’s value in the company. Who are your role models?

My biggest role model was my late father who, over the years, gave me a lot of good advice. I may not have recognized it initially, but I think that’s one of the key things that’s guided me. My other role model within the commercial real estate industry is Larry D’Orsay, a principal from a small brokerage named Indusite Realty. I admire his people skills—the way he communicates with people, how he joined committees with his colleagues and, as a result, built his career up, as well as the careers of those around him. What is your number one goal going into 2010?

I am a big fan of working smarter, not harder. I’m also a big believer in hard work. But hard work alone, without strategy or a sense of what you are doing, will not lead to success. In 2010, I would like to continue on the path of constant improvement. We took a step back in 2009 financially, but I think we’ve improved our presentation skills, our prospecting, marketing and research, which has made us a better company than we were in 2008. My goal in 2010 is to dominate the commercial real estate market in Toronto, and we’re moving closer and closer to that each day. K L knowledge- leader.com

Personal Biz

Enhancing the executive lifestyle

There’s an App for That Are you getting the most out of your iPhone? Before you answer yes, check out our top must-haves. By Durgesh Sharma So you have the coolest gadget on the market today in your pocket—the sleek, (and let’s face it) somewhat addictive iPhone. Congrats. But are you sure you’re taking full advantage of all it has to offer? You may be surprised to learn that Apple has more than 130,000 apps for the iPhone and iPod touch, all jockeying for your attention. To help make your life easier, Knowledge Leader has done the legwork for you, taking on the seemingly impossible task of identifying the top 10 applications for today’s busy professional. Here are our favorites:

ToDo ($9.99) The app store is glutted with to-do list managers, but many are so simple, they’re ineffective. If you want something that has more functionality, is easy to use and gets the job done, get this app. It also syncs your data with the online to-do list managers Toodledo and Remember The Milk. The addition of push notification and optional e-mail alerts helps with follow-through.

QuickOffice ($9.99) Enjoy superior Microsoft Word and Excel create and edit functionalities in this powerful productivity suite. QuickOffice allows file transfers from your desktop to your iPhone via Wi-Fi. You can also view, e-mail and access attachments with the most popular file formats— PowerPoint, PDF, iWork, HTML, PNG, JPG, GIF, SVG, TIF and MP3.

Skype (Free) At long last, the iPhone and iPod touch have a Skype client all their own. This is a momentous turn of events, particularly for iPhone users who haven’t opted for AT&T’s unlimited voice plan and want to save their precious minutes. IPod touch users will no doubt welcome the opportunity to add any sort of calling capability to their mobile devices.

Flight Update Pro + TripIt ($9.99) Flight Update Pro allows you to enter any flight number to view its status and location. Zoom in to the precise location the aircraft is flying over using TripIt. Plus forward airline e-mail confirmations and download itineraries directly into Flight Update Pro.

knowledge leader Spring 2010

Kindle for iPhone (Free) Kindle for iPhone is a free application that allows you to choose from more than 350,000 Kindle books to purchase for reading on your iPhone or iPod touch—no Kindle required. Amazon’s new Whispersync functionality automatically synchronizes the last page read so you can easily switch between devices and pick up reading from where you left off.

Yelp (Free) Yelp is a fun and easy way to find, review and talk about what’s great—or not so great—in your neighborhood. You’d be hard-pressed to find a more opinionated, honest and, at times, catty group than the citizen reviewers on Yelp. Search for restaurants, nightlife, banks, gas stations and drug stores. New additions even allow you to rate and review a business on the phone itself—no need to wait for the check!

WorldCard Mobile ($5.99) This is one application that you have to try because, once you’ve mastered it, it will save you tons of time. WorldCard Mobile is the leading business card recognition system. It captures and recognizes business cards through the 3GS iPhone. It automatically sorts recognized information by name, company, position, address, phone number, e-mail address and other fields, and exports this information to iPhone’s address book. No more entering information manually! (Requires iPhone OS3.0 and 3GS Model.)

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Flight Control ($0.99) No one needs fun more than the business professional stranded in an airport, waiting for a delayed flight. Flight Control wouldn’t exist without the iPhone. The addictive game-play is perfectly suited to the device. Spend the buck and start playing. Just touch and drag the plane to its runway!

Bloomberg (Free) Those in the financial industry—or those who follow it—will be pleased to see that Bloomberg is one of our top applications. Bloomberg’s name is well-trusted in the financial industry as a solid source of company and market information, and this application brings all of that knowledge to the iPhone. It even includes tools to help analyze the world’s markets.

Mint (Free) Mint is fresh, intelligent online money management. Not only is it free, it saves you money. Track, budget and manage your cash on the go. Simply sign up at mint.com, add your banking account and access your personal finances anywhere.

The best of the rest… NPR News (Free) With only so much time to keep up with what’s happening in the world, what’s a news junkie to do? Well, if you love NPR, you’ll be thrilled to learn that there is an NPR News app for the iPhone and iPod touch. NPR News is one of the best news and information applications and it will not disappoint. Help keep it going by donating every once in a while.

iXpenselt ($4.99) iXpenselt Lite (Free)

TextFree Unlimited ($5.99) or TextFree Unlimited Lite (Free) Yep, it’s true—you can send unlimited free texts to any U.S. mobile phone for a whole year from an iPod touch or iPhone. Replies are free too! The Lite version has a daily text limit.

LinkedIn (Free) LinkedIn for iPhone puts your professional network just a touch away. Connect with more than 55 million professionals worldwide while keeping your network up-to-date with your status in real-time.

Movies (Free) Heading to the multiplex, but uncertain about what to see? Haven’t this season’s offerings been… well, not exactly abysmally bad, but solidly mediocre? Save yourself. A look at the user reviews on Flixster’s Movies app for the iPhone and iPod touch shows what’s hot and what’s not. Check user comments, watch trailers, read Rotten Tomatoes’ movie reviews and manage your Netflix queue.

Evernote (Free) Evernote turns the iPhone and iPod touch into an extension of your brain, helping you remember anything and everything that happens in your life. From notes to ideas to snapshots to recordings, put it all into Evernote and watch as it instantly synchronizes from your iPhone to your Mac or Windows desktop.

Kayak Flight & Hotel Search (Free) Kayak for iPhone connects you to the best travel search engine in the world. Find the right flight. Choose the perfect hotel. If your flight is cancelled, find a new one in a minute. Or get on the phone with the airline in seconds.

This app isn’t one of the sexier uses for the iPhone, but it’s mighty useful for anyone looking to track expenses or plan a monthly budget. The interface is clean and quick to use, with good visual accounting of your spending by category. It feels secure, too—a concern for many corporate users—with password protection and the ability to backup and restore data at will. And, if you want a gimmick that is genuinely useful, you can also take snaps of individual receipts to be stored in your records.

PortfolioLive ($5.99)

Slacker Radio (Free)

If you love sports, you should already have this on your phone. ESPN ScoreCenter brings you real time scores from over 500 sports leagues around the world. Stay on top of all the results you care about with one-tap access to your personalized set of scores. Never miss another goal, pitch, basket, try, touchdown or wicket. ScoreCenter brings you the fastest and most reliable game details like plays, key stats, leader boards, box scores and scoring summaries. K L

Slacker Radio is a beautifully designed application that gives you access to a nearly unlimited selection of music and comedy. Slacker has excellent audio quality, no matter where you’re using your iPhone or iPod touch. The service comes in two flavors: a free, ad-based version with some minor limitations, and a $4-per-month subscription-based service with no ads or limitations. knowledge- leader.com

For the stock market professional, PortfolioLive simplifies and improves your ability to manage your investment portfolio. Now you can track your portfolio, research individual stocks with detailed news and custom technical charts, and stay informed anywhere, anytime. Manage hundreds of positions across an unlimited number of portfolios and track every buy and sell you make!

ESPN ScoreCenter (Free)

Colliers international Spring 2010

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

“We don’t just look at space needs; we consider the client’s root business issues.” – Doug Demers, Colliers Studio

Gaining New Perspective Colliers Studio helps companies see their properties’ true potential. By Kerry Alexander In commercial real estate , pitch meetings typically end in one of two ways— with a handshake or a headshake. When Doug Demers launched Colliers Advance Planning Studio (Colliers Studio), a strategic consulting arm within Colliers International’s Corporate Solutions business line, he generated both. Handshakes came from clients who felt like they had been given the inside track on the hottest innovation to hit the market; and headshakes came from competitors, who couldn’t quite figure out how the deal slipped from their grasp. In today’s market, real estate decisions are less about finding space and more about leveraging assets. As property becomes a more central player in overall business strategy, it is increasingly 12

knowledge leader spring 2010

important for companies to select a service provider who is knowledgeable about more than available square feet. Additionally, larger firms with vast geographical operations don’t want to establish and maintain relationships with multiple providers in multiple markets. Case in point: A leading food manufacturing and distribution company based in St. Louis, Mo., was looking to expand its West Coast operations and wanted someone familiar with the Northwest. The director of operations contacted Scott Alan, SIOR, Colliers International senior vice president and industrial property expert in Seattle. Alan asked Demers to accompany him to the meeting. “More often, we’re finding that when it comes to real estate, companies are not

dealing with just one requirement. They have multiple mandates going on simultaneously,” says Alan. The client had existing facilities in British Columbia, Washington, and California, and wanted to assess its operations and distribution needs regionally. “In this instance, the real estate was just one component. I sensed the client could benefit from partnering with someone experienced in business planning, who could help engineer and orchestrate the right plan,” explains Alan. “Doug did an eloquent job of explaining the process and mapping out viable options. The presentation and meeting went well and we were awarded the business.” Brokerage remains a critical part of the equation, asserts Demers. “It’s not either-or; it’s both. Typically, the broker has the existing relationship and track record with the client. He also has the local market knowledge and expertise to execute on the plan once it’s been developed.” Combine that with the consulting services provided by Studio, says Demers, and suddenly, the win rate increases exponentially. “We call it the one-two punch.” And it seems to have real knock-out power. With rounds consistently being awarded to the Studio team, the competition is left standing in the ring, stunned. “They can’t quite figure out why they lost the deal and what it is that we have,” says Demers. Demers, who has worked with such blue chip clients as Boeing, Microsoft, Apple, Merck, AT&T and Disney, says Studio is beginning to catch on in the market. “It takes time to get integrated into the process. But once we’re at the table, it quickly becomes apparent to our brokerage teams that this is a very powerful tool to offer clients.” Alan concurs, calling Studio “another elite tool knowledge- leader.com

in Colliers’ toolbox,” especially for specialized industries with manufacturing and distribution components or specialized space needs such as pharmaceutical, biotech, manufacturing and food services companies; academic institutions; and financial and professional services firms. Clients that have recently benefitted from Studio’s services include Pacific Biometrics, DCI Engineers, Holmes Weddle Barcott and Dorsey Whitney. According to Demers, Studio’s business model is unique in the industry because “we don’t just look at space needs; we consider the client’s root business issues.” The conventional approach to commercial real estate transactions tends to be linear, he explains. Studio looks at all angles of the business and develops a 360-degree solution. “We look at cost, facilities, business and human resources. It’s not that companies don’t think of these things. They do. They just don’t typically look at them together,” says Demers. “We diagram space in the ideal facility from a programmatic standpoint. Then we overlay this onto candidate buildings. There is a clear graphic depiction and, suddenly, options begin to materialize.” Demers refers to Studio’s products as decisionsupport tools. “Fundamentally, that’s what they do: help the client make informed business decisions.” In most cases, corporate real estate has to get financial approval and buy-in from leadership before decisions can be made. “If you

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can hand over a carefully crafted process with options and solutions, it’s easier to get everyone on the same page,” notes Demers. Studio also helps the client see the long-term viability of the real estate. “We don’t limit the site or building to its current use; we focus on its potential,” explains Demers. Can the building be repurposed? What modernizations or renovations can be done? Would these be more cost-effective than building or moving to

a new facility? How can the asset be positioned for resale or marketed to a new owner or tenant? Studio encourages the client to consider all these options. “Naturally, they want the best deal,” he notes. “We show them that this is best achieved at the macro, not the micro, level. By creating a multi-year roadmap, the client receives a better product—a business-driven plan for their space for both the short and long term.” K L Graphic depictions of workplace strategies can help the client visualize varied workspace designs. This drawing (left) illustrates options for mobile personnel, including collaborative spaces.

Below, from left: A conceptual model that shows an adaptive re-use scenario involving an existing building, plus adjacent property acquisitions and new development. A customized build-to-suit scenario. A completed existing lease option in the market.

Colliers international Spring 2010

Wired

Technology is continually changing how and where we work. Knowledge Leader looks at the trends today, as well as whatâ&#x20AC;&#x2122;s on the immediate horizon. By Teresa Kenney

knowledge leader Spring 2010

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The Dallas headquarters of law firm Thompson & Knight has six dedicated, state-of-the-art video conferencing rooms.

It’s

safe to say that most college graduates entering the workforce today have never used a typewriter—or a word processor for that matter. They probably have never saved a document to a floppy disc, and texting has replaced e-mail as their preferred mode of communication. Like it or not—and when it comes to improving communication and efficiency, what’s not to like?—technology is changing how and where we work. Today’s workforce is accustomed to faster communication, immediate response and uninterrupted connectivity, both on and off the clock.

Wired Workforce Bob Anderson is senior director for IT Business Value Evangelism at Microsoft Corporation in Redmond, Wash. He sees a dramatic generational shift happening in the workplace. “Today’s workforce is now a unique blend of individuals spanning three very distinct ‘chronological’ generations, each defined by year of knowledge- leader.com

birth: the baby boomers, Gen X and Gen Y/ Millennials. But today’s college graduates have been ushering in what Gartner [an information and technology research advisory firm] has called Generation V—the virtual generation,” explains Anderson. Anderson says that the members of Generation V are defined more by their online activity than their date of birth. “The Millennials have grown up entirely online, it’s just natural for them. For others, this may be a disruptive change in how they both live and work. While management has a strong knowledge base that experience provides, the younger generation is good at finding information online and relies more and more on online ‘social’ relationships. It will be a fascinating change,” he adds. Anderson’s job is to help companies such as Colliers International leverage existing expertise and emerging technology to create a more efficient workplace—whether that workplace is a physical location or a virtual office. “For a lot of companies, the IT department

typically buys a product but doesn’t necessarily understand how the ultimate user will use it. To be effective, you have to understand both the business and how software can solve your issues. IT departments have to evolve from a primary emphasis on cost cutting to an emphasis on creating business value. They must determine what needs to get done for and with the business, as opposed to just purchasing. This provides a great new opportunity for today’s IT professionals—one that is defining the future focus of their careers,” says Anderson. Anderson points to cloud computing as an emerging trend that has been making headlines recently. Still in the early stages of acceptance, cloud computing refers to the ability to extend your IT capabilities through subscription-based or pay-per-use service. “For instance, instead of installing Microsoft Office Word on your laptop, you use your browser and connect to it over the Internet,” explains Anderson. “Rather than buying and maintaining select hardware, you contract it to a third-party over the Internet.” Colliers international Spring 2010

From Thompson & Knight’s technology command center, technicians monitor and record meetings or depositions, addressing any issues as they arise.

One obvious advantage is the cost- and spacesavings for companies that will no longer have to invest in hardware such as multiple servers. “As companies gain more trust and comfort with this approach and its underlying security, any critical information can be hosted internally, but you would also have virtual servers,” explains Anderson. It’s a concept that may seem risky to some baby boomers but is familiar to, and expected by, Generation V. “The current generation has grown up with Twitter and Facebook. They will work with people they don’t know and have never met faceto-face for a common good,” says Anderson. “They understand the power of a crowd—of people sharing information with others who have like interests.” The coalescing of chronological generations into one virtual generation has been driving a new way of working, blurring the lines of how people connect in both their personal and professional lives. 16

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“It’s the ‘consumerization’ of the enterprise. People are having a really good consumer experience at sites like Amazon.com or eBay, but when they go to their jobs, things don’t work as easily. This expectation will result in more consumer-friendly applications for the workplace,” Anderson notes.

Wired Offices Technology is changing office design as well. For some, that might mean working off-site at least part of the time. For others, it might mean incorporating new tools and consolidating traditional spaces. Graeme Young, senior vice president with Colliers International’s Toronto office, says one of his clients, an international accounting firm, is “big on video conferencing, which has allowed them to cut down on their travel considerably. They also do a lot of ‘hotelling.’ Because their business requires employees to work out of their clients’ offices, you may have three or four people to one desk in their home

office.” Hotelling is a reservation-based method of supporting unassigned workspaces for mobile workers. Young calls this space intensification: more people in less space. “If you’re going to be in the Toronto office, you log into the system and reserve space. By the time you’ve arrived, someone will have rolled out your files and delivered them to your desk. All you need to do is plug in your computer. The only things missing are the family photos,” says Young. This can be extended to private offices as well. “If a senior manager is on holiday, for say two weeks, they put their office in the pool. So if you need a private office for the week, you can reserve it. Nowadays, you’re a bit of a dinosaur if you are tied to your space,” Young remarks. This won’t work for all industries, however. “Mobile workers are having an impact on space, but some businesses still need all of their employees together,” says Jay Sternberg, senior vice president with Colliers International’s San Francisco office. knowledge- leader.com

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depa r t men t s h av e t o e volv e f rom a pr im a ry emph asis on cos t-cu t t ing t o a n emph asis on cr e at ing business va l ue.” B ob A n d e r s on , se n io r d ir e c t o r f or I T B u sin e s s Va l ue E va n ge l i sm, Micr o s of t Co r p o r at ion

That’s the case for Andrew Ingrum, partner with the Dallas law firm Thompson & Knight LLP. His firm recently moved into new offices at One Arts Plaza in downtown Dallas. “I don’t think we’ll ever be able to have associates working from home five days a week; it’s hard to manage in this type of service business. That being said, I do work from home quite a bit more now. I can go home to spend time with my family and then hop on my computer later in the evening,” says Ingrum. What technology has done is distribute the same square footage more efficiently. Thompson & Knight’s new library is proof of that. “Our previous library was about 30,000 square feet; now it’s about half that. We have a room of CDs in a fraction of the space that would normally house shelves of books,” says Ingrum. Ingrum says they’ve implemented technologies in their new space that are providing tighter security and more innovative ways to connect. “We now have fingerprint technology that limits access to certain offices within our firm. Before, we had key fobs that we swiped at a reader at the door,” Ingrum observes. “We also added Voice over Internet Protocol, so telephone service is now over the Internet. That allows us to reconfigure phone service as our needs change and answer our office phone regardless of our actual location,” says Ingrum. “I can be in a hotel in New York, answering the phone as if I’m sitting in our offices in Dallas.” There are also six dedicated video conferencing rooms with a central command center. From the command center, technicians monitor and record meetings or depositions, addressing any issues as they arise. “I’m very thankful that our IT department is so good. It’s a far cry from years ago when I had technical issues and the only solution was ‘control, alt, delete—reboot,’” says Ingrum. Having a well-wired office can benefit a company in other ways as well—such as recruiting new employees. “I think the top attorneys that are coming out of law school today are looking for a home that has just the type of support we offer,” says Ingrum. knowledge- leader.com

An office like Ingrum’s doesn’t happen overnight. Planning can take years, and because technology is such a rapidly evolving industry, those plans are fluid. Although Thompson & Knight moved into its new building last summer, preliminary planning began in late 2005. “We worked with technology consultants who talked with us about what we currently had and what we wanted to have. In late 2006, we got into the nuts and bolts, looking at technology that we didn’t really need at the time, but knew we would in the future, installing infrastructure that could accommodate future innovations. We continue to evolve and upgrade,” says Ingrum. Hunter Blanks specializes in law firms and helped Ingrum’s firm choose their new space. “You need to have a real estate professional who really understands how a law firm is set up, what support they need. And you need one who can pull together the right team. We hired a project manager and vetted architects for them to interview. We also brought in key subcontractors such as the IT consultants,” says Blanks, executive vice president of the office division for Colliers’ Dallas/Fort Worth office. Using a well-connected broker is especially important for young, inexperienced companies. “Many young companies turn to us to help them understand what they need and generate innovative solutions, instead of telling us ‘this works for us,’” says Sternberg. In the tech-rich Bay Area, Sternberg and his team often works with emerging technology companies. “We invest a significant amount of time obtaining knowledge about our client’s business. We seek an understanding of their business plan, what drives them, and how their various divisions interact and communicate internally,” says Sternberg.

Wired Buildings New technology isn’t just helping businesses connect and communicate more effectively; it’s also helping companies save money. “Corporate America is getting smarter and more focused than ever on cost-effective solutions to reduce real estate-related expenses,

which is typically their second largest line item behind their people cost. As such, successful reductions in occupancy costs have significant and direct impact on the return to their stakeholders,” says Sternberg. That’s why more companies are choosing sustainable workplaces, which are cheaper to operate than traditional buildings. “Right now, there are four large office towers either recently completed or under construction that are targeted for LEED (Leadership in Energy and Environmental Design) certification,” says Mike Cowie, executive vice president for Colliers International’s Toronto office. While some cities have required new construction to target LEED or similar green design certification, Cowie notes that in Toronto, “the tenants are taking the lead and the developers are listening.” One of Cowie’s clients—a large Canadian bank—recently leased about 700,000 square feet, reducing their previous physical footprint by about 20 percent in the process. “They moved to an open plan, which is a more collaborative design. There are very few large private offices now,” notes Cowie. The building costs approximately 20 percent less to operate than a typical building, thanks to innovations like a deep water cooling and steam heating system that uses water plumbed from Lake Ontario. Underfloor HVAC (heating, ventilation and air conditioning) systems allow tenants to adjust the heating and cooling to their own personal comfort. In addition, a computer-controlled lighting system helps to regulate sunlight. Too much sun or glare triggers motorized blinds to shade windows; too little makes the blinds retract to let in natural light. The tower’s innovations are groundbreaking today, but Cowie believes they will soon become the norm as more and more tenants insist on sustainable workplaces. “If you’re building a key tower in Toronto and aren’t building LEED, you won’t lease as well, explains Cowie. “It’s like building an apartment building without air conditioning or a designing a car without power brakes.” K L Colliers international Spring 2010

Industrial Strength Retail New trends are emerging as retailers face a merchandise surplus and rising transportation costs. By Cheryl Reid-Simons

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Colliers international Spring 2010

For retailers, keeping the bottom

line healthy comes down to a pretty simple equation: Increased sales + lower costs = happy shareholders, satisfied consumers and a growing business. During the low-interest rate, easy-money economic boom times, most retailers only needed to concentrate on the first component of that equation: racking up ever-higher sales figures. Then along came 2008, and consumers stopped consuming at the rate retailers had come to expect and rely on. “Goods just stopped flowing,” says Henri Legal, senior director of operations for one of Canada’s leading thirdparty logistics firms, Maersk. “It started in ’08; and in ’09, it was apparent there was way too much inventory on hand.” Merchandise started sitting on shelves and in warehouses longer, in some cases going from an average of 80 days on the shelf to 200 days. Retailers who would survive the downturn had to quickly refocus on the second part of the profit equation: lowering costs. “It made a lot of these retailers rethink what they’re doing,” Legal says. High fuel costs and a change in the shipping industry’s strategy helped turn retailers’ focus to streamlining distribution.

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“Throughout the entire supply chain, you’ve got to squeeze every nickel you can,” says Vern Schultz, executive vice president of Colliers, Bennett & Kahnweiler Inc., in Chicago.

Trend: New and Rising Transportation Costs No one thinks the emphasis on distribution systems will go away even when inventory begins to move again. “With energy costs going up, this issue is only going to become more accentuated,” says David Bowden, chief executive officer of Colliers International - Canada. “Retail is shifting from an archaic approach to a very modern, much more savvy system.” Shipping lines used to quote rates for delivering goods to several inland destinations. A few years ago, that changed. “The shipping companies are now saying, ‘We’ll take it to Los Angeles and you figure out how to get it where you want it,’” says Legal. With the increasing cost of transporting goods from port to distribution centers (DCs) around Canada and the United States, the inefficiency of shipping goods from Vancouver, British Columbia, to Toronto to be unpacked, reloaded and returned to Vancouver quickly becomes clear. “If you’re sending a container intact to Toronto, you’d better make sure most of it is staying back east,” Legal states. In response, Legal says retailers are beginning to unload and reconfigure freight closer to where it enters the country. For inventory coming from the Pacific Rim into Canada, that entry point is going to be Vancouver. Because inventory doesn’t spend unnecessary time in transit across Canada, “there’s a distinct advantage to [reconfiguring your freight at entry]. If you terminate your goods in Vancouver, you can then decide closer to the sales event how you distribute them,” says Legal.

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Trend: Emerging and More Sophisticated Distribution Channels Gord Cook, executive vice president with Colliers’ Toronto office, says the old distribution model made sense when more goods were actually manufactured in North America. “If product was channeled from multiple inland locations, generally speaking, the simple solution is to locate your warehouses closest to your largest customer base, which is still the primary objective” Cook says. “In the new world where you don’t have as fragmented a supply chain and there’s a much heavier weighting of goods coming into seaports, goods are landing on one side of the country or the other.” In Canada, even more so than the United States, the seaports are a long way from the large population centers where most of the goods will actually be sold. “It’s like if you ordered 50 loaves of bread from Asia three months before you needed them and they delivered them to your back door—and the kitchen is in the front of the house,” says Cook, describing retailers’ dilemma. And the solution isn’t as simple as asking the delivery guy to come to the front door next time. “Recognize customer buying preferences vary city by city. Simply put more umbrellas in Vancouver and more snow shovels in Toronto,” says Cook. “There are a couple of interesting, competing trends,” says Fred Regnery, senior vice president with Colliers, Bennett & Kahnweiler Inc. in Chicago. “One is a general consolidation of the number of distribution centers. As they consolidate, they tend to get bigger. On the other hand, there has been a tremendous increase in technological capabilities.” That means significantly improved inventory tracking and controls. “You can go from quarterly to daily orders now,” Regnery says. “That would dictate a trend to smaller facilities.”

Regnery notes that the increased pressure to improve distribution systems has many companies returning to third party logistics firms such as Maersk. “As inventory control systems get better, there’s only going to be more scrutiny on how to make that system as efficient as you can,” Regnery says. And as automation improves and warehouses become more sophisticated, Regnery says, it also means employees working in those warehouses will need to be more sophisticated as well. “We’re going to see a need for an improved and higher educated workforce—fewer employees, but with a higher skill level.” The locations of distribution centers are changing as well, as retailers emphasize quick delivery to storefronts or directly to consumers. “The general trend is for big DCs in exurban locations,” Regnery points out. That’s why the best real estate advisors are familiar with the pros and cons of markets across the country, not just in their own backyard. Regnery recalls a company that did studies on logistics and transportation costs and came looking to build a distribution center in southern California. “The real estate agents started looking at other costs,” Regnery recalls. The company ended up outside their original target location and opened the DC in Arizona with a significant savings in operating costs. Similar economic factors have helped turn low-profile but wellconnected markets like tiny Sparks, Nevada, into intermodal shipping and distribution center hubs.

Trend: Online Retail Among Regnery’s clients is a major fulfillment company for online giant Amazon.com. The client operates half a dozen distribution centers. “Speed to the customer for them is really important,” says Regnery. The success of online retailing is transforming

The locations of distribution centers are changing, as retailers emphasize quick delivery to storefronts or directly to consumers. knowledge- leader.com

Colliers international Spring 2010

Headquartered in Seattle (below), Amazon.com leased more than 17.2 million square feet of warehouse and fulfillment space (right) worldwide in 2008.

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Trend: Sustainability Improving distribution systems through strategies such as streamlining transportation undoubtedly saves on the bottom line, but a side benefit is a reduced impact on the environment. “There’s no one who’s not talking about green issues in real estate,” says Regnery. While storefronts and offices have been a focus of the environmental movement, industrial spaces have been slower to join. “In industrial real estate, it’s in the infancy stages,” he says. Without the public relations and marketing benefits of a green storefront or office building, the industrial sector hasn’t had as much pressure to improve its carbon footprint. But Regnery believes that’s changing. Legal agrees. “We’re at the beginning of quantifying the costs and savings of what it means to be a green industrial building,” he says. “You’d be half crazy not to consider the environmental side of it because there are huge savings. As much as companies like to get out there and tell people ‘hey, we’re environmentally conscious,’ at the end of the day it’s going to come down to the bottom line.” A bottom line that is affected by countless external factors. That’s why, Cook says, Colliers spends extensive time researching issues such as energy savings and carbon footprint, distribution networks, warehouse design and labour markets. “Our role as advisors is to provide value-added knowledge to our clients and advise them of trends that they may or may not be aware of,” says Cook. “Otherwise we would just be selling bricks and mortar.” K L knowledge- leader.com

p hotos C ou r tes y of A ma zo n . com , I n c

retail distribution systems. While traditional retailers have struggled to grow sales, Seattle-based Amazon.com has managed to rack up increasingly impressive numbers each quarter, even during the economic downturn. “E-commerce is a phenomenal emerging market,” Cook says. Today, even traditional brick-and-mortar retailers are putting an emphasis on their online sales. “Toys R Us, Wal-Mart and Sears are ramping up,” he says. And as this segment of business grows, it will have a significant impact on companies’ warehouse and distribution needs. Amazon.com, the largest internet retailer, has a global customer base and annual net sales of more than $20 billion without operating out of a single retail storefront. Instead, the retailer’s “stores” are 20 fulfillment and customer service centers scattered around the globe. In 2008, the company leased more than 17.2 million square feet of warehouse and fulfillment space worldwide. Online retailers don’t have to pinpoint their locations to reach maximum exposure to consumers, either. Their inventory doesn’t get dispersed to storefronts where the difference of a few blocks can be the difference between success and failure. “The margin for them isn’t 1 mile or 10 miles,” Regnery says. “It’s a 500-mile radius.” They also need access to major highways, as well as skilled labor to operate the advanced inventory and shipping systems. “As these guys get more sophisticated, real estate costs are at the bottom of the list of decision-making factors,” he says. Transportation costs, labor costs and customer shipment times are first priorities. “[For online retailers] lease costs or land costs are not the drivers of the decisions about where to locate DCs,” explains Regnery.

B2B

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

Why ‘Y’? There’s a new generation taking over today’s workplace and they’re armed with a whole new set of expectations. By Chrystal LeBlanc and Lex Perry

| knowledge leader spring 2010

Whatever buzz word you choose to call them—Generation Y

(Gen Y), the Millennials, Generation Next, the Digital Generation or Net Generation—this newest addition to employers’ payrolls makes up one-fifth of today’s workforce and is nearly as large as the retirement-bound baby boomer generation. Regardless of the futuristic references, the sheer size and influence of Gen Y has a profound effect on company culture today. Born in the 1980s onward, and defined by life events that include such tragedies as the Columbine High School massacre, 9/11 and the Enron scandal, this generation has its own distinct, life-altering experiences and its own values. Their childhoods shaped their expectations with high demands and busy schedules filled with diverse activities. They are overtly confident, highly skilled, techno-savvy, accustomed to instant response and not afraid to challenge the status quo. Gen Y-ers communicate differently, and perhaps more importantly, they expect to work differently than previous generations. They have joined the workforce and brought a whole new set of demands. So why hire Y? The truth is, Gen Y is the hidden powerhouse of employee potential. This generation is future-oriented, ready to contribute and opportunity driven. Employers will need to learn how to effectively tap into this resource, or they will risk losing this refreshingly bright talent. As the knowledge- leader.com

economy recovers, companies will return to the challenge of winning over enough talent to drive renewal and growth, and at the top of the talent pool will be Gen Y, eager to work and craving learning opportunities in an exciting, rewarding, fast-paced environment. Interestingly, when asked about career plans in the next two to five years, our interviewees agreed that they are proud to work for their current employers and plan to stay put as long as there is room for growth. “I have been with my employer for a few years, and it would be very hard to leave because I always have something to strive towards,” says Erin Wilson, a 28-year-old property administrator with Rogers Communications. “Even in five years, I see myself with Rogers. I’m consistently challenged, and they offer some pretty unbeatable benefits.” Each of the interviewees emphasized the importance of recognition and employer reputation, making reference to their respective company’s global scope or corporate social responsibility (CSR) initiatives. “It feels good to work for a company that allows its employees to take off a day or halfday to volunteer. I’ve participated in company charity events for the past two years,” explains Steve Keyzer, a 26-year-old sales representative

“More than one in two Gen Y-ers indicate that their greatest workplace expectations include flexible work schedules, a promotion within a year and more vacation or personal time.” Wall Street Journal, “The ‘Trophy Kids’ Go to Work”

with Colliers International. “It’s great to have fun with colleagues outside of work and at the end of it all, know that we’ve raised money for a great cause.” Gen Y-ers are aware of the wider implications of their companies’ actions and highly value a sense of community. They are not a generation that watches the clock or counts the hours; they are willing to work, but only in exchange for personal fulfillment from their workplace, which includes a sense of involvement. So what can today’s employers take away from this? Gen Y-ers have a profound impact on company culture, and they won’t accept anything less than honesty and a challenging, rewarding work environment. They are accustomed to instantaneous response but are willing to work hard to get ahead. Top talent will flourish

in a company that challenges its employees, provides recognition and increases emphasis on CSR initiatives, maintaining its highly valued reputation. Gen Y-ers will challenge what they see based on what they believe, and they will do what they need to today to climb the corporate ladder tomorrow. As employers return to the challenge of winning over talent to drive growth, they will do well to realize that the rules of engagement have changed and that the landscape of talent management has been transformed. Employers need to create an environment that offers consistent recognition, challenge and new opportunities. Attracting and retaining Gen Y is an essential success strategy for all highperforming organizations, not just today but well into the future. K L

We asked some up-and-coming Gen Y-ers about their career expectations and what drives them. Steve Keyzer

Julia Heiser

Erin Wilson

Sales Representative, Office Leasing Colliers International, Toronto Age: 26

Vice President, Media Director Live Nation Products Group Age: 27

Property Administrator Rogers Communications Age: 28

A main reason I chose to work for Colliers was because of Colliers University, their in-house training program. Colliers was able to offer me a tool that ultimately means continued growth. I was also attracted to Colliers because of their reputation as a leader in the field. When I’m recognized by management or a client for a job well done, it helps build my reputation and builds relationships. Recognition to me means I have succeeded, and this feeling only drives me to do even better.

I love the fast-paced, start-up feel of the live music industry as well as the large global reach of an established corporation like Live Nation. I’ve always been passionate about challenge and the opportunity to learn, grow and achieve new accomplishments. This has always been more important than title and salary. Yes, they should go hand-in-hand, but I have approached the first years of my career soaking up all the knowledge possible.

A company with a good reputation in their respective industry is key. I’ve recently watched two friends actively job hunt, and this was one of their main concerns. They were also concerned about the stability of the company, as neither wanted to be a part of a “burning ship.” So many things make me proud to work for my company. It has an excellent reputation in every field. It’s one of the largest companies in Canada and they treat their employees well. I also enjoy the sense of community. Having a gym in the building is also a major plus.

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Colliers international Spring 2010

iskî ś eward As fund managers shuffle their investment advisors,

Stockbridge capital group positions itself for success. By Heidi Stout Tretheway

knowledge leader spring 2010

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Steve Steppe

were the type to roll his eyes, this is when he’d do it: At a kids’ soccer game, as one team routs the other and the losing team’s parents lose their cool.

“I spent my entire childhood on losing athletic teams,” Steppe confesses. “And I hate losing. But it amazes me when parents get mad about their kid’s team losing. In my experience, losing drives you to want to win, and drives you even harder than winning does.” Always highly competitive—“probably overly competitive,” he admits—Steppe has navigated more than 35 years in commercial real estate to emerge as captain of a winning team: He is executive managing director of Stockbridge Capital Group, which manages more than $6 billion worth of assets. “People have enjoyed working with me because it’s all about performance, not politics,” Steppe says. “We have a lot of different personalities who are highly successful because we’re all about doing the right thing by our clients.” Stockbridge is still a relatively small player in the real estate investment world—the firm, founded in 2003, has just 26 investment professionals dispersed among offices in New York, Chicago, Los Angeles and its San Francisco headquarters. However, it has nearly doubled its total assets under management in the last nine months. Stockbridge purchased a $430 million industrial portfolio on behalf of a public pension fund in June 2009, and shortly thereafter the firm was awarded three new takeover account mandates, together valued at more than $2.4 billion. “The investment management industry in particular was hard hit by this recession and

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the dramatic change in property values,” Steppe says. “It caused most pension funds here in the U.S. to think long and hard about their future real estate strategies as they relate to leverage and risk.” As pension funds reevaluate their core allocations, Steppe believes his team’s experience operating through several real estate cycles will guide their clients toward a more stable core asset strategy. “We’re in a position to help our clients navigate through the challenges in their existing portfolios and find the best acquisition opportunities as the cycle bottoms out,” Steppe says.

Paradigm Shift The economic and credit market crises, which struck a one-two punch to commercial real estate values and income, forced most pension funds to reevaluate their current strategies and managers. “Good times hide a lot of problems,” Steppe explains, “but in not-so-good times, those problems become very evident.” He recalls another economic and real estate downturn in the early 1990s when his team at RREEF (where Steppe was a partner and led client relations at the time) took over approximately $7 billion in assets from advisors who were terminated. “Many pension funds not only evaluate their assets, but also their advisors and whether they have the necessary skill set,” Steppe explains. Surprisingly, the trend is just the opposite in Canada, where a small number of relatively

large pension funds dominate the investment landscape. The top four funds keep in-house teams, and the next 15 to 20 largest players work with a small group of advisors. “That community is very strong, both in terms of operational expertise and by being extremely conservative on the financial side,” explains Milton Lamb, chair of Colliers’ Canadian national investment team. He says it is rare for managers to exceed 50 percent debt on properties, and both vacancy rates and construction volumes remained low through the last market cycle. “Compared to the States, we have not been hurt, and that’s a lot of the reason why people switch advisors,” Lamb says. “I’m scratching my head to think of a Canadian pension fund that has switched advisors in the past 18 months. If anything, they’ve simply tightened up the circle of advisors they currently have.”

Investment Opportunity Today, the real estate portfolios of several U.S. pension funds are weighted towards higher-risk investments, and managers must re-balance these portfolios with stable, core assets that contribute to the portfolio’s ongoing income returns. Stockbridge’s management team, including nine senior staff who have worked together more than 15 years, is focused on acquisitions. “This is the time to find the best deals at significant discounts to replacement costs in every sector,” Steppe says. “Buying opportunities today will be similar to those realized in the market downturn of the early 1990s.” Colliers international Spring 2010

Steve Steppe is executive managing director of San Francisco-based Stockbridge Capital Group.

knowledge leader spring 2010

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And those who are able to deploy capital quickly today will be the winners in the next cycle. Steppe’s outlook for 2010 is decidedly more bullish than in 2008, when he told the Institutional Real Estate Letter, “While we are not market timers per se, we know that there are times when the risk in core acquisitions does not justify the potential reward, and being on the sidelines is the most prudent course of action. This is one of those times.” In 2010, Stockbridge’s business plan calls for the firm to invest new equity throughout the United States, in all of the major product types: industrial, retail, multifamily and office. Steppe adds that they will de-emphasize office this year because they believe office product is still experiencing declining rents and cash flows. They will also avoid hotels. Steppe explains that core assets are expected to generate 75 to 80 percent of their total return in cash flow. For value-added assets, about 50 percent of the return should come from cash flow.

E r i c M i llette Photo g r a p h y

Sustainable Success Because pension funds are typically longterm investors, virtually every pension fund is looking for opportunities to enhance its portfolio with sustainable, energy-efficient buildings, Steppe says. That leads investment managers to push not only for reduced energy costs, but also for careful tracking and reporting of this progress. “We’re looking for all practical solutions to reduce energy costs on every asset we’re managing, whether that’s solar, lighting or heating,” Steppe says. Stockbridge typically hires external experts to help its managers accomplish this. Although the path to green real estate seemed to take a detour when many property owners’ balance sheets went in the red, Steppe firmly believes the trend toward greener buildings is here to stay. “It’s become a major issue, and part of corporate and public practice,” Steppe says. “As investment managers, we have to make it part of our practice.” knowledge- leader.com

“

This is the time to find the best

deals at significant discounts to replacement costs in every sector. Buying opportunities today will be similar to those realized in the market downturn of the early 1990s.” Steve Steppe, Executive Managing Director Stockbridge Capital Group

Strategic Moves Steppe admits that given a chance to retire gracefully or to be dragged out of the office, clutching his files, kicking and screaming, the latter option is more probable. It’s because he has a passion for his business and his team. Steppe and a team of eight professionals came to Stockbridge in late 2007 and early 2008 to grow the firm’s business into the lowerrisk “value-added” and “core” investment strategies. The team had a long history of working for separate account clients such as pension funds. “I spent 20 years with an investment manager [RREEF], and for 10 of those years we were a partnership owned by 14 senior people. I believe in the kind of accountability and clientdriven culture that is created when people own their business,” Steppe explains. “I was highly motivated to get back to an entrepreneurial culture where we all trust each other’s knowledge and abilities.” Steppe admits the first two years starting the

new business line with Stockbridge were very challenging. Now, he says, it feels as if “there’s a renewed desire to deal with an investment team where the management team owns the business.” “Our momentum has really taken off in the last nine months,” Steppe says. “When you bring together senior people with a broad set of skills and experience in working directly for institutional investors and provide them with the infrastructure to do their job in an entrepreneurial setting, you have a formula for success.” He hopes to add more accounts this year that will not only take over existing assets, but also invest new capital into the market. Steppe believes that as long as the senior people stay focused on what’s best for the client and the client’s portfolio, ahead of what’s best for them personally, they will generate the highest quality results. “The legacy of Stockbridge will be building a management-owned firm and a culture where the top talent in our industry wants to come to work,” Steppe says, “It’s the only kind of place I want to be.” K L Colliers international Spring 2010

Bank Notes

C o m m e r c i a l F i n a n c i n g N e ws

Capital Idea Do today’s financiers have what it takes to turn the real estate market around? By Jack M. Cohen, CRI, CMB Decades ago, when investors first took to real estate as an asset class, they were told it was an attractive investment for three reasons: It was a hedge against inflation; rents essentially always went up because of demand for space from tenants for growth; and, you could buy real estate with other people’s money—leverage (mostly positive). As we end this decade and look ahead to where and when we expect to find the bottom of the current cycle, we have to ask ourselves if we are in a period of inflation, deflation, stagflation or hyperinflation. Our economy has lost 8 million jobs since 2007 and still has not ended job loss. The issue as to when we will reach the point where job growth will drive tenant growth is also

leverage in the system, values have collapsed anywhere from 30 to 60 percent on otherwise healthy real estate. It’s not clear how the industry will solve the problem that hundreds of billions of dollars in loans were extended but not refinanced over the past couple of years. But the “pig in the snake” aside, the losses must be taken and lower values, lower loan-to-values, and less velocity of transactions lead to the conclusion that we will need less capital in the system than we believed in 2007 we were entitled to. The dramatic growth of commercial mortgagebacked securities (CMBS) from 2004 to 2007 clearly came at the expense of banks, particularly regional and community banks. For higher-

During 2010, not only will motivations change and trigger a need to transact, but brick and mortar knowledge will get us out of this mess over time. obfuscating the value viability of the real estate asset class. Lastly, the seizure of the financial system across the globe has shaken the real estate user of capital’s core belief that we really have deep and flowing capital markets where other people’s money can be used for leverage. This past year, considering their real estate investments, the users of capital finally had to recognize that the frequency and amplitude of three distinct cycles—the cycle of brick and mortar, the cycle of the capital markets and the cycle of our economy—matter, together. If we see these cycles overlaid on top of one another, where they converge is opportunity and where they diverge is risk. The risk associated with uncertain real estate values today has never been more paramount. As we look to 2010, we must face as a reality that none of us were as good as we thought we were. It is clear now that really low interest rates drove really high leverage, and really high leverage drove bloated values. Without the 30

knowledge leader Spring 2010

quality properties with relatively stable cash flows, CMBS offered lower borrowing costs and greater all-in leverage. This siphoned off the better lending opportunities, pressuring banks to become more concentrated in riskier types of lending. The situation in commercial real estate is the opposite of that in residential real estate: Banks hold the riskiest commercial real estate debt. Regional banks needed growth and the local market was too hot, so they took in, as well as became participants for, riskier transactions. We can now see that it’s these regional and community banks where our industry’s problems lie. As recently reported by the FDIC, there are 552 problem institutions with $346 billion in assets. We as an industry have proven that whether we consider Wall Street, local banks or the local entrepreneur, in any case, we cannot legislate against greed or stupidity. The industry came off the rails when the subordinate bond holder began

“re-REMIC-ing” (Real Estate Mortgage Investment Conduits) subordinate bonds. That was the beginning of the end because no one truly had risk in the transaction. The forecast is that 2010 will be very much like 2009, only more volatile in the extremes of highs and lows. Part of the 2009 industry largess—“extend and pretend” driven—was that sellers and borrowers didn’t really have motivations to trade. During 2010, not only will motivations change and trigger a need to transact, but brick and mortar knowledge will get us out of this mess over time. The question to the generations of borrowers from the late ’80s and early ’90s is this: Does today’s generation of borrowers have what it takes? The past generation of borrowers was made up of brick and mortarw professionals who knew how to make money from real estate. It was a real estate business that they operated, but they ran into trouble when the capital markets themselves imploded. By contrast, the borrowing community today is largely capital markets financiers who lack the comparative brick and mortar skill set of professionals 20 years ago to turn real estate as a business around—and that is what the industry needs most right now. Is the borrower brick and mortar skilled? Does he know how to get real estate turned around with stable and increasing cash flow available for debt service? Can he take the economic loss? Answers to these questions, more than any, will dictate how much longer the real estate industry will take to toil its way out of this disaster. 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

Follow the Leader

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

Catch the First Wave Understanding how the markets move can position you for success in the economic recovery. By Stewart Gall and Gina Danford The shape of the economic recovery is the single biggest issue for CEOs

and entrepreneurs in 2010 and 2011. Markets move in waves, with peaks and troughs and the guarantee that the circumstances, whether boom times or bust, won’t last forever. In the past 80 years, three distinct patterns have emerged as the “shape” of a recovery: a V, an L and a W. •

The V is typical of a mild recession, when the market drops but continued, reduced investment eventually boosts the economy out of its slump. The L is typical of a deeper recession, when the market drops swiftly and very limited investment produces a flat or only slight uptick in the markets. We saw this after the 1987 crash and also when Japan wrestled with an L-shaped recovery for more than a decade beginning in 1990. The W has emerged only four times in recent history: after the markets fell more than 50 percent in 1929-30, 1937-38, 1973-74, and 2008-09. In this pattern, businesses withdraw their spending and reinvestment dollars, holding tightly onto their cash until they see evidence of a rebound.

•

A deep recession produces the W effect because business leaders greatly reduce their risk profiles. It sets them on a course of “buy high” (wait until the market is strong to invest) and “sell low” (wait until the recession to pull back) and creates a mismatch of timing. As a result, leaders position their businesses to stay behind the curve, missing the first wave of growth. So how can you adjust your strategy to stay ahead of the curve? First, avoid the blind spot in business. During boom times, business managers tend to focus on the bigger strategic plays: mergers, acquisitions, new markets, and new branches or facilities. These are what we call macro strategies. During these times, what is forgotten is the micro—all of those details 32

knowledge leader spring 2010

that keep the business lean and efficient. Growth will hide these mistakes, so during boom times, micro strategies are the blind spot. During recessions, owners tend to get dragged into the micro details of the business, often overlooking macro strategies and vision. After the recession, they waste 12 months or more realigning their macro approach, but by that time, the market is already growing and they have failed to catch the first wave. A second strategy is to align your timing. While investing in markets is instantaneous, investing in business is anything but. When a CEO or business owner decides to expand—by adding staff, opening new offices or markets, or investing in new products, for example—it can typically take 9 to 18 months to produce a return on that investment. The diagram (below) illustrates typical investment during a deep recession. When the market crashes, businesses stop investing, so the first wave of recovery—the center of the W—is influenced only by the last wave of investment prior to the crash. We call this the “drag” period—when the market bounces off the bottom but drags out in a flat period. But then the market heads down again, as the lack of business investment during the first crash becomes evident. The good news is that in this “release” period, the market spikes downward initially and then releases into a new period of growth resulting from the first wave of reinvestment. By understanding the expected W recovery, you can adjust your business strategy to grow quickly when coming out of a recession, adopting the profitable strategy of “buy low, sell high.” During the drag period or the center of the W, business leaders buy very differently than in boom periods. Your clients and customers are likely to be much more cautious about how they spend money, demanding proven return on investment. While they tend to take time in making decisions, they are eager to find new investment opportunities. This mentality is key to helping you catch the first wave. When the market turns, most of your competitors will still have their feet on the brakes. However, by going to market early with innovative products, packaging and services, you are able to capture the first wave of reinvestment dollars. Meanwhile, your competitors may wait until there is plenty of proof that we are out of the recession. By that time, the market will have already picked up 30 percent to 50 percent growth in the initial stages of the new cycle. A recession is nothing more than a cleansing period. It gets rid of unproductive processes, businesses and people. Think if it as a detox for the market. This provides a strong foundation for new growth, an opportunity for new energy to enter the system, and the perfect time to get ready to catch the first wave. K L

Stewart Gall and Gina Danford are coaches with Shirlaws, an international business coaching firm specializing in helping businesses grow by developing strategy, increasing productivity and driving revenue. knowledge- leader.com

Behind the Scenes

King of the Park Phil King, president of the Orlando Corporation, opens up about the challenges

commercial real estate development is facing today and shares his company’s strategy for the future. By Lex Perry

p hotos cou r tes y of o r la n do co r p o r at i o n

As president of Orlando Corporation—

Canada’s largest vertically integrated industrial and commercial real estate company—Phil King oversees more than 3,000 acres of business parks across the greater Toronto area (GTA). Over the years, Orlando Corporation has designed and developed more than 74 million square feet of commercial real estate. Today, the company owns and manages a portfolio of properties that exceeds 40 million square feet. After emigrating from the United Kingdom in 1981 as a civil engineer, King was soon lured to property development to run what was, at the time, the largest master-planned industrial development in the GTA for the Orlando Corporation—the 1,250-acre Heartland project in Mississauga, Ontario. The business center remains one of Orlando Corporation’s flagship communities. When fully developed, it will include 25 million square feet of office, industrial and retail space, and will accommodate more than 300 businesses and 35,000 jobs. Working on the project remains one of King’s proudest achievements. “It was a really rewarding project, taking what was essentially farmland to what now has more than 15 million square feet of developed real estate,” he says. Knowledge Leader asked King what changes he has seen in the market since joining Orlando Corporation in 1987. “One of the major shifts has been the advance of the institutional players. Twenty years ago, there was a whole bunch of significant private players, but over time they’ve been bought out or swallowed up,” King explains. “It’s really hard to see them coming back now as the entry barriers are so high. It’s easy for them to get out, but much harder for them to get back in.” knowledge- leader.com

The recent financial crisis, King says, has caused many U.S. developers to leave the Toronto market. “The greater Toronto area is a big market, and developers from the United States were attracted by the size, low vacancy rates and reduced competition,” he explains. “But with the crisis, we’ve seen those developers retreat, and it will be interesting to see if they come back in the next cycle.” So what makes Orlando Corporation different? King believes it’s the company’s longer-term strategic view. “We operate on a different philosophy from many of the U.S. developers and smaller private companies. We see ourselves as long-term investors who hold and manage our properties rather than fee-based developers or getting in and out for a quick profit.” “It’s hard to find good land tracts, to get control of them and get approvals in place. We work to acquire, develop and then own the best development land available, and that takes time to set up,” he explains. “For instance, we’re looking at land parcels today with a view to develop them 10 to 15 years down the track.” King says it will be some time before the market sees major new industrial developments in Toronto but that Orlando Corporation will remain active. “There’s still a lot of stock to be absorbed. A typical industrial tenant has three to four options today; that needs to come back to one or two before they’ll consider committing to a new building.” “In the meantime, we’ll develop some new retail and focus on our vacancies,” he adds. When fully developed, Orlando Corporation’s Heartland project (right) in Mississauga, Ontario will include 25 million square feet of office, industrial and retail space.

King predicts that when the next industrial development cycle does begin, the buildings will be bigger. “Twenty years ago, a standard warehouse building might have been 100,000 square feet with a 28-foot clearance. Today, it’s 200,000 to 300,000 square feet and a 30-foot clearance. I think we’ll see that grow further to meet the needs of the major logistics and distribution companies.” So what is Orlando Corporation doing today to weather the global financial crisis? “Our focus is on aggressively retaining our tenants and maintaining good vacancy profiles,” says King. “This downturn is fartherreaching, but from a real estate perspective in Canada, it’s not as bad as it was in the ’80s. I don’t think we have the same oversupply issues this time.” And in the end, regardless of the current economy, success comes from doing what you do best. “We stick to what we know and what we’re good at,” says King. K L

Behind the Scenes

? It was a simple question: “How many of you review your tenants’ sales data regularly?” Sandy Sigal, president and CEO of NewMark Merrill Companies, watched about 20 of the 100 retail real estate CEOs in the room raise their hands. “How many of you monitor sales data for tenants who don’t pay percentage rent?” Hands dropped. Just a few people, including Sigal, kept their hands in the air. “How many of you use this data as a basis of conversations with your tenants?” Sigal looked around the room in surprise. He was the only one with his hand still in the air. Retail investment has been a rocky road in the past few years, crippled by both the recession and the capital markets crisis. But Sigal thinks it’s still the place to be for NewMark Merrill, named one of Los Angeles’ fastest-growing companies by the Los Angeles Business Journal every year since 1997. The key, he says, is for investors to adjust their mindset to the new reality of the marketplace. “There’s been a major shift away from looking at retail as a short-term investment, from a financial and underwriting-based perspective, to a long-term asset management and value creation business,” Sigal says. This has long been the approach of NewMark Merrill: Invest in shopping centers for their location and long-term opportunities to create value for the retail tenants. “I think this paradigm shift is a good trend,” Sigal adds. “Some investors bought retail solely as a financial instrument, and when the bubble 34

knowledge leader spring 2010

Rethink Retail Sandy Sigal, president and CEO of NewMark Merrill Companies, discusses how investing in retail has changed and if it’s for the better. By Heidi Stout Tretheway

burst in the retail market, it forced them to realize the underpinnings of their cash flow and to get out and talk to their tenants.” Years ago, landlords simply charged rent as a percentage of sales; then the market shifted to fixed rent, regardless of the tenants’ sales. Now, Sigal expects smart investors will strive to understand what helps a tenant perform better, knowing their success is tied to the tenant’s success. “Retail provides a unique opportunity. If the landlord provides a space that is better lit, safer and easier to access, he or she can improve the merchant’s business,” he says. NewMark Merrill develops shopping centers with companies such as Wal-Mart, Lowes Home Improvement, CVS and 99-cent Only Stores. In some places, their work is 90 percent ground-up. But, in this market, approximately 90 percent of their business has been acquisitions—buying centers that are underpriced, under-managed or under-leased. “The key to our investment profile is we don’t want fully functional centers; we want to buy distressed assets or workout deals or buildings below replacement cost,” Sigal notes. NewMark also offers a fee-based retail management service to help other owners add value to their properties. “Real estate is a long-term industry, not a quick-buck industry,” Sigal says. “You have to plan on it for the long term and can’t expect to be successful in your first few years.” Sigal remembers his start in the industry,

when his first salary was $10,000 per year. He thinks many recent college graduates are so anxious to start a career that they fail to focus on finding mentors and platforms to grow from. “My advice is to find the right boss, ask lots of questions and be patient. If they ask you to do market research, do market research. If they ask you to do leasing, do leasing. Sit in on staff meetings and just listen. This is the knowledge base you’ll build your career on.” NewMark Merrill started in 1997 and, as Sigal puts it, “came from nowhere, and now we’re a decent player in our space.” The greatest challenge in his career was making the leap of faith to start the firm. “It was scary as hell, I already had three kids and it was a huge risk,” Sigal recounts. “But I’ve had the benefit of incredible mentors in my life, and that guided me on the right course.” He says the culture at NewMark Merrill is one of the most rewarding aspects of his career. “We’re creative yet disciplined, hardworking yet fun, and that’s a hard culture to create. But we have great alignment; we do a good job and enjoy each other. It doesn’t feel like work.” Today, Sigal also enjoys making an impact on the 43 cities where NewMark Merrill builds, develops and manages property. “I like watching people come out with their kids, shop and buy ice cream, or go to holiday events we host. When we turn around shopping centers, there’s a social aspect of how we improve the community.” K L knowledge- leader.com

Investment/Leasing Opportunities a selection of colliers international properties

1817 Burlington Street

Eighth Avenue Place

Excellent Low Cost Warehouse Space Hamilton, Ontario

LEED Gold Pre-Certified Class AA Office Tower Calgary, Alberta

• 255,600 SF building with 91,141 • • • •

leased out until May 2010 164,506 SF available for lease For sale with income in place to carry 1/2 mortgage, 1 km to QEW, 3 km to Port of Hamilton Rail spur on property, clean building Available immediately

Sydney Hamber 416.626.1600 sydney.hamber@colliers.com Paul Mariutti 416.626.1600 paul.mariutti@colliers.com

Tolko Industrial Facility

Eighth Avenue Place will be a premier office development located in the heart of Calgary’s downtown core. Developed by Hines on behalf of Institutional Investors, the development will consist of a 49-storey East Tower (1,070,000 SF); 39-storey West Tower (790,000 SF); 1,143 stall underground parkade and a winter garden atrium. Anticipated completion is January 2011.

Randy Fennessey 403.571.8762 randy.fennessey@collierscalgary.com www.eighthavenueplace.com

Roo Hsing Company Garment Manufacturing Facility For Sale San Salvador, El Salvador

Stand-Alone Bldg W/ Excess Yard & RAIL Greater Edmonton, Alberta • 132,995 SF under development

• Full service garment manufacturing

• • • • •

• Machinery in place for denim, twill,

on 28 AC 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

Jim Rea 403.215.7250 jim.rea@collierscalgary.com

facility for sale in El Salvador and knit productions

Rod Connop 780.969.2994 rod.connop@colliers.com

• Access to skilled labor pool • Total building area is 169,166 SF

Sean Day 780.969.3002 sean.day@colliers.com

5825 & 5875 N Sam Houston Parkway W

Tony Phu 909.612.2612 tony.phu@colliers.com

3500 Paradise Road MARDI GRAS INN & CASINO Las Vegas, Nevada

323,000 sf Class A Office Buildings Houston, Texas • 323,000 SF, six-story Class A LEED

Certified Gold Level office buildings • Located at intersection of Highway 249 & Beltway 8 • Structured garage parking with climate controlled and enclosed walkway from garage to buildings

David L. Carter, CCIM, SIOR 713.830. 2135 dcarter@collierstexas.com www.beltwaylakes.com

• Building size is 158,637 SF • Lot size is 189,486 SF • Casino with non-restricted gaming license allowing for future expansion • 314-room hotel with Best Western franchise/reservation system. • One block from Las Vegas Strip & close to Wynn Resort, Airport & Convention Center

Mike Mixer 702.735.5700 mmixer@lvcolliers.com Michael Argier 702.836.3787 margier@lvcolliers.com www.lvcolliers.com/resortgaming

Investment/Leasing Opportunities a selection of colliers international properties

3525 Arden Road

1315 North Service Road East

Premier Bay Area Warehouse Space Hayward, California

Designed to “LEED” Oakville, Ontario

• ±300,765 SF (divisible into ±66,048

SF) on ±15.52 AC; 15,000 SF office area in three locations • At foot of San Mateo Bridge with immediate access to Highway 92 & Interstate 880 • 82 dock-high doors, 7 grade level doors, cross-dock capability, 28' clear height, ESFR sprinklers, concrete truck aprons & ample truck staging

• LEED Silver Office Building Available

for Lease

• 90,000 SF left in this 150,000 SF

office development

Greig Lagomarsino 510.433.5809 glago@colliersparrish.com

• Now ready for tenant fixtures • Great highway identity

Adam Dauphinee Adam.Dauphinee@colliers.com

Joe Yamin 510.433.5812 jyamin@colliersparrish.com

www.liunacentre.com

1100 Polytek Street, Phase I

One 11 Tower 255,477 SF Office

± 108,800 SF Available For Lease Ottawa, Ontario

±149,962 Sf Available For Lease Phoenix, Arizona

• Light industrial facility in East Ottawa

• Divisible into 12,800 SF units • Column space 40 feet by 40 feet • 28-foot-high ceilings • Dock and grade level loading available • Building signage available • Phase II approximately 122,800 SF • Phase II construction commencement to be determined

• Owner: GE Credit Equities, Inc.

Warren Wilkinson 613.683.2207 Warren.Wilkinson@colliers.com Geoffrey Godding 613.683.2206 Geoff.Godding@colliers.com www.colliersproperties.com/cebc

Cessna Aircraft Manufacturing Plant

Charles Miscio 602.222.5192 Charles.Miscio@colliers.com Sean Rosenzweig 602.222.5077 Sean.Rosenzweig@colliers.com www.one11tower.com

1351 East Beamer Street Rail Served Industrial 30-AC-RAIL Property Woodland, California

22559 NELSON ROAD Bend, Oregon

• 204,000 SF of usable space, located

on airport tarmac • Formerly a Cessna Aircraft design and manufacturing facility, in an Enterprise Zone • 132,000 SF manufacturing space; 22,000 SF hanger space, 25,000 SF office space with unfinished mezzanine office • Great facility with available M & E specialized local workforce

• Prime CBD location in downtown Phoenix • Lease rate: $18 to $24/SF • 19-story high rise with Class A finishes; recently renovated • Highly visible, new monument sign • On-site property management, leasing & 24-hour security • Parking: 3.3:1,000. parking structure building and visitor valet

Parcel 1 – 10.83 AC for $3 million Parcel 2 – 5.378 5.37 AC for $1.5 million Gregg Wassmansdorf 416.643.3446 Gregg.Wassmansdorf@colliers.com Jerry Matson 503.499.0077 Jerry.Matson@colliers.com www.colliersproperties.com/cessna

Parcel 3 – 10.819 SF with 241,000 SF of building for $5 million • ±15,000 SF of existing office • 20-45’ clear height • Two rail spurs • Property can be purchased for $7 million

Matt Lofrano 916.563.3000 cvig@colliers.com

Investment/Leasing Opportunities a selection of colliers international properties

Twelve Trees Business Park

18260 Harlan Road

Premier Business Park in Kitsap County Poulsbo, Washington

Crossroads Commerce Center Lathrop, California

Premier business park in Kitsap County with historically high occupancy (90%+) as a result of its excellent location near Puget Sound Navy installations. Excellent tenant roster with strong national, regional companies. Lack of zoned land for competitive development. 262,757 SF in 12 buildings; part of a larger park with owner-occupied buildings comprising the balance of the project. Pride of ownership apparent.

• ±430,770 SF expandable to ±555,770 • •

Scott Eshelman 206.287.0219 scott.eshelman@colliers.com

• • •

SF located on ±29.11 AC ±5.99 AC for expansion Insulated, climate controlled warehouse; gas heated dock area Excellent access to Port of Stockton One grade level door California state enterprise zone

715 Milner Avenue

7.46 Acres – Outside Storage Permitted Toronto, ON, Canada

First Class Corporate Head Office Facility Toronto, Ontario

• 7.46 AC of land available • Zoned general industrial; allows

• 257,000 SF • Currently Honda Canada’s head

• • • •

• Excellent distribution facility • 40-feet-clear height warehouse,

office

racking included • Highway 401 exposure

Paul Finlayson 416.791.7242 paul.finlayson@colliers.com Peter Davies 416.643.3739 peter.davies@colliers.com

Anthony Miller 416.791.7227 anthony.miller@colliers.com

8030 Esquesing Line

Marine Gateway 8440 Cambie Street

AMB Milton Crossings Business Park Milton, Ontario

Mixed-use project with over 1,000,000 square feet of building area. Vancouver, British Columbia

• 300,000 SF available for lease • Offices finished to suit • 30 truck level doors (expandable) • 32 trailer parking stalls (expandable) • ESFR sprinkler

Mike Goldstein, SIOR, Managing Partner 209.475.5106 mgoldstein@colliersparrish.com www.colliersparrish.com

Laura Secord Walk

outside storage and vehicle service Good access to central Scarborough Close to highway 401 Rectangular shaped lot Rare in fill site

Gregory O’Leary, SIOR, Senior Vice President 209.475.5108 goleary@colliersparrish.com

High profile opportunity to lease retail premises in one of the largest mixed-use projects in Vancouver with over 1,000,000 SF of building area. Gord Cook, SIOR 416.620.2831 gord.cook@colliers.com Ian Gragtmans, SIOR 416.620.2883 ian.gragtmans@colliers.com

The 280,000 SF retail component will be anchored by a major theatre and grocery store.

Sheldon Scott 604.662.2660 Sheldon.scott@colliers.com Derick Fluker 604.661.0805 Derick.Fluker@colliers.com

CSR

c o r p o r at e s o c i a l r e s p o n s i b i l it y

The David Brower Center (shown here) in Berkeley, Calif., is slated to be certified LEED Platinum this year. It’s home to David Gottfried’s (pictured below) company, Regenerative Ventures.

A Deeper Shade of Green As more businesses and communities embrace sustainable building practices around the world, one pioneer continues to push the envelope. By Niki Stojnic

Colliers International is working with global sustainability leaders to help usher in a new era. The movement began making inroads in the United States during the oil crisis of the ’70s. In the early ’90s, more progress was made as two of the movement’s major players were introduced: the U.S. Environmental Protection Agency’s Energy Star program—a standard set of guidelines to recognize the energy efficiency of various products—and the U.S. Green Building Council (USGBC)—a national industry organization advancing green building practices for livable communities. Fast forward to today and sustainable building has gone from being fringe to being front and center in the commercial real estate market. In 2010, as Nancy Searchfield notes, “If you are building now and it’s not high-performance green, you risk functional obsolescence before you are out of the ground. Increasingly, it is also about ‘future proofing’ investments by greening existing buildings and their operations.” Searchfield is Colliers International’s Canadian leader of brokerage sustainability, as well as vice chair of the Canada Green Building Council—the Canadian counterpart to the USGBC. She sees remarkable headway in the corporate sector for going green. “There has been a tremendous increase in corporate social responsibility as it relates to sustainability. Companies are measuring their carbon footprints, setting goals to reduce their environmental 38

| knowledge leader spring 2010

knowledge- leader.com

D av i d B r owe r C e n te r : T i m G r i ff i th

The sustainable building movement has gone mainstream, and

impact and reporting progress in a cycle of continuous improvement.” As the Founding Global Partner of the World Green Building Council (WorldGBC), Colliers is helping lead the green building movement worldwide by supporting existing national Green Building Councils (GBCs) and helping form new councils in countries where none presently exist. Searchfield credits one man, David Gottfried, with making phenomenal contributions to the sustainable building movement. Gottfried is the founder of both the USGBC and the WorldGBC and the author of the memoir Greed to Green: The Transformation of an Industry and a Life. The book details his journey from successful mainstream real estate developer to green building pioneer, turning the building industry on its ear. His second book, Greening My Life: A Never Ending Journey, is coming out this summer. A visionary in the field of sustainability, Gottfried has been connecting, incubating and advising businesses in environmentally sound strategies since 1995 with his company Regenerative Ventures and its consulting arm, WorldBuild. A real estate developer, construction manager and consultant, Gottfried was championing sustainability long before other developers and builders used the word green to reference anything other than paint color. His clients have included such diverse organizations as Starbucks, Yahoo, DreamWorks and the U.S. Navy. Gottfried’s newest venture, Regenerative Network, launches in April. Its aim is to bring innovators in construction and building materials together with like-minded property owners and corporations. Such heavy-hitters

in the corporate world can have a tremendous impact on improving our global environment and influencing the way the general public views sustainable building. “When I founded the USGBC, the term ‘green building’ didn’t even exist,” says Gottfried. Now, there are 7 billion square feet of LEED (Leadership in Energy and Environmental Design) certified properties in the United States, as well as 64 countries involved with the WorldGBC. The LEED Green Building Rating System is a third-party certification program and an internationally accepted benchmark for the design, construction and operation of highperformance green buildings. The past several years have seen developers, construction companies, investors and occupiers alike catch on, en masse, to the economic benefits of a sustainable focus. “These are economics that are driven by an environmental imperative; we are redefining the economy to focus on life cycle value,” says Gottfried. He says the time has come for a group such as Regenerative Network to take shape. “The idea is to find the ‘best in class’ in green product manufacturing and services,” says Gottfried. Members are invited into the network based on their score on the “regenerative balance sheet”—a set of criteria that measures a business’ sustainability acumen. Then, Gottfried explains, “We connect them to our enlightened real estate portfolio owners in our Regenerative Marketplace.” “Colliers has great appreciation for the significant contributions David Gottfried has already made to the global green building movement through the U.S. and World Green Building Councils and his vision in providing clients with leading-edge strategies for

real estate developer, construction manager and consultant David Gottfried was championing sustainability long before other developers and builders used the word green to reference anything other than paint color. knowledge- leader.com

decades,” says Searchfield. “His formation of Regenerative Network is the natural next step, applying his global expertise and extensive relationships to operationalizing sustainability worldwide.” Colliers is aligning its goals with Gottfried’s vision that businesses get to a regenerative environmental impact level—that is, beyond sustainable to restoration of the ecological damage caused, in large part, since the onset of the industrial revolution. “Looking forward, our goal is to go beyond net zero impact to regenerative,” says Gottfried. “Ultimately, we strive to develop solutions that will restore our environment— clean the air, water, soil and restore ecosystems—and find a new balance between social, environmental and economic goals to create a truly prosperous society. This is the ultimate definition of wealth.” Gottfried sees a growing international community that fully embraces the environmental, economic, social and health benefits of green building. “I think there will be a national Green Building Council in every country. All buildings will be rated and labeled [for sustainability], and all professionals will study sustainability,” he says. “We look to people like David Gottfried, the World Green Building Council and Regenerative Network,” Searchfield adds. “These are the people who are bringing the vision to fruition for society.” K L Colliers international Spring 2010

In Focus

F r o m t h e Pr e s i d e n t

Sign of the Times As 2010 opens, Colliers emerges as a powerful contender in the global real estate services market. By Doug Frye entrepreneurs, Thomas Edison, asserted that “genius is 1 percent inspiration and 99 percent perspiration.” Any modern-day business executive will attest that “sweat equity” still plays a huge factor in seeing a successful venture through to completion. Recently, Colliers International initiated some of the largest and most important strategic wins in the history of our organization, creating momentum and setting the course for our future as the premier global real estate services firm. In October 2009, Colliers International World Owners signed a new affiliation agreement with overwhelming support from our partners. This was the first in a series of key milestones that has more strongly aligned us as a global brand and has ensured greater quality and consistency of service delivery across markets. The agreement paved the way to strengthening our foothold in London, one of the strongest referral markets in the world, and to deepening our reach into Western Europe through new partnership channels in the United Kingdom, Ireland and Spain. Additionally, FirstService Real Estate Advisors (REA) launched national corporate solutions and institutional asset and property management divisions in the United States, both tactical infrastructure enhancements that integrated essential service offerings with our Colliers offices globally. In January, we announced that Colliers International and FirstService REA are combining operations and global real estate platforms to provide our clients with a deeper and broader range of services. The combined assets of this consolidation—which include Colliers International, FirstService REA, FirstService Williams (our New York and New 40

knowledge leader Spring 2010

Jersey brokerage division), FirstService PGP Valuation and PKF Consulting—will now operate in the global market under the Colliers International name, a brand that is well-known in the industry for its quality, leadership and, most importantly, client service. We’re seeing our perspiration and inspiration pay off in dividends as we head into the second quarter of 2010. We have a truly international platform, a full complement of services and, with the support of our capital partner— FirstService Corporation—we are inarguably the strongest and most diversified commercial real estate company in the industry. We embarked on one of the most aggressive global expansions in the history of commercial real estate, largely executed during a time when competitors were scaling back. We tapped into the entrepreneurial spirit that makes Colliers exceptional and took an enterprising stance in the market at a time when the competition was playing it safe. Our people feel more empowered than ever to meet the needs of our clients. We’re winning more business and attracting the best and brightest in the industry—those who are client-centric by nature and seek opportunities that match their professional aspirations. People want to be part of the new Colliers International. Today, we’re the third-largest commercial real estate services firm globally, with 15,000 professionals in 480 offices in 61 countries, $2 billion in revenue and $64 billion in transaction value on the books. Reputable sources like Harvard Business Review and the Lipsey Company have already endorsed Colliers International as one of the top real estate firms, and we’ve been named “Best Place to Work” in New Zealand, “Best Real Estate Agency”

Doug Frye is the global president and chief executive officer for Colliers International.

and “Best Property Management Firm” in Poland, and “Number One Provider” in Latin America. This is a significant turning point in our business and industry. We are a company that embraces the genius of the “and,” not the tyranny of the “or.” We refused to compromise the strength and consistency of a global firm for the accountability and intimate knowledge of local markets. We knew we could do both. Colliers’ momentous decision to transition from a decentralized network of affiliates to a partnership-model business philosophy is truly groundbreaking and will fundamentally shift the paradigm of service delivery in the industry to a new standard of excellence. Had Edison not taken risks, persevering beyond personal and professional hurdles, there is no doubt that the velocity of our society’s modernization would have not have moved forward as swiftly. Yet, as he astutely asserts, “What you are will show in what you do.” The future of our company is clear. We will lead by example, and in doing so, have a lasting impact on the evolution of our industry and what it means to truly be a global leader. K L knowledge- leader.com

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