ICSC RECon Redux

Posted: June 7, 2017 by Paul Cohen, Regional Director of Business Development


ICSC RECon REDUX

In May I shared my Top Ten Tips for Surviving ICSC RECON 2017. Having now had two weeks to work off my hangover, I thought it valuable to share some additional thoughts from this year’s conference. Send me your tips for surviving and thriving at ICSC Vegas.

 

  1. Stay off the strip. I’ve always found it a little depressing to come down from my hotel room each morning and see an old lady on the slot machines next to an insurance salesman who has been playing Blackjack all night. This year, our team at CREXi used AirBnB to rent a five-bedroom house five minutes from the strip. Initially, the goal was cost savings and flexibility as we hadn’t finalized our roster, but what we found was the time we spent together in the evenings before going to the strip was an effective team building experience. As someone who has stayed on the strip multiple times, it was nice to see where the locals live, go for a run in the neighborhoods without inhaling cigarette smoke on my way in and out of the hotel lobby, and to support some local restaurants and bars. I’m not suggesting readers do it every year, but give it a try.
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  3. Not just a pretty face. I got some blow-back on my previous Survival Guide post for suggesting that unless you are “an attractive woman” people won’t just stop by your booth. Some took that to mean that as a female professional you should use your looks and not your abilities to get business. Far from it. I was talking about paid models meant to lure passerby’s in. While the practice seems to be on the decline, when applied it often comes off as tacky and less than professional.
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  5. One giant step for man. Take advantage of the vast distances walked by setting step goals for the day.  I took 45,484 Steps over the two days.  Anyone do better?
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  7. Elevator Pitch Redux. I visited several booths and asked what I believed to be a simple question: What do you do? I expected a simple elevator pitch. You know, like if you were going up an actual elevator. Here’s what happened instead (on almost every occasion): first, the booth host became defensive and asked who I was while they looked directly at my chest to scan my badge. Five minutes later after completion of their “elevator pitch” I was still no clearer. I felt like I was in Willy Wonka’s Glass elevator on the way to Umpa Lumpa land! I am now getting emails from some of these companies and still don’t know what they do.
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  9. Get better swag. Sorry but somebody had to say it. Other than the group that gave out flip flops and the sandwich guys, the swag was very unimaginative. Throw away those stress balls. I suggest that you come up with a theme based upon what your company stands for and then build around that. According to Rich Curran, owner of Expo Convention Contractors (the country’s leading Convention Services provider), “make your theme and swag match. For example, Miami based developer uses a beach theme and gives out sunglasses. You can also use your giveaway to capture leads without asking. You can set up a photographer and offer headshots or a caricature artist. A simple business card drop gets them in line.” 
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  11. The booth, you can’t handle the booth. It was interesting to see how companies handled their allotted space. I saw quite a few “closed” booths, meaning booths that had physical barriers to entry and some with gate keepers behind big desks. Booths should be open in my opinion. Think of a playground for adults. They can come in and see what you are doing. Host a Happy hour in the booth. Nothing says welcome to our booth like a Goose and soda. Expo’s Curran added “a welcoming environment keeps attendees there and talking. Making connections are key, so having someone want to stay at your booth longer gives a chance to build a relationship. Make your booth about an experience not just a product or service.”
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  13. Don’t go deep the first night. This was in the original post but worth elaboration.  I saw a lot of hurt people on Tuesday morning. My advice is to take it easy for the first night (or two if you’re staying longer) and stay hydrated. When you do eventually hit the strip, know your limits and stay within them. Some of my best relationships have been made with people I get a little “loose” with, but it’s a fine line. Remember this is a company function and any inappropriate behavior can hurt your standing within the firm. Whether you realize it or not.
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  15. Go to the parties. I missed the Chainsmokers but got front row to Nelly (Thanks Colliers International!). A confession, I forgot who Nelly was, I was thinking Nelly Furtado so when “Nelly” (rapper from circa 1998) hit the stage I was a tad disappointed. However, once Nelly started the show I got into the mood and found myself singing my own version of his song: 

     

      If you want to go and list your deals with me
      We’ll stick em on da CREXi real EZ.
      Oh why do we do it this way? (Hey, we don’t cost no money!)
      If you want to go ahead and get on CREXi
      Put on a Triple Net or a storage Facilit-E.
      Oh how do we do it this way? (Hey, we don’t cost no money!)

     

    You had to be there!


Paul Cohen

Paul Cohen, CREXi Convenient TechnologyPaul Cohen is a Regional Director with CREXi based in the firm’s Miami office and focused on business development in the southeast. Prior to joining CREXi, Cohen was a Managing Director specializing in investment sales and equity raises at Cohen Financial, a national debt and equity advisor. Prior to Cohen Financial, Paul owned and operated his own independent real estate firm following a 12-year tenure at CBRE where Cohen was a Senior Vice President and led the Private Client Group in Miami-Dade County with a specialty in office and industrial investment sales.  Email Paul

 

Data-Less 2017 Market Outlooks (Analysis Without Paralysis) Part 2

Posted: December 14, 2016 by Eli Randel

DATA-LESS 2017 MARKET OUTLOOKS (ANALYSIS WITHOUT PARALYSIS) Part 2

Read Part 1 Data-Less 2017 Market Outlooks

Despite the moving market pieces and political volatility which could affect the US capital markets, I muted the noise and “what-if” scenarios, spoke to several trusted advisors, and put my thumb in the air to paint a picture of what I think the 2017 CRE capital markets will look like:

Following a flurry of sometimes fruitless activity (lots of squeezing, minimal juice) in Q4 to close investment sales and refinance debt before year end, I expect a brief pause and “holding of the breath” entering 2017 as Trump takes office and investors shake off their added holiday weight. Eventually, the ambitious deployment targets and billions of dollars in unplaced capital will resume the deal chase and direct or LP equity will be plentiful albeit more risk averse. Despite the domestic perception of political risk, foreign economies still view the US as a safe-haven for capital and will continue to gravitate towards the US CRE market to escape their own struggling economies, political risks, and low (and even negative) interest rate environments. Large supplies of domestic and foreign capital competing for deals coupled with strong growth assumptions will mostly offset softening values resulting from upward pressure on cap rates caused by rising interest rates and costs of capital.

The debt markets will become tricky to navigate as interest rates rise and a new regulatory environment mostly for banks and conduits emerges (although Trump has discussed reversing many of the new regulations), but good deals with good sponsors will have no shortages of financing options from debt-funds, conduits, agencies, life companies, and banks. Ultimately lenders will be eager to get to work and to begin deploying their aggressive 2017 targets with balance sheet products from banks and debt-funds continuing to find an opportunity for larger market share. Borrowers will learn to settle for lower leverage or more creative capital structures as rising costs of capital will make debt harder to service and while younger investors will be unsettled by rising costs of debt, more seasoned investors will remember a time when interest rates were well into the teens and will conclude that rates are still relatively low and opportunistic for borrowers.

The last two quarters of the “Wall of Maturities” resulting from the many 10 year loans originated in 2005-2007 will pass mostly as a continued non-event as most maturing loans have successfully paid-off following a sale or recapitalization. Despite some value softening, most asset values remain above their 2007 value or at least above their unpaid loan balances. However, some market softening and the new financing environment may cause a handful of notable maturity defaults, but competition for any deals that emerge will pull returns below opportunistic levels. Distress investors will mostly continue to wait on the sidelines into extra innings. Assets that do default will take a year or two to make it to investors (unless sold as notes) and competition for the deals will push pricing above opportunistic levels.

Transaction velocity will be about even or slightly below 2016 as buyers may increase their yield requirements and sellers are slow to (or choose not to) adjust their expectations and the bid-ask gap – always existent but easier to bridge in a bull market – widens for many deals. However, as repeatedly stated, competition to place capital may offset and shake-off what would seem like a rationale cooling. Pent up capital supply, investors with long time horizons, expiring equity funds, and baby-boomer retirees rightsizing their income, will contribute to transactional movement and deals will still get done at a good pace.

Overall I believe 2017 will mostly mirror 2016 with some signs of softening and plateauing seen in certain product types and markets. I believe a tale of two bifurcated markets may emerge where good product in good markets will remain sought after and yields will remain low and asset values high. In most respects, basic value-add, low-risk profile deals, and core assets will feel similar in pricing to 2016 as institutional capital remains mostly bullish on long-term fundamentals and will look to keep the lights on by continuing to place capital. However, secondary and tertiary markets may initially slow in deal velocity in 2017 as private capital can be less cerebral to value changes (largely because capital is proprietary and not OPM) and sellers will have a hard time dropping their value expectations while buyers have a harder time navigating debt markets causing the bid-ask gap to widen and deals to become harder to execute. However, I think as the year progresses and sellers slightly loosen their expectations while entrepreneurial capital floods secondary markets chasing greater yields than core markets offer, volume in secondary and tertiary markets for sub-institutional product will increase – especially if job creation as promised by the incoming president occurs and infrastructure investment creates new occupiers and tenants armed with government contracts.

To find deals that fit your criteria, please visit www.crexi.com where you will find an aggregated marketplace of over 6,500 commercial real estate investments (and rapidly growing). One-click NDAs, due diligence vaults, and a user-friendly email marketing portal ensures you can immediately begin underwriting deals.

Eli Randel

Eli Randel, CREXi Business Development ManagerEli Randel is Director of Business Development based in CREXi’s Miami office. Eli spearheads CREXi’s growth and sales throughout the east coast as well as overseeing the national sales team. Prior to joining CREXi, Eli was director of dispositions for Blackstone’s Invitation Homes. Eli has also held management positions and production roles with Cohen Financial, Auction.com, LNR and CBRE where he began his career spending three years in Investment Sales before leaving to obtain his Master in Business Administration from the University of Florida.