A Year of Transformation

Douglas Howe

Since last September, when what appeared to be a minor offshore disturbance landed as a Category 5 hurricane in the form of an epic global financial crisis, our industry has faced unprecedented challenges.

As the economy has continued to slide deeper into recession, real estate markets across North America have been affected as demand for space in all product types has fallen precipitously. The inevitable recovery always seems painfully slow. The good news is that we have had 11 recessions since WW II, followed by 11 recoveries – a perfect track record! Recent economic indicators are beginning to point toward better times ahead.

It may take 12-18 months for employment growth to resume after the unemployment rate peaks this year. We may have to wait until 2011 for net positive demand for space to resume in most markets. Uncertainty in capital and credit markets will still be problematic until the new rules are in place. It seems like a game of 52 card pick-up, with all the cards still up in the air. We’ll need clarity, certainty and the new rules of the game defined before our industry can move ahead, even if market conditions improve. Once we have a sense of what “new normal” looks like, planning for the future will be made much easier.

Sustainable Development and Government Advocacy

I have had the pleasure of visiting more than 20 NAIOP chapters so far this year. No chapter withstanding, I have been continually impressed by the commitment, dedication and hard work of our volunteer members. Chapters continue to pursue improving the value of NAIOP membership and reaffirming the positive contribution of the commercial real estate industry in their respective markets. In my visits, I’ve learned that the predominant subjects of importance on the minds of NAIOP members are Sustainable Development and Government Affairs.

With respect to Sustainable Development, it’s about both learning how to make the business case by doing it cost effectively and by being prepared to meet the market demand from tenants and investors moving forward. Our NAIOP sustainable education offerings in the form of conferences, publications and Webinars have been well received and NAIOP has positioned itself as a leader in sustainable development initiatives and education. On the Government Affairs front, the value of advocacy and “being at the table” on issues critical to the health of our industry are getting more attention at the local chapter level. New taxes, regulations and mandated green building ordinances are being proposed in nearly every state, province and municipality across North America.

Our business has always been centered on creating value in real estate. I’m encouraged to see our members engaged in understanding where the opportunities are today and positioning their businesses to prepare for the inevitable market upturn with the expectation that the economy will improve and capital will return.

NAIOP Resources More Important Than Ever

In these transformative times, the value of your NAIOP membership is more important than ever, as is the relevance of education, networking, meaningful research and government affairs support. During the National Forums Symposium in April, I was encouraged by the conversations, idea sharing and networking I witnessed among many Forums participants and leaders in our industry. Like me, these members recognize that coming together with our NAIOP peers was exactly what we needed to be doing. Where else would we be best suited to find clarification in our challenges and talk face-to-face with commercial real estate’s very best?

© The New Yorker Collection 1993 P.C. Donald Reilly from cartoonbank.com. All Rights Reserved.

This is an excellent time for our members to take advantage of one or more of the numerous education programs offered this year by NAIOP. For example, our new, free online Solutions Series program connects you with relevant, valuable information for surviving - and succeeding - in today’s unpredictable industry conditions.

Please accept this as my invitation for you to be in Chicago this October for Development ’09: The Annual Meeting for Commercial Real Estate. You won’t find a better gathering of decision-makers – everyone from CEOs to Developing Leaders and those in between – who all have a united purpose: to withstand our current downturn and find the knowledge and connections that will lead us into success tomorrow.

In closing, this is a year that will transform both our industry and our association. I believe both will be for the better. We have weathered storms before and have emerged stronger after each previous downturn, and I’m confident that this time is no different.

By Douglas Howe, chief executive officer, Touchstone Corporation.