Friday, January 30, 2009

Articles 01.30.09

To understand the magnitude of the issues facing our city over the next several years it is instructive to understand what happened in previous downturns. “Future of NYC: How Bad Will It Get?” provides an invaluable history lesson. When reading this article keep in mind that current predictions are that the City will lose a total of about 250,000 jobs by the middle of 2010 although this number has been climbing every month.

For those of us who have been compelled to sit on the sidelines the last couple years while the spreadsheet cowboys have been chasing deals with cheap money, the article “Return to Fundamentals in Time of Crisis” is a breath of fresh air. Isn't this how deals were always supposed to be done?

“London and New York in the 21st Century” is an interesting analysis of what these two cities must do over the long term to maintain their stature as the foremost commercial centers of the world.

For the brave souls among you who would like to celebrate The Year of the Ox, “Fine China” offers recommendations for several restaurants in Manhattan's Chinatown. Enjoy!

Thursday, January 29, 2009

Economic Indicators for Dummies

Economic Indicators

Every day we are barraged with news stories touting all the various economic indicators that economists and other business and social scientist types like to refer to as a guide to how badly our economy is doing. For the most part these economic indicators read like a laundry list of all those things that caused your eyes to glaze over and you to lapse into a head bobbing, drooling stupor in Economics 101. So in an attempt to devise my own economic indicators I've come up with the following lists. Please feel free to make recommendations for other items that should be included:

Leading Indicators of an economic decline

1. Cocktail conversations sprinkled with any of the following words or phrases:

a. "burn rate" (remember that one? My all time favorite)
b. "new paradigm"
c. "new metrics"
d. "traunch”
e. "mezz financing"

2. men getting plastic surgery

3. Condominium developments that include such amenities as dog spas, billiard rooms (ever notice how the cue sticks never last more than one week), and lap pools.

4. The sale of derivatives and other securities that only those with a degree in physics from either MIT or Princeton can understand. Good luck to any broker peddling this stuff to really explain the risks to their customers.

5. A proliferation of glossy magazines containing 350 pages of ads featuring hot young models younger than your kids wearing clothes that nobody in their right mind would ever wear and only three pages of content.

6. Restaurant dishes containing at least three ingredients that you never heard of, written on menus in type so small that most of us require a magnifying glass and flashlight to read.

7. Yoga studios on every corner

8. Botox

9. $4 cups of coffee

Trailing Indicators

1. The reappearance of squeegee men and graffiti

2. a proliferation of sidewalk preachers urging us to repent

3. Being able to get a table without a reservation at a trendy neighborhood restaurant on a Thursday night.

4. Snooty salespeople becoming polite and friendly.

5. Increased beer sales.

6. Availability of taxi cabs during rush hour on a rainy night

7. Your son's bar mitzvah fund has more money than Bear Stearns, Citibank and the country of Iceland, combined.

Wednesday, January 28, 2009

The Real Deal Interviews Peter Braus

New York real estate news magazine The Real Deal's reporter Adam Pincus interviews Sierra Realty's own Peter Braus.

Peter Braus, executive vice president and principal at property owner and manager Sierra Realty, said tenant brokers have more leverage in the commercial leasing market today as vacancy rates rise and new tenants are hard to find.

Click here to read the whole thing.

Monday, January 26, 2009

Excelling in Tough Times

The next several years will present serious challenges to all businesses. With unemployment rates rapidly escalating, banks cutting off credit, and consumer confidence plummeting, many businesses will fail or see their revenues significantly decrease. By adopting the right approach and attitude, however, a handful of businesses will be able to take advantage of the opportunities this market presents them and will strengthen and grow their businesses during these times of economic contraction. What can you do to strengthen your business over the next several years?

For a printable checklist for how to excel in tough times not only in the New York Real Estate industry but all businesses, click here.

  • Reduce Expenses: Review every recurring expense and aggressively renegotiate pricing and credit terms with your vendors. Many vendors would rather reduce their prices or loosen credit terms then lose business. If necessary, switch vendors to those that will provide you with better pricing. Rent is often one of the biggest recurring expenses that a business incurs. Review your lease and evaluate your options for obtaining a rent reduction from your landlord. If your lease is expiring soon, take advantage of the decline in rent rates and aggressively shop for the cheapest possible deal. You may ultimately renew with your existing landlord but having market information available to you and offers in your pocket will let you negotiate the most favorable deal. An experienced and reputable real estate broker can help you here.
  • Employees: For an employer this is now a buyer’s market. Take advantage of it. Take a hard look at your employees and determine which are valuable and which are under performing. There is much talent out there to be hired. Upgrade the quality of your staff without incurring an increase in payroll.
  • Reconnect with your clients and customers: Don't take your existing clients or customers for granted. Contact each client personally and make sure they understand that you value their business. Each year I make a point of asking each of my clients to review the quality of our services. I meet with them personally to discuss their observations. Now more than ever you need to make each client feel as if they are the most important client of your firm. It is far easier to keep an existing client than to find a new one.
  • Evaluate any weakness in the quality of the work that your firm performs: Make sure that you are providing an exceptional product or service. Address any deficiency immediately. Replace any underperforming employees and, if affordable, upgrade your infrastructure.
  • Aggressively pursue new business: Many of your competitors will be impacted by this economic downturn. They may be required to make cutbacks in staffing, delay making much needed infrastructure upgrades or take other actions which may seriously compromise the quality of the work they perform. This is an ideal opportunity for the well-positioned firm to increase market share by picking up the dissatisfied clients and customers of these firms. How best to do this?
  • Marketing: This is not a time to scrimp on marketing. Use intelligent marketing through public relations, advertising, direct mailing, cold calling etc. to get the message out that you're still in business and provide a quality service.
  • Networking: Network like crazy. Attend events where you might meet people who could be potential customers. Let your professionals, vendors and existing clients and customers know that you're actively seeking new customers. Perhaps there are people they can refer you to. Don't be shy! And make sure that all your contacts are aware of all of the lines of businesses and services you can provide. Sierra Realty provides a full spectrum of leasing brokerage and property management services. It is surprising how many of our leasing brokerage customers are unfamiliar with our property management services and vice versa. We continually need to educate them so that they can refer new business to us. Don't assume your clients know everything that you do.
  • Leverage your relationships: Use the business that you give your vendors and professionals as a way of encouraging them to refer potential customers to you. When I hire a new vendor or professional I make it clear that I expect them to refer business to my company.
  • Incentivize your employees: Think about giving your employees incentives for finding new business for the company. Make your employees "partners" in your enterprise. Incentives can range from gift certificates to a percentage of the business they initiate.
  • Get involved: I urge every one of my executives and employees to get involved in organizations outside of work. These can be religious organizations, alumni organizations, charitable endeavors, community groups, sports leagues, political clubs, reading groups etc. The list is endless. Not only can it be amazingly gratifying, it is a great place to develop relationships with people who might be able to refer business to your company.

Tough economic times are difficult for all. The uncertainty of what is to come can unnerve even the most seasoned of business executives. Yet by following some of the steps outlined above and taking a proactive approach to the economic downturn, a savvy business owner can not only survive this market but emerge from it a stronger and better company.

Friday, January 9, 2009

Articles 01.09.09

"Stress in the City” offers a quick snapshot of what's in store for 2009. While these numbers are cause for concern they must be kept in perspective. It is projected that the city will lose 175,000 jobs over the next one or two years. While this is a very high number it is lower then the 225,000 jobs that were lost in 2001, the 325,000 jobs that were lost in the late 1980s and the 610,000 jobs that were lost in the 1970s.On the other hand, it feels to me as if the City's economic circumstances are far worse than they were in 2001. Let's hope that job losses do not exceed the 175,000 jobs that are currently projected to be lost.

Now for some good news: a recent Appellate Division, second Department decision determined that a residential landlord has no duty to mitigate damages arising from a tenant's lease default. See the article "Damages" for the full text of the decision.

In a divided decision, Appellate Division, First apartment has reversed a former decision that allowed residential landlords to terminate the lease of a tenant that is subletting her apartment for an excessive profit. For the full text of the decision, see "Roommate Profiteering."

For the foodies among you, I include the article "The Simpler Pleasures," which is New York magazine's list of where to eat in 2009.