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Corporate Real Estate What role do corporate real estate (CRE) decision-makers play within their companies? A broad survey of organizations reveals that CRE management, while becoming increasingly sophisticated, remains a corporate 'backwater.' However, the role that CRE officers and their departments play within the organizations varies widely. Organizations placing more importance on CRE report that CRE plays a more central role in decision-making, is better staffed and equipped, has clearer objectives, and has a more focused and effective approach to CRE management, at both an asset level and a property management level.
Redefining Corporate Real Estate Global competition, technological advances, and warp speed are driving companies to become extremely cost conscious and, at the same time, to pursue new sources of revenue. Against this backdrop, corporate real estate (CRE) professionals are finding that to be successful, they must shift roles from being service providers to their companies to managing corporate real estate as an asset. In this new role, they manage costs and maximize value throughout the life cycle much as their traditional real estate peers do. While this trend is to date far from universal, the organizations that have adopted this approach have found a shift from service to asset management requires a different organizational model and a different skill and mindset. In effect, CRE staffs are changing their business model from being a non-core business to being a core business within a broader corporate enterprise.
Entrepreneurial Return and Risk in Commercial Real Estate Traditional analyses of commercial real estate returns and risks fail to reflect the experience of the typical real estate entrepreneur in two ways. First, one-dimensional risk assessments provide an incomplete picture of event risk in the commercial property markets. Second, the returns reported by the industry benchmarks, which exclude the effects of leverage, are different from the returns experienced by commercial real estate investors, who rely on significant amounts of debt to fund their projects. These shortcomings are particularly significant, given the historical cyclicality of the commercial property markets.
Hostile Takeovers of REITs Although it is widely believed that REITs enjoy two special and inherent hostile takeover defenses, public REITs are as vulnerable to hostile attack as any other public company. Excess share provisions have a role to play in a REIT's takeover defense strategy, but are largely untested as anti-takeover devices and are no substitute for judicially validated rights plans. Ultimately, REIT directors must be aware of possible hostile activity and must be prepared to respond if a bid emerges. The most fundamental decision will often be whether to implement a rights plan that provides a potential target with judicially tested protection from unsolicited bids. A properly deployed takeover preparedness strategy is essential in protecting a REIT against abusive takeover tactics and increasing its ability to control its own destiny.
The Kelo Decision The Supreme Court's refusal to judicially limit the use of eminent domain for economic development while leaving the door open for states to legislatively restrict its use in Kelo v. City of New London has precipitated a flurry of legislation in many states seeking to eradicate this controversial mechanism for the government to take property pursuant to the takings clause of the Fifth Amendment. This article reviews Supreme Court opinions, considerations for the real estate industry and various legislative approaches proposed to curb eminent domain, as well as how these approaches have fared in different states.
Nine Causes of Sprawl Since the late 1990s, sprawl has become a leading public policy issue. The author presents nine important causes of sprawl that include: the rent gradient; demographic changes; growing affluence; car ownership; different levels of government services in suburbs and cities; racial discrimination; land assembly issues; federal income tax policy; and land use regulations. He concludes that if policy makers are truly concerned about the malignant underpinnings of sprawl-discrimination, fiscal zoning, transportation that imposes social costs, federal tax policy, and regulations that needlessly consume land for residential development-then they will deal with these causes directly.
Who Lives Downtown Today? In the past, downtown living meant living in hotels, clubs with sleeping facilities, flophouses, and jails. By the 1920s, downtowns reached their economic peak; many of their business functions began migrating to "uptowns," "midtowns," "edge city" and "edgeless" locations. In this article, the author used Census data to examine downtown trends from 1970 to 2000, assessing which cities and regions have attracted downtown residents. The article describes who lives downtown today, compares downtown trends to those of cities and suburbs, and discusses what these trends mean for local leaders working to encourage downtown living to reinvigorate their urban cores. Recent evidence indicates that the impetus for downtown residential living has continued and is broadening.
Rebuilding NOLA
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