London's New Icon

Dexus: Global Partnership Knowledge Social Media: CEOs Who Tweet colliers international Business Class: Leader property magazine savvy Travel Tips fall 2011

The Shard London’s New Icon

20 36 contents 24 4 outlook 20/20 20 out with the New, top U.S. retailers are migrating north. In with the Old BY James Smerdon ontario’s Perimeter Development is revitalizing outlying communities. 6 spotlight By Sarah Eadie and Cheryl Reid-Simons chicago’s Illinois Center Two; Corporate Finance Series report; U.S. parking rates; 24 business Partners Q&A with Karen J. Whitt. A local partnership between DEXUS and Colliers International Australia goes global. 10 B2B by John Wolcott High oil prices and hotels don’t mix. BY John B. Corgel and Jamie Lane 28 behind the Scenes credit Suisse’s Daniel Tochtermann has a 12 Working Space passion for real estate. Small energy-efficient fixes can mean big by michelle santos savings. By Jeff Bond 34 Follow the Leader Which CEOs are tweeting? And should you 14 bank Notes follow suit? By Aaron Blank The Federal Reserve is testing banks. BY KC Conway 36 Personal Biz Travel smart when doing business overseas. 16 london Bridge by Annika Hipple Is Going Up London’s skyline is changing dramatically 40 in Focus 4 thanks to a tower of glass known as New technology is bringing together talents, The Shard. resources and ideas. BY Ruth Bloomfield by Doug Frye

www.knowledge-leader.com Cover Photo ©sellar group Colliers international Spring 2009 | 1 Volume 5 u Number 3 From the Knowledge colliers international Editors’ Leader property magazine

Desk Executive Managing Editors David Bowden Dylan Taylor Dylan Taylor and David Bowden IN BETWEEN THE LINES Editor Teresa Kenney

Associate Editors Christine Schultz, Lex Perry, Aaron Finkelstein Colliers International is honored to be one of four joint sole agents named to the London Bridge Quarter development, particularly because we feel the project’s Art Director significance extends beyond the visible impact it will have on the skyline. Amy Wallace Not only does the London Bridge Quarter contain The Shard—one of the most striking buildings in Europe—but the project as a whole is a bold step in the ongoing Project Manager redefinition of London, one of the world’s greatest cities. This unique vertical community Heidi Page compellingly illustrates the power of international cooperation and the willingness to Contributing writers discover innovative solutions to seemingly insurmountable problems. Aaron Blank, Ruth Bloomfield, Jeff Bond, KC Conway, Inspired by this international alliance, the Fall issue of Knowledge Leader takes a global John B. Corgel, Sarah Eadie, Doug Frye, Annika Hipple, perspective, looking at major trends in commercial real estate worldwide. Our cover Jamie Lane, Michelle Santos, Cheryl Reid-Simons, story on London Bridge Quarter’s iconic new skyscraper reveals how The Shard has James Smerdon, John Wolcott continued to rise through hard economic times, and how British developer Irvine Sellar turned his vision into reality with the help of resources from around the world. Proofreader Other features include: Jim Thomsen • A profile of DEXUS Property Group, a leading integrated real estate brand advertising sales in Australia, and its blueprint for international expansion through local Jenna Badu-Antwi partnerships; • A look at a new report that projects the impact of global oil prices on the hospitality This magazine is published by sector; and, Colliers International • An interview with Credit Suisse’s top real estate exec, Daniel Tochtermann. Closer to home, our Outlook 20/20 column examines the economics behind the U.S. retail invasion of Canada. KC Conway, Executive Managing Director of Real Estate Analytics for Colliers, examines plans for stress testing of the banking industry in Bank Notes. You’ll also find articles on global travel tips, CEOs and social media, and FS Energy’s visionary plan to reduce energy consumption in the built environment. As always, we hope that Knowledge Leader both informs and inspires you to greater success in your own business. To order more copies, learn about advertising options or subscribe to Knowledge Leader, visit www.knowledge-leader.com.

David Bowden Dylan Taylor Chief Executive Officer | Canada Chief Executive Officer | USA Colliers International Colliers International

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2 | knowledge leader fall 2011 knowledge-leader.com

Outlook 20/20 hot topics making headlines today

In late 2010, Target announced it was Strong Loonie expanding into Canada One of the most compelling factors for U.S. retailers to open stores north of the Canada- U.S. border is the value of the Canadian dollar relative to the U.S. dollar. As the Canadian dollar strengthens, it’s increasingly worthwhile to establish Canadian stores rather than sell only to Canadian customers online or in the United States. For some U.S. retailers, Canada is the largest, closest, and/or most similar market to the U.S. market, and represents a logical move to maintain revenue growth. While not all retailers are compelled by the same macro-economic factors, the exchange rate plays some part in the spate of recent announcements of U.S. retailers opening shop in Canada. As recently as 2004, Canada’s retail sales per capita were US $8,000 compared with approximately US $12,000 per capita in the United States. However, with the appreciation of the Canadian dollar, per capita retail spending in Canada now approximates the U.S. By itself, this would certainly attract new interest in the Canadian retail market, but when one considers that the available retail space in Canada (on a per-capita basis) is substantially less than that in the U.S., it becomes even more attractive. Compared to the U.S. retail market, Canada represents a bounty of untapped potential. The United States has 38 square feet of retail floor area per capita, compared to only 24 square feet in Canada. This means that Canadian retailers’ average productivity is CA $530 of sales per square foot compared to only US $320 south of the Canada-U.S. border. If American retailers can maintain the same cost structure and operational efficiency in Canadian stores as they do in U.S. stores, there is the potential for significantly greater profitability. Drew Keddy, Vice President of Colliers International in Canada, leads the firm’s retail practice and notes that Canada is considered Target Market a very attractive destination for high-end retailers. “Canada is uniquely positioned in Canadian Economy Lures International Retail Interests. terms of market attractiveness to retailers. By James Smerdon Our economy has bounced back faster than other markets around the world and our cur- Target Corporation’s late-2010 announcement of expansion into Canada leaves Kroger, rency continues to strengthen. These factors, Walgreens, and CVS Caremark as the only top-10 U.S. retailers who have not publicly announced coupled with high sales per square foot and plans to open stores in Canada. Target’s acquisition of up to 220 Zellers stores continues to be a relatively low rent rates, create perfect condi- huge story in Canadian retail, and could be part of the biggest story in North American retail for tions for international players to expand their the next decade. presence here.”

4 | knowledge leader Fall 2011 knowledge-leader.com Largest U.S. Sell to Canadians in Canada Establishing stores in Canada could also keep Retailers Canadian shoppers north of the border instead by Revenue (2010) of being lured to the U.S. by sales, outlet stores 1. Walmart or other incentives used by retailers to entice recession-weary shoppers. In Canada, total retail Kroger2. spending increased by a comfortable 5 percent 3. Target from 2009 to 2010, and retailers have not, by and large, had to dramatically cut prices to maintain 4. Walgreens sales volumes. U.S. retailers view the Canadian 5. Home Depot market as an opportunity to sell merchandise at 6. Costco full sticker price—or in many cases, at higher prices—than they do in the U.S. 7. CVS Caremark For a U.S. retailer not currently in Canada, 8. Lowe’s expansion north can be a logical next step in its growth strategy. With an exchange rate that now 9. Sears favors the Canadian dollar, Canada is only slightly 10. Best Buy smaller than California in terms of total retail market potential. For U.S.-based retailers that have locations or supply chains close to major Canadian years will likely see a period of declining profit population centers, the move to establish stores in margins for large Canadian retailers and revenue Canada is an easier decision. It’s estimated that growth for retail property owners, as increased more than 70 percent of Canada’s population lives retailer competition impacts both parts of the within 100 kilometers (approximately 62 miles) retail economy differently. of the Canada-U.S. border. Many U.S. retailers Some of the major brands rumored or confirmed could supply a first phase of Canadian expansion to enter the Canadian market include: using existing supply chains, which significantly reduces the investment and risk associated with • Marshalls (Part of the TJX Companies, entering the Canadian market. which already operates Winners and HomeSense stores in Canada and has five Competition Affects Retailers and stores in the Toronto region.) Owners Differently • J.C. Penney Target has attracted a lot of attention with its • Topshop goal of 200-plus stores and CA $6 billion in • J.Crew sales in Canada within six years. In comparison, • Kohl’s Loblaw Companies had sales of CA $31 billion • Dick’s Sporting Goods in 2010, while Walmart had sales of CA $15 billion. However, at $6 billion, Target will generate The Next Wave triple the spending relative to the Zellers stores Canadians can expect to see some of their most they will be replacing. This extra spending is not familiar national chain stores disappear as for- likely to come from induced demand (conversion eign retailers look for opportunities to set up of saving to spending). shop north of the border. Some retailers will face Walmart, Home Depot and Costco were among the largest U.S. retailers by revenue in 2010. Much of the spending that Target will attract in a decreased market share as U.S. retailers gain Canada will be transferred from other competing prominence in Canada, while others will become retailers. For Canadian retailers and property prime targets for acquisition as American retailers maintain economies of scale entering Canada for owners, the impact of Target’s migration will look to move into the market quickly and easily, the first time, the Walmart and Target approach last well beyond the initial store openings. Com- rather than on a store-by-store basis. of buying a chain with similar location and size petitors will invest in new locations and existing With the Canadian retail sector pushing for- preferences has many advantages, including stores will undergo renovations to establish mar- ward at a sustainably healthy rate, demand for establishing a banner across the country quickly, ket position. Once Target stores are open, there space in shopping centers and street fronts will launching operations in familiar and tested retail could be additional acquisitions of Canadian continue to get tighter, resulting in an increase in locations, and acquiring existing leases that have brands that cannot compete head-to-head with lease rates, particularly in growing urban markets. lower base rates than what they would pay if they Wal-Mart and Target. In general, the next five For retailers that need greater numbers of stores to signed brand-new leases. KL

knowledge-leader.com Colliers international fall 2011 | 5 spotthe people, places light and events shaping the industry

Illinois Center Two in Chicago’s East Loop >Unique Properties submarket is currently 83.8 percent occupied. Chi-Town Tower CommonWealth REIT has retained Colliers International, Chicago to market and lease 233 N. Michigan Avenue, a 1.1-million-square-foot Class A office tower in Chicago’s East Loop submarket. Originally constructed in 1972, the 32-story office building is part of the 4.66 million-square-foot Illinois Center at Michigan Avenue and Wacker Drive. Also known as Illinois Center Two, it is currently 83.8 percent occupied by major tenants including the U.S. Department of Health and Human Services, United Healthcare, Clear Channel Communications, Motorola, and Young & Rubicam. CommonWealth REIT’s purchase of 233 N. Michigan continues a recent trend of increased activity throughout Chicago’s central business district. “The first half of 2011 has seen a flurry of investment sales in Chicago, either through outright sales or debt restructuring, which has resulted in increased opportunity for a change in third-party leasing,” said Drew Nieman, principal of Colliers International, Chicago. tar S o C

6 | knowledge leader fall 2011 knowledge-leader.com >Trends

>In the News spotthe people, places light and events shaping the industry Parking

Corporate CORPORATE FINANCE SERIES Rates Hold Corporate Lease Accounting #6

AT ISSUE: The threat of imminent corporate lease accounting changes has The joint FASB/IASB task force is attempting to eliminate the been lingering for the past eighteen months, certainly since well existing SFAS13 “bright line” tests, which currently provide before the FASB/IASB joint task force issued its August 2010 a roadmap for lease classification and allow for financial Finance Exposure Draft. Today, the most common questions are: engineering by corporations. Steady > When will the new rules be finalized? THE NEW JOINT TASK FORCE’S COURSE OF ACTION: > What will be the final resolution of the most controversial The FASB and IASB received substantial constructive feedback Exposure Draft elements? on its original August 2010 Exposure Draft. The result has been > What are the expected effective dates of the proposed a material course correction on certain conspicuous elements of The more things change the more they new standards? the Exposure Draft, including definition of “lease term,” landlord > What should we do now to prepare for the new rule capitalization requirements and accounting for certain contingent changes? rentals, to name a few. Please note that NO elements of the stay the same—at least when it comes new proposed rules have been codified. As such, all elements of Series If recent history is any indication, nobody can predict with the proposed new lease accounting rules are subject to further absolute certainty the answers to any of these questions. We can, change, adaptation and re-adaptation. to parking rates. According to Colliers however, provide a summary of recent discussions and guidance for corporate executives and real estate service providers. Colliers has received feedback that the Exposure Draft has been In the latest installment of its popular cor- substantially modified from its original version. In fact, the FASB/ International’s National Central Business REVIEW OF FASB / IASB OBJECTIVES: IASB boards have publically stated that deliberations surrounding It is important to remember the general reasons behind the lease the lease accounting Exposure Draft are ongoing and should be porate finance series, Colliers International accounting changes: completed during the third-quarter 2011, with a revised exposure District Parking Rate Survey, despite draft publication shortly thereafter. This type of delay and revised > increase the transparency within corporate financial approach is not uncommon for the board. Most recently the addresses questions about corporate lease statement reporting; and FASB realized a similar fate relative to its Revenue Recognition a general improvement in economic > enhance the comparability of similar companies and like standards. In that case, the task force reissued its exposure draft transactions. to incorporate the substantive changes resulting from public accounting changes following last summer’s comments and further review of the standards application. In any conditions, most parking garage owners The FASB and IASB endeavor to create a common lease standard event, we know for certain that the full new standard publication to ensure assets and liabilities arising from lease contracts are will NOT occur this summer and the timing for implementation release of the Financial Accounting Standards uniformly recognized within corporate financial statements. will be delayed well beyond the original expectation of FYE 2012. and operators did not increase parking Assets shall be classified based upon a corporation’s right-to-use the leased property, whereas lease liabilities shall be classified Board (FASB) and the International Account- based upon a corporation’s obligation to pay rent. rates during the last 12 months. A handful ing Standards Board (IASB) joint task force’s 1 of 2 of cities saw double-digit increases, but in Lease Accounting Exposure Draft. Due to a most markets parking rates held steady, delay in the new standard issuance, questions the future capital structure of the company. rose marginally, or dropped by just a few plague the real estate industry, including While advocating a strategic approach to percent. when the final rules will be released, what financing determination, Colliers recom- According to the survey, the five most date the proposed standards will take effect mends a cautious approach to investment expensive parking districts (as represented and what steps can be taken now to prepare in systems and technology. These new rules by median rate) in the United States are for the changes. will definitely add complexity to the finan- Midtown Manhattan ($541.00), Lower The lease accounting changes are being cial statement reporting process. In order to Manhattan ($533.00), Boston ($438.00), drafted to increase the transparency within track lease obligations more effectively and San Francisco ($375.00) and Chicago corporate financial statement reporting and allow corporations to efficiently implement ($289.00) per month. The five least enhance the comparability of similar compa- lease accounting disclosure requirements, expensive are Reno ($45.00), Phoenix nies and like transactions. The goal is to create companies with many real estate and equip- ($50.00 USD), Bakersfield ($55.00), a common lease standard to ensure assets and ment leases will need to invest in systems and West Palm Beach ($56.00), and Memphis liabilities arising from lease contracts are uni- technology which are currently in formative ($57.00) median rate per month. For more formly recognized within corporate financial stages. It is widely believed that the boards information, contact Chief Economist Ross statements. will provide ample time for recognition of the Moore at [email protected]. According to the FASB/IASB boards, delib- new lease accounting standards. Therefore, erations surrounding the lease accounting without a specific and detailed understanding Exposure Draft are ongoing and should be of these final lease disclosure requirements, completed during the third quarter of 2011, which will affect the coding and formulation with a revised exposure draft publication of these systems, Colliers recommends careful shortly thereafter. Therefore the timing for consideration of capital commitments. Before implementation will be delayed as well. investing capital and committing valuable Colliers advocates a strategic approach to the resources in new systems, processes and tech- current corporate financing determination. nologies, Colliers proposes “procrastination” Today’s decision-drivers must fully incorpo- surrounding tactical implementation of the rate the most likely lease accounting precepts. new lease accounting standards. By proactively understanding such factors and To receive a full copy of the finance series incorporating the prospective rules into the report, email Bret Hardy, CPA, Executive lease-versus-buy decision matrix, your com- Managing Director of Corporate Finance for pany will intelligently influence real estate Colliers International, at Bret.Hardy@colliers. decisions that will have a lasting impact on com.

knowledge-leader.com Colliers international fall 2011 | 7 spot light

>Q&A executive insight with: Karen J. Whitt U.S. President & Chief Operating Officer | Real Estate Management Services Colliers International

Karen Whitt oversees Colliers International’s property management team. Whitt ensures consistent service across the organization and col- laborates with brokerage and investment sales professionals nationwide to provide integrated real estate solutions. During her more than 20 years’ experience in the industry, she has been a national leader in property management, handling office, retail and mixed-use for institutional clients, including TIAA, ING UBS, and Principal Financial. She is based in Washington D.C.

If you could have dinner with any Favorite business book? Biggest accomplishment so far in business leader, who would it be Who Moved My Cheese? by Spencer Johnson. your career? and why? The value in this book for me is the reminder Really, my biggest accomplishment is handling I’m on the road several days a week, so if I had that everything is always changing, and you the day-to-day challenges, and making sure to an open dinner slot I’d choose to be home with have to be innovative and stay ahead of the enjoy the small victories. my husband and thirteen-month-old baby, and crowd. invite Oprah Winfrey. She’s smart, she’s not Who is your role model? afraid to take risks, and she’s genuine. I just What do you see as new industry My mom. She taught me to think outside the wouldn’t tell her I didn’t watch her show. trends to note? box, never accept status quo and, most impor- Property management organizations will tantly, to put others first. Knowing there are Words to live by? become true partners with their clients, rather many solutions has made solving problems Just do it...but do it right. than just providing service. This may result in much easier throughout my life. performance-based management fees to truly Who were your mentors? align the interests of clients and management How are you involved with your My first boss after college, Barb Kocmur of firms. community? Janez Properties in San Diego, who showed My husband and I have provided a foster me how to handle challenges with grace; Marc What did you want to be when you home for more than 200 locally rescued dogs DeLuca of Clarion Partners, who taught me were young? in addition to the four special-needs dogs that how to deliver value to clients (as he does every A teacher. Both my parents were teachers… are part of our household. The animal rescue day); and Dylan Taylor, who exemplifies trust and of course, I wanted summers off! organization we work with, Lucky Dog (www. and integrity, and shows us that you can lead luckydoganimalrescue.org), provides adoption only if people follow you. What was your first job? matchmaking and foster care in the Metro D.C. I was a lifeguard at the local pool. (Saved two area. Last year alone, Lucky Dog kept 1,400 kids in three summers.) dogs out of high-kill shelters in the South. KL

8 | knowledge leader fall 2011 knowledge-leader.com

B2B business to business tips

Gas, Food, Lodging Much like oil and water, high oil prices and hotels simply don’t mix. By John B. Corgel, Ph.D., and Jamie Lane

A report released by PKF Hospitality the health of the macro economy to sell their normal levels, individual consumer and busi- Research (PKF-HR) in Spring 2011 reveals products—guest rooms, food and beverage ness spending power is reduced, which in turn a direct economic relationship between oil services and meeting rooms—oil prices should has a negative multiplier effect throughout the prices and the U.S. lodging industry. The be a serious concern for hotel managers, inves- economy in general and the lodging indus- special report, entitled Oil Prices and Lodging tors and developers. try specifically. Based on our study, oil prices Risk, notes that the U.S. lodging industry will “As the price of oil has shot up and then down above $125 a barrel exceed ‘normal’ levels and see minimal disruption if oil prices reach $125 over the past few months, many U.S. hoteliers would have an increasingly negative effect on per barrel in 2011. However, if prices surge have worried about the impact that oil prices hotel operating performance.” to $150 per barrel, the recovery that U.S. could have on their business,” notes R. Mark The PKF-HR’s Hotel Horizons® econometric hotels are currently enjoying could be severely Woodworth, president of PKF-HR, an affili- demand model relies on economic data from curtailed. ate of Colliers International. “Our analysis Moody’s Analytics to project future hotel Since the U.S. lodging industry depends on found that when oil prices increase beyond demand levels. In describing the microeconomic

10 | knowledge leader Fall 2011 knowledge-leader.com Revenue per available room (RevPAR) gains OIL PRICE IMPACT ON observed in the beginning of 2011 will not continue in either of Moody’s oil-price-spike U.S. LODGING INDUSTRY scenarios. These high oil prices have the poten- REVPAR FORECASTS tial of halting the economic recovery; given lodging’s dependence on macroeconomic health, the report expects declines in economic production to flow through to lodging demand. 10% 8.9% In the $150 per barrel scenario, the 2 percent RevPAR increase in 2012 will be entirely driven 8% 7.1% by a 2 percent increase in demand as average daily rate (ADR) levels remain flat. As inflation 6% 5.5% powers forward, ADR fails to keep up, which 5.0% 4.6% results in real ADR declines. 4% This trend is generally seen through all 1.9% types of locations and chain scales. PKF tested 2% which location segments are more susceptible to an increase in oil prices. Historically, oil 0% prices have had a 99 percent correlation with ANNUAL CHANGE IN REVPAR 2011F 2012F gas prices and, since hotels are travel destinations, one could assume an increase in March 2011 Hotel Horizons® Baseline Forecast the price of getting to the destination could $125 Oil Price Scenario potentially decrease demand. Not surprisingly, hotels with drive-to business, including inter- $150 Oil Price Scenario state, suburban and resort hotels, may see the

SOURCE: PKF HOSPITALITY RESEARCH first impacts of increased oil prices. Declines are then expected to migrate to fly-to resort locations once other hedging strategies— effect of oil prices, Moody’s states: forecasts in which oil prices increase to either including taking the train or reducing other “The most visible channel through a high of $125 or $150 by the fourth quarter vacation expenditures—run out. which higher crude oil prices affect the 2011. The baseline scenario ($98 per barrel To test this theory, PKF inserted Moody’s U.S. economy is higher transportation for 2011) reflects Moody’s modeled funda- $150 oil price scenario into models for each costs. An increase in crude oil prices mental price of oil ($93.53) coupled with location. The results show the average Rev- raises the price of gasoline and diesel. a premium of approximately $5 to account PAR change for 2011-2012. The two bars for Higher crude oil prices also raise the cost for the supply uncertainty. This baseline sce- each location represent the baseline forecast of heating oil and propane, which are nario also assumes the Libyan conflict will be (blue) contrasted with our hypothetical $150 used by households in the Northeast and resolved over the course of the year. oil price scenario forecast (red). The location Midwest to stay warm during the winter. According to Moody’s Analytics, a surge in segment expected to see the bulk of the dam- When petroleum prices rise, consumers the price of oil to $150 per barrel would trig- age is resort, where RevPAR could fall from have less money to spend on other goods ger a mild recession, which is traditionally an average increase of 12.3 percent down to or services, save, or pay down debt. Every defined as two successive quarters of nega- 3.7 percent. These results confirm that loca- $1 increase in the price of crude oil raises tive gross domestic product (GDP). In the tion segments exposed to leisure/destination gasoline prices by 2.2 cents per gallon and $150-per-barrel scenario, Moody’s forecast travel demand could see the largest declines in cost consumers about $3 billion over the of real GDP growth falls by a maximum of future growth. course of a year.” 2.6 percent, resulting in the loss of 4.5 mil- As long as oil prices continue to stay high, lion jobs by 2012. they remain a concern and warrant continual Another cause for concern for the industry The econometrically-based Hotel Horizons® monitoring. While the scenarios presented is the continued threat of political instability demand model relies primarily on changes above have a low probability of occurrence, in oil-producing nations that could constrain in real personal income and total payroll many of the drivers will have a greater influence supply, and increased demand from developing employment. By introducing Moody’s oil- in our models as situations abroad unfold. nations emerging from the global recession. spike scenarios for economic growth into To download a complimentary copy of the Concerned with the direction of oil prices these models, the next five years begin to Oil Prices and Lodging Risk report, visit www. in April 2011, Moody’s created two economic look vastly different. pkfc.com/oilpricesandlodgingrisk. KL

knowledge-leader.com Colliers international Fall 2011 | 11 working space smart design for the workplace

As New York’s energy needs spiked this summer amid one of the worst heat waves on record, David Kuperberg, CEO of FS Energy, knew that a good portion of that energy was simply being wasted. The founder and CEO of Cooper Square Realty (a FirstService Corporation subsidiary and the largest residential property management company in New York City), Kuperberg says he has documented that many of the city’s buildings are terrible energy hogs. For the good of the environment and the good of his customers, he wants to make buildings more energy-efficient. According to the Green Building Council, buildings in the United States are responsible for producing 39 percent of the nation’s greenhouse gas emissions. The average building’s energy consumption also accounts for as much as 25 percent of a building’s annual operating expenses. “When you put those two figures together, it’s clear that reducing emissions by reducing energy consumption is the way to go,” Kuperberg says. “As property managers, our goal is to increase asset values for our clients. In this economy, one of the best ways to do that is by reducing operating expenses. By reducing consumption, we reduce costs and greenhouse gas emissions; that will increase asset values.”

Changing an Industry Together with the management team at FirstService, Kuperberg began developing a plan to change some of his clients’ resistance to retrofitting their properties for greater energy David Kuperberg efficiency—which soon grew into a more comprehensive initiative to champion the cause of conservation in the real estate industry. According to FirstService President and Chief Operating Officer Scott Patterson, saving energy, cutting costs and reducing a company’s carbon footprint was simply the right thing to Conservation’s do. “We saw it as a responsibility,” Patterson says. “Through our Residential Management division and Colliers International, we are by far the largest manager of properties in North Silver Lining America and are in a unique position to impact energy consumption in the built environment. FS Energy is championing the cause of energy We needed to act on it.” conservation and helping the real estate industry From these initial discussions was born in evolve in the process. By Jeff Bond 2008 FS Energy, a division of the property

12 | knowledge leader fall 2011 knowledge-leader.com management leader that aims to cut building shows building owners how much they are a building’s lighting system, can pay for emissions through retrofits, equipment paying for energy compared to similar buildings themselves in energy savings in less than one upgrades and maintenance changes. New York next door or down the street. And he notes year. Another popular measure is to convert City was the first city in North America to roll that the largest potential for reducing energy dirty oil-heating systems to gas. The City out the new plan, starting with the approxi- consumption is in retrofitting buildings, most of New York is promoting the conversion mately 450 buildings that Cooper Square often by replacing old and inefficient equipment by passing ordinances restricting certain oversees. with newer products. types of oil-heating systems. Following FS The immediate goal for the energy division However, the menu of energy-saving retrofits Energy’s example, city officials passed Local is to reduce energy costs and consumption is long and includes some very simple fixes. Law 84, requiring buildings to benchmark in its New York properties by 25 percent by So far, FS Energy has helped improve energy their energy usage and enter the results in the 2013. Such a reduction would save more than efficiency through the implementation of 26 Environmental Protection Agency’s Energy $30 million for FirstService clients and reduce separate projects. Energy-saving measures Star database annually. carbon emissions by up to 111,000 tons— have included everything from replacing equivalent to taking 110 buildings offline or a building’s heating and air-conditioning Changing the Status Quo removing nearly 22,000 cars from New York’s system to developing cheaper procurement While the initial cost of some of the retrofits streets. and maintenance systems to upgrading is not inconsequential, FS Energy has worked Patterson stresses that the company isn’t lighting systems. out three different options for paying for the focused on making money from this initiative. The division’s unique combination of skills retrofits that shouldn’t cost tenants a dime In fact, the development of the new division in procurement, negotiating contracts and and would save building owners money in the has actually cost the company time, money retrofitting properties has saved their clients long run. and manpower. But he believes it is the right millions of dollars in just the first few years. The first option is for a building’s ownership direction—one that will bear fruit for the FS Energy helped New York’s famed Plaza to pay for the upgrades out-of-pocket and then company and its customers in the future. Condominiums save more than $500,000, collect the savings. The second is for ownership which will be realized over a two-year period. to take an unsecured loan from one of the Developing a Database Another property, University Towers, has banks that FirstService has made an agreement The first step toward this goal was to create a already seen cost reductions of $200,000 per with to help fund these projects. The banks unique database of detailed information on year, and FS Energy was able to save St. James are paid back with the energy savings resulting every building’s current and historical energy Towers more than $330,000. from the retrofits, and the building’s tenants consumption, which can be used to identify To no one’s surprise, many buildings in New don’t pay any extra fees. Kuperberg says that both strengths and weaknesses in a building’s York are extremely energy-inefficient, relying in many cases such loans are paid off in only energy usage. With this database, FS Energy on old equipment or even steam from the a few years. can accurately compare the energy usage city’s electricity generating plants to heat the The third method is only available to certain across its entire management portfolio. So far, properties. Tenants of such buildings have no properties and requires FS Energy to actually the division has given Energy Report Cards control over the temperature in their units. pay for the retrofit. The company would pay which list energy usage to more than 350 of its “In many buildings in New York, the itself back with the resulting energy savings. properties. thermostat is literally your window,” Kuperberg In this age of enlightened environmental “We aren’t in a position to make decisions for says with a laugh. “You have to open the window awareness, FS Energy’s idea of retrofitting the buildings’ owners,” Patterson says. “But, as to let in cooler air to adjust the temperature in properties at no cost would seem like a the knowledge leaders in this area, we are in a your apartment. Some of the buildings are so no-brainer. However, Kuperberg says he still position to put forth the facts to our clients and energy inefficient that energy savings projects struggles at times to talk building owners into help them realize the potential savings.” produce investment returns over 20 percent.” making the necessary changes. Ironically, their Kuperberg says this benchmark information In fact, some basic fixes, such as upgrading attitude is that the deal is too good to be true. But he says attitudes continue to evolve and an increasing number of property owners are seeing the light. “The most important thing people should Some basic fixes, such as realize is that it pays to be energy-conscious,” upgrading a building’s lighting system, can pay for Kuperberg says. “And I’m not talking about just tangentially by attracting more tenants. themselves in energy savings in less than one year. I’m talking about saving money. The bottom line is buildings can do well financially by > doing good.” KL

knowledge-leader.com Colliers international fall 2011 | 13 Bank Notes Commercial Financing News

Pass or Fail Governments are putting their banks through a series of stress tests. But is it enough to ward off another financial crisis? By KC Conway

Following the collapse of Lehman Brothers in 2008, the United States Federal Reserve began to put the nation’s top 19 financial institutions through a series of economic and credit stress tests known as the Supervisory Capital Allocation Program (SCAP). These tests are an effort to create a firewall against an advancing financial crisis. As the commercial real estate (CRE) risk spe- cialty officer to the New York Federal Reserve at the time, I was engaged in these tests and, more recently, have been teaching CRE stress testing to bank examiners in advance of what will become an annual event for both U.S. and European banks. I believe stress tests will become the modern-day symbol that a financial institution is well-capitalized—much like the FDIC insurance logo did after the Great Depression. Without a passing grade, a bank will likely find it difficult to attract capital for expansion, and its lending activities will be constrained. In December of last year, U.S. banks submit- ted their “capital plans” which updated the results of the original 2009 SCAP. All but one testing exercise of 91 banks in 20 countries. And Australia had one bank miss the 5 per- of the original 19 institutions—Bank of Amer- in the past six months, both the U.S. and Europe cent core Tier 1 capital ratio. ica—was deemed well-capitalized and cleared have put banks through a second round of stress to increase its dividends. As a result, the largest tests. In Europe, the latest tests revealed: Europe is considering a TARP-like program U.S. banks have been drawing down their loan that would inject as much as one trillion Euros loss reserves into earnings to pay higher divi- • A total of eight banks failed or fell below to insure deposits in all EU banks except those dends. It has been an egregious draining of the the capital threshold of 5 percent, with in Greece, Portugal and Ireland. The intention TARP money out of the banks while the hous- an overall shortfall of $2.5 billion (EUR) is to create a firewall to contain the spread of ing and mortgage crises have worsened. It’s hard or $3.5 billion (USD). the sovereign debt crisis—much like the U.S. to understand how the December 2010 updated • As many as 16 more European banks will did with TARP—making the bailout palatable U.S. bank stress tests could justify such a need to bolster capital after their core to Germany, which has opposed any more sup- release of the allowance for lease and loan losses Tier 1 ratio dropped below 6 percent— port for Greece. (ALLL), calling into question the integrity of or just above the assessment’s 5 percent Stress tests assess the impact of movements these subsequent stress tests. pass-mark. in relevant economic variables (gross domes- In the spring of 2010, Europe embarked on a • The failing banks were located predomi- tic product, unemployment, home prices, etc.) much broader and more comprehensive stress- nantly in Spain (five) and Greece (two). on the liquidity and credit quality of a bank’s

14 | knowledge leader Fall 2011 knowledge-leader.com part of a bank’s risk management practices, not impact of a regulatory mandate. And the process needn’t Stress tests assess the be complicated or expensive. movements in relevant economic variables on Stress testing starts with an assessment of the the liquidity and credit quality of a bank’s assets. availability, accessibility and accuracy of information. It then involves identification of the resources within the bank that have the skill > and independence to assemble and analyze the assets. And, in turn, the impact on a bank’s cap- A majority of U.S. banks still struggle to roll information to make a forward-looking judg- ital position can be measured to determine if it up loans within lines of business and across ment about the adequacy of a bank’s capital holds sufficient capital to weather a storm. This geographies to then stress them to sensitivity to withstand market volatility. The key to the process relies on one huge assumption: that the analysis. During the 2009 SCAP, it was an whole process is familiarity with what infor- banks are able to provide sufficient line-of-busi- arduous process to collect line-of-business and mation is available, how it is accessible, and if ness and loan-level detail to subject the bank’s loan-level information from banks in order to it is timely and independent. assets to sensitivity analysis. conduct a consistent stress test. The process can be as simple as identifying The objective of the stress tests is threefold: It is a common misconception that the regula- the 20 largest loans in the bank that account tory community knows all that is going on in for 100 percent of the bank’s Tier 1 capital and • Psychological: Stress tests were created a bank because of its routine onsite exams; or subjecting only those loans to a series of sensi- primarily to calm the markets and con- that the banks provide granular data on their tivity analyses. Or it can be as easy as requiring vince the public that more Lehman-type loans and operations through what are known a sensitivity analysis at the end of an externally failures or 1933-style banking crises as “call reports.” In my opinion, the regulatory prepared appraisal of the two or three most were not looming. community did an atrocious job of monitoring influential variables in an asset’s valuation, • Equalizing: Prior to the SCAP, the the banks in the decade leading up to this finan- and then electronically capturing them into U.S. and European banks had never cial crisis. They allowed CRE concentrations, the ALLL forecast process. been analyzed across a myriad of met- for example, to explode without appropriate Stress testing should be mostly about com- rics simultaneously under a uniform set enhancements to risk management practices or mon sense and prudent banking practices, but of economic scenarios. The stress tests additions to capital. And they failed to assess it has become cover for the regulatory regime were designed to correct this regulatory bank’s IT systems to ensure banks were capable to diffuse their failings in the decade leading failing. of conducting line-of-business and loan-level up to the financial crisis, and justification for • Corrective: Stress tests were designed sensitivity analysis on an electronic, rather than paralyzing regulation. to identify how much capital a large manual, platform. The objectives of the stress tests have been financial institution might need if the As a result of this regulatory failing, and the mostly psychological to date, in an effort to U.S. or Europe remained in a recession data deficiencies highlighted in the original calm the market. However, they are moving in over a protracted period of time, as well SCAP, an interagency data collection effort a direction that will become more substantive as how much capital would be needed was initiated in 2010 to assess banks’ capabili- as line-of-business and loan-level data collec- to create a firewall to halt an advancing ties for providing more detailed and consistent tion from the banks improves and becomes financial crisis. loan-level information for future stress tests. It more automated. was an eye-opening experience for the Board All we need now is a logo to display in bank From a macro-level perspective, stress tests of Governors and heads of the OCC and FDIC windows adjacent to “FDIC Insured” that have succeeded in meeting these objectives. to realize how little information the bank “call says, “Stress Tested with a Well-Capitalized The market has rebounded, and banks have reports” provide—and how much a manual Rating.” KL not closed or failed at anywhere near the pace process it still is for banks to capture basic between 1930 and 1933 or the savings and information needed to calculate a probability Executive managing loans crisis of the late 1980s. of default (PD) and loss given default (LGD). director of real estate The question is, however, do we have fewer The absence of sensitivity analysis conducted analytics, prior to bank failures today because of stress testing, or by banks at loan origination, and subsequently joining Colliers Inter- are the stress tests masking the true underlying during the life of the loan, is shockingly poor. national, KC Conway problems in our banking system? The answer Today, as I teach CRE stress testing to bank was the commercial lies in a deeper understanding of what is going examiners and bankers, I remind them that real estate risk spe- on behind the scenes in the banks and with the stress testing is really all about determining the cialty officer for the regulatory process. adequacy of bank capital. It should be a systemic Federal Reserve.

knowledge-leader.com Colliers international Fall 2011 | 15 London London’s skyline is changing dramatically thanks to a tower Bridge of glass known as the Shard. Is By Ruth Bloomfield Going

16 | knowledge leader FALL 2011 knowledge-leader.com The Shard is the centerpiece of the £2 billion mixed-use development, London Bridge Quarter.

When millions of international athletes and spectators descend on the United Kingdom next summer for the 2012 Olympics, the famous skyline of London will have a new global landmark for them to admire. The Shard, a narrow and elegant glazed tower, is Western Europe’s tallest building, and has become a source of some fascination to Londoners. Its allure is partly its sheer scale: at 1,016-feet tall and the equivalent of 95 stories high, The Shard is breathtaking by U.K. standards. Also, it’s designed to be an iconic public building, already being described as London’s answer to Paris’ Eiffel Tower or New York’s Empire State Building. Finally, there’s the rarity value. The recession has put a series of other major developments in the City on ice, yet during the worst of economic times The Shard defiantly continuedw to rise. In fact, The Shard is the centerpiece of the hugely ambitious £2 billion (approximately $3.26 billion U.S.) w mixed-use development, London Bridge Quarter (LBQ). The tower itself will house a five-star Shangri-La hotel and spa, office space, restaurants and exclusive apartments. It is estimated that approximately 12,500 people will work at London Bridge Quarter when it is complete. The LBQ project also includes a new 10,000-square-foot public piazza, a redesigned and expanded London Bridge Station and bus terminal, and a 17-story, 600,000-square- foot headquarters building named The Place. Like The Shard, The Place is designed by renowned Italian architect Renzo Piano, recipient of the Pritzker Architecture Prize, the American Institute of Architecture Gold Medal, the Kyoto Prize and the Sonning Prize. Piano’s other renowned designs include the Centre Georges Pompidou in Paris; the New York Times Building in Manhattan; the Menil Collection in Houston, Texas; the Kansai Airport in Osaka, Japan; and the Modern Wing of the Chicago Art Institute. The man behind the London Bridge Quarter is self- made property developer Irvine Sellar. His involvement in London Bridge’s reinvention began pragmatically, with the purchase of an investment property in the area, the Southwark Towers—a bland 1970s building, at the p u time leased to accounting firm PricewaterhouseCoopers. Initially, he had no grand design to erect a record-breaking ar gro

ll tower; in fact, he was attracted to the site specifically

©se because it had a long-term quality tenant.

knowledge-leader.com Colliers international FALL 2011 | 17 But then the U.K. government—usually fell silent—including high-profile skyscraper Sellar, will elevate the station to the highest highly resistant to modern design in historic projects with nicknames like the Helter Skelter, standards of international transport design to areas—made it known that it would be the Cheese Grater and the Walkie Talkie. cater to the 54 million passengers that flood amenable to high-quality, high-density But Sellar pushed on. As a result, he is through every year. projects near transport hubs. The concept of currently in the enviable position of launching If its proposals are approved—and it is the London Bridge Quarter was born. two landmark buildings at a time when there is almost inevitable they will be—then the To build The Shard as a linear development a grave shortage of Class A office space in one five-year project will start in 2013 as part of would eat up around 30 acres and be of the world’s most attractive business locations. a £5.5 billion plan to enhance the efficiency monstrously expensive. The solution, decided The Shard is already attracting interest from a of mainline train services which thread from Sellar, was to build upwards. wide range of potential occupiers, both domestic the station and across South East England. He decided to give Piano his first U.K. and international. Part of its appeal is that it London Bridge is also served by 15 bus routes commission because he was impressed by his will be multi-let, and occupiers will be able to and two subway lines, with speedy links to international body of work. Inspired by the lease as little as 4,000 square feet of space to as the West End and the City, London’s central 18th century landscape paintings of Italian much as 200,000 square feet. business and financial district. artist Canaletto, Monet’s paintings of the Sellar believes the lower, larger floors with Piano has described The Shard as a “vertical Houses of Parliament, and the masts of tall 33,000-square-foot floor plates will appeal to city” because its unique mix of offices, homes, ships that once plied the Thames, Piano’s multi-national companies such as financial hotel, spa and shops means that residents and design was approved in 2003 by the U.K.’s services or energy-related businesses; the upper workers need barely leave the site, whether they former deputy prime minister John Prescott, floors will attract a diverse range of occupiers, want a cocktail, a coffee, a facial or a new pair of who proclaimed the project architecturally from media businesses and hedge funds. The shoes. But the truth is they may want to, as the “exceptional.” Place, meanwhile, is seen as a perfect prestige formerly industrial stretch of the South Bank Funding was then secured from a consortium headquarters building. between London Bridge and Waterloo has been of Qatari banks, and the project became a truly The future tenants of London Bridge Quarter undergoing an extraordinary renaissance since

international venture: the work of a British will also be able to take advantage of some major the millennium. p developer, an Italian architect, Middle Eastern improvements to the already bustling transport Growing up in north London, Sellar was u financiers, and Dutch company Scheldebouw, hub. Network Rail, the body which runs the always aware of London Bridge, but admits ar gro which supplied countless unique panes of glass. U.K.’s national public transport network, has there was little reason to go there during his ll In 2008, however, Lehman Brothers just applied for planning consent to rebuild formative years. “Of course I knew the area. collapsed and London plunged into a property London Bridge Station itself, which, combined Everyone knows London Bridge, it’s a global otos ©se h meltdown. Building sites all over the capital with the new concourse being constructed by address—one of the brand names of London,” p

18 | knowledge leader FALL 2011 knowledge-leader.com The Shard has been described as a “vertical city” because of its unique mix of offices, homes, hotel, spa and shops.

he said. “But it was more of an industrial area, like much of the Thames at that time.” That reputation has changed significantly, and South Bank is now regarded as one of the Mark McAlister, head of City cultural hearts of London. Agency for Colliers International in The Tate Modern, housed in a former power London, likens the launch of Lon- station, is now probably the United Kingdom’s don Bridge Quarter to another leading contemporary art gallery, attracting “new” business quarter, Canary millions of visitors each year. In fact, it has Wharf—now approaching its twen- become so popular that it is currently in the tieth anniversary. throes of a major extension which will see an Like London Bridge Quarter, extraordinary pyramid-shaped annex by the Canary Wharf is a magnet for inter- architect Zaha Hadid built beside it. national business, and originally The Menier Chocolate Factory is becoming one had as its centerpiece a landmark of London’s leading “Off Broadway” theaters; tower: One Canada Square. and Borough Market, once a dirty warren of The Shard dwarfs the 770-foot wholesale stalls, is now an absolute treat for One Canada Square, but McAlis- gastronomes, stuffed with charming cafes and ter believes London Bridge Quarter stalls full of artisanal produce which can be has something more important over bought direct from the farmland of England. Canary Wharf: location. LBQ is And if this were not enough to tempt occupiers much closer to both the City and the from traditional office locations in the West End West End and is already blessed with a great infrastructure. and the City, once The Shard and The Place are In fact, even without a landmark building, the South Bank is now exerting a pull on major complete, Sellar has his eyes firmly set on adding companies. “The tenants already benefiting from the South Bank renaissance include to the nascent London Bridge Quarter. Time Warner, Shell and PWC. So The Place and The Shard represent the final piece in “We have other properties here and we will the puzzle,” notes McAlister. “All major corporations will consider these buildings, and extend London Bridge in ways which will with total occupancy costs much lower than the City and West End, such relocations will complement what we have already done,” be good value. For Canary Wharf tenants they can save themselves the extra commute, he says. “It is the nucleus of a new district of conservatively estimated at 30 minutes a day.” London.” KL

knowledge-leader.com Colliers international FALL 2011 | 19 Ontario’s Perimeter Development is transforming the urban landscape of suburban communities with projects like Breithaupt Block in Kitchener, shown before (opposite page) and after, as a computer-generated rendering (this page).

Out w i t h t h e New, In w i t h t h e Old. In Ontario, developers are revitalizing outlying communities by renovating historic buildings and reviving neighborhoods.

By Sarah Eadie and Cheryl Reid-Simons

20 | knowledge leader FALL 2011 knowledge-leader.com revitalize the hearts of downtowns in Waterloo Region because the same people who want inno- Like a homeowner vative, new in-city office campuses also want pulling up outdated shag carpeting, only to to stay there when the sun goes down. “With discover gorgeous hardwood flooring hidden everyone being very concerned about the cost beneath, Perimeter Development has unearthed of energy and the amount of time spent com- some remarkable treasures while restoring muting, people want to work, play and live in buildings and redeveloping communities. their own neighborhoods,” Gibson notes. “It’s a Of course, turning an early 20th-century complete 360 over the past 35 or 40 years.” manufacturing building into a high-tech Kitchener was founded as a manufacturing industry office space is a little more compli- hub, explains Rod Regier, director of economic cated than simply pulling out a few carpet development for the city of Kitchener. “It’s full staples. Consider Perimeter’s Breithaupt Block of these older Victorian industrial buildings project in downtown Kitchener, Ontario, for that are three, four and five stories with high example. “We’ve taken out 1,200 tons of heavy ceilings, large windows and just tremendous machinery over the past year and a half and ambiance,” Regier says. “You could replicate it, we’re now in the process of going in and sand- but nobody would anymore. It’s an expensive blasting all the walls, putting in new windows form of architecture now, and it’s not being pro- and mechanical systems,” explains Perimeter’s duced in suburban office parks.” Chief Executive Officer and Founder David Regier explains that, as the value of the Cana- Gibson. “You can now see the bricks and dian dollar surged, manufacturing took a hit. w beams, which are all made of Douglas fir. You Add to that the growth of suburbs, and things can’t build with materials like that today.” were grim in downtowns like Kitchener’s. “Our Turns out, all those buildings that once man- downtown took a beating in the 70s and 80s ufactured car parts and rubber soles have a lot when people moved out to the suburbs,” he of soul of their own. And they’re helping to says. “Today we’re seeing a strong new market for urban living. A lot of young, creative knowledge-industry workers want to live downtown. They want to be in the coolest place there is, and that’s downtown.” New demands for unusual and funky, urban spaces have opened the doors for developers like Perimeter, who are looking to convert old structures into office or residential spaces. Gibson says an office in an old tire plant simply looks more interesting than one built from scratch. “The it-factor is the thing that generates a lot of money,” he says. Gibson founded Perimeter Development in n o 2009 after 20 years as CEO and president of FirstGulf, an office, commercial and industrial illiams developer. “I tried retirement for three months. It wasn’t for me,” he explains. The company arry W focuses on projects just outside—or on the o: L t o perimeter—of the greater Toronto area. “The

r ph idea is to be nimble and quick. We’re able to o make a decision happen quickly and this gives xteri

E us an advantage over other companies who need

knowledge-leader.com Colliers international FALL 2011 | 21 to go through boards, etc., to make decisions,” he says. “It also allows us to maintain a fun factor. Work should be fun. The less stress in life the better, and we make a point of having fun at Perimeter.” By focusing outside the metropolitan area, Perimeter also avoids some of the more aggravat- ing elements of major market developments. “I really love the opportunity to work with all the municipalities,” he says. “It’s not like building in the City of Toronto where you’re competing with 30 or 40 other large developers. To now be the big fish in a small pond and really make a difference—it’s fun.” In addition to the Breithaupt Block project

underway in Kitchener, Perimeter’s second n major project in the works is in the Galt portion o of the city of Cambridge in southern Ontario. The developer purchased seven properties along illiams Main Street between Ainslie Street and Water arry W Street with plans to upgrade 10 storefronts o: L t and 15 residential units. And while renovating o The bones (above, bottom) of the older

an older, existing building isn’t cheap, it has r ph buildings Perimeter Development is o renovating are given a facelift (above, top) its own rewards. “It takes a lot more work to xteri without losing their history or charm. save the better parts of the buildings,” Gibson E

22 | knowledge leader FALL 2011 knowledge-leader.com We’re preserving history—that’s very rewarding. Perimeter Development Chief Executive Officer and Founder David Gibson

admits. “But in Galt, they’re all made out of And if these developments seem to have a other forms of transportation or major services,” stone. They’re beautiful old buildings and you European flavor, that’s no accident. “Traveling explains Gibson. Located across the street from just couldn’t recreate that.” extensively has definitely impacted and shaped what will be a new regional transit hub, he says Gibson enjoys finding ways to work with my ideas,” Gibson says. “My interest is in cit- “the Breithaupt project is one of those key loca- existing structures, even though they will end ies and how they were originally created and tions that we believe will be very attractive to up looking completely new by the time the proj- designed. You can see what they are doing to the high-tech industry and other companies.” ect is over. “The real opportunity when we look re-create themselves, and how some have had Waterloo Region has been aggressive in at some of these older buildings is that you have to re-develop because of war or other factors. attracting high-tech and knowledge industries the infrastructure in place already, in many European cities do a great job of embracing the to its downtowns, including the University of cases it needs to be upgraded or expanded, but best of the past and the future.” Waterloo School of Pharmacy in Kitchener and it is there so you’re not having to develop it And a lot of that has to do with the attitude of the School of Architecture in Galt. Google, from the ground up,” he says. That leaves more investors. “Places like Germany where you have Research in Motion (maker of the Blackberry), time and money available for the more creative great architecture, they traditionally have had a and companies like OpenText have a sizeable aspects of development. much longer view of real estate investment than presence in Waterloo, as well. “I love complex projects. I love mixed-use devel- investors in North America,” Gibson acknowl- The marriage of high-tech companies and opments; they aren’t cookie-cutter like just doing edges. “In the past 15 years in North America, renovated buildings constructed in an era when industrial or just office space; each one is unique there have been more merchant builders (spec- a vacuum cleaner passed for cutting-edge tech- in its own way,” Gibson says. “Building mixed-use ulative builders) than long-term investors and nology may seem odd, but it works. “High-tech projects takes a certain expertise; not everyone can that has impacted how we’ve built. We live in a businesses love these older buildings because do them, and that’s why I like them.” very disposable society.” they’re the type of building they can be very Still, renovating an existing structure for a That long-term view is one of the things that creative in,” Gibson says.” That’s helping bring completely new use has more than its share of make Perimeter so interesting to work with, says historic town centers back from the brink of challenges, says John Lind, a broker with Colliers Lind. “Their deals are less about the structure insignificance and giving developers like David International in Kitchener. “They’re essentially of the cash flow and more about how that asset Gibson a reason to keep going. putting mechanical systems into a building that works in the community,” Lind says. “They “What wakes me up every morning is the was built when those systems didn’t even exist. come at it from a social standpoint. Other com- excitement of making a difference,” Gibson Air conditioning? They didn’t have air condi- panies do that, too, but Perimeter takes it to a says. “When I can go into the downtown dis- tioning when these buildings were built.” whole new level.” trict of a city like Galt which has been through The sort of brick-and-beam redevelopment While preserving history is one of Perimeter’s tough times, and take a city block of seven to Perimeter is doing isn’t easy and doesn’t provide goals, the company also looks to the future by eight buildings, and redevelop them, creating quick returns, Gibson acknowledges. “If you do supporting a green building philosophy. “We’re a new retail mix—that is making a difference. it right, a lot of the payoff is not in the short incorporating the right mechanical systems and And what we’re doing with Breithaupt—we’re or even medium-term.” And they don’t lend building materials that not only work the best not tearing it down, we’re preserving history— themselves to preleasing, either. “People can’t for our projects, but are also environmentally that’s very rewarding.” visualize what it will be when they see it in the sustainable,” Gibson says. Perimeter plans on being in Waterloo Region raw state,” Gibson says. “The only way we can But probably one of the most environmentally for the long-term. “We picture ourselves as city get the kind of rents we’re going to need is to friendly aspects of the projects, are their well- builders,” Gibson says. “We are involved in all have the first phase done. We’re not even going connected addresses. aspects of the community. In terms of chari- to begin any kind of serious marketing until “That’s something that we’ve really focused table events, we support each other and our the first phase is finished. When it is complete, on: finding quality locations, close to newly community. We are not there just to profit from that’s our marketing because people will be able proposed transit like Kitchener/Waterloo’s the developments; we’re about creating a better to see the quality for themselves.” Light Rail Transit, GO Transit locations, and community.” KL

knowledge-leader.com Colliers international FALL 2011 | 23 Business Partners When expanding into international markets, partner with local experts who have global networks.

By John Wolcott

In today’s shrinking business world, more and more companies are beginning to think and act globally. Before entering a new market, however, it’s wise to partner with companies that share your business’s philosophy and vision—local experts that can offer sound guidance and direction to help you succeed. Knowledge Leader sat down with executives of two companies that have formed such a partnership: DEXUS Property Group—a leading global real estate group with more than $14 billion in properties under management in Australia and the United States—and Colliers International, the leading integrated real estate brand in Australia. They shared why and how their relationship has succeeded at home and abroad.

24 | knowledge leader FALL 2011 knowledge-leader.com MALCOM TYSON, Colliers International Australia, National Executive Director and Managing Director, Industrial

DEXUS was one of the first institutional property managers in Australia. They were established over 25 years ago and set about acquiring a national portfolio of properties with good quality tenants. Today, DEXUS is one of the largest companies of its type in the country. We at Colliers International began our relationship with DEXUS around 15 years ago, so our experience with the company goes back quite some time. Over that period, we’ve developed a good understanding of the way that DEXUS operates. We’ve focused on understanding DEXUS’s changing needs and requirements as the market changed, and bringing together the right people with the right skills to deliver on those requirements for them. That’s worked pretty well for us; they like dealing with our business and the services we provide. We’ve been the recipient of DEXUS’s annual w leasing and transaction awards many times, which gives us a very good point of reference as to how well we’re supporting our relationship with them. In 2010, Colliers International took top honors at DEXUS’s annual Excellence in Agency awards, collecting both Industrial Agency of the Year and Transaction of the Year. DEXUS is very strong in office and industrial—their core areas—as well as retail markets. We worked with DEXUS here in Australia to design market strategies which have helped them take advantage of opportunities at times when others might not even have been active in the marketplace. For example, we assisted DEXUS in acquiring industrial property in the middle of the global financial crisis—the first real estate investment trust in Australia to do so. It turned out to be a terrific acquisition for them. That came about from a detailed strategy work- shop with us that looked at opportunities in the market and evaluated them with respect to their objectives. Our long- and short-term forecasts were able to demonstrate where the market might be within three to four years’ time, which assisted DEXUS with their investment analysis. In the U.S., DEXUS is repositioning its national portfolio to progressively concentrate

knowledge-leader.com Colliers international FALL 2011 | 25 investments along the West Coast where they see greater growth opportunities. We concur with these growth prospects. Having the caliber of people on the U.S. team like John Hollingsworth (Colliers Internation- al’s industrial leader for Los Angeles, Orange County and Inland Empire, one of the largest combined real estate markets in the world) is absolutely fantastic. It’s good to know that there’s a Colliers International office in Los Angeles that will welcome one of our clients like DEXUS and will develop a solid, long-term relationship with them like we have. We have a lot of respect for our colleagues in the U.S., and have learned from them as well. And DEXUS’s focus in the U.S. market further strengthens our relationship with Col- liers International in the U.S. While DEXUS will be guided by the L.A. office of Colliers International, we also maintain contact with the company through Jane Lloyd, who heads DEXUS’s U.S. industrial investments. Before relocating to the U.S., Jane headed up the DEXUS retail business here in Australia, where she was managing a multibillion dollar portfolio and had a very different set of challenges. Our successful relationship comes from the synergy between two established companies. We understand each other, so we’re able to have a very transparent conversation. That allows us to provide DEXUS with another val- idation of their objectives, both in Australia and in the U.S. DEXUS and Colliers International share similar values and are very much alike: focused on customer service and a commitment to expertise. We work well together to deliver the right outcomes. That has helped us work through some challenging market conditions to achieve our goals. Our relationship with DEXUS is an excellent example of what Colliers International can do for clients, sharing information within our global network and accelerating their success. As more and more of our clients look to build their presence in new markets, we have applied the same growth strategies to acceler- ate their success.

26 | knowledge leader FALL 2011 knowledge-leader.com JANE LLOYD, DEXUS Property Group Managing Director, U.S. Investments

DEXUS has a long history with Colliers Inter- national in Australia; we’ve built a strong partnership with them. Our partnership approach with agencies, tenant representatives and our corporate and capital partners is crucial to delivering superior results. Clearly, our aim in entering the U.S. market is to replicate the success of DEXUS in Australia and to have sustainable competitive advantage in our four key markets: Seattle- Tacoma, the I-880 corridor in San Francisco, the Port of Long Beach, and California’s Inland Empire in the fast-growing Riverside/ San Bernardino area. At one time, our U.S. portfolio—which we DEXUS’s U.S. portfolio includes began acquiring in 2004—had included 21 this industrial property located northeast of the I-10 and I-15 markets, with 109 industrial properties total- interchange in Riverside, Calif. ing more than 27 million square feet and valued at $1.1 billion. In 2009, we began scal- ing that portfolio back to the 15 markets we When we opened our office in Newport market, it was clear that he understood our busi- have today. We redeployed our investments Beach, Calif., in June 2010, we knew that to ness model and what we’re trying to achieve on in the Midwest and on the East Coast so that succeed in a new market you had to have strong the West Coast. There are three things about we could focus on West Coast opportunities, local market knowledge and a well-respected Malcom that stand out: he’s smart, knows the specializing in business parks, logistics and team. So we hired the experienced team of market inside and out, and is well-connected. distribution facilities. Master Development Co. (MDC). MDC had The key thing about Colliers International in We’re seeing strong demand associated with previously enjoyed a long and successful work- Australia and the U.S. is their level of profes- the major ports of the West Coast as well as ing relationship with the Colliers International sionalism. They are a large organization with a major industrialized areas. We’re focused on team of Tom Taylor, Steve Bellitti and Josh boutique view—which is obviously a valuable finding good opportunities in those markets Hayes, brokers based in Ontario, Calif. asset to bring to the table. The business backs and we have great teams with good, strong local The eight team members of the MDC group up its strong brand and corporate presence with market knowledge and great relationships—like form the nucleus of our present 21-person on-the-ground expertise and intelligence in each our relationship with Colliers International— DEXUS team on the West Coast, all of whom of their markets. That’s really crucial to driving to source and close deals. are high-caliber real estate professionals. We value in our markets. DEXUS’s objective in the U.S. is to become were very keen to work with local experts. They have been a great help recently in U.S. a West Coast market leader in industrial real Malcom Tyson has worked closely with us business. We have a global share registry. estate, so we are taking a rigorous and strate- on a number of leasing and asset transactions Although 60 percent of our investors are Aus- gic approach to leasing. After closing out other over the years in Australia. He’s very customer- tralian, the remaining shares are split evenly U.S. investments, we will have approximately focused and is always working to do the right between American and Asian investors. $600 million to invest in West Coast markets thing for the best interest of his client. He has We’ve made an enormous amount of progress in the next few years. In Toronto, for example, helped us with introductions and late last year, in building our business in the U.S. in just 12 we had only one property, so we contacted the organized a presentation with a number of his months’ time. We started from a low profile in Colliers International team there—Jim McIn- colleagues. Following that, we closed a couple the U.S. but we had a strong brand in DEXUS, a tosh and Bill Pitt—and told them we thought it of great deals, including a 212,000-square-foot strong balance sheet and great help from Colliers was time to realize the value out of that asset to lease in Rancho Cucamonga. International. In that short space of time we’ve take advantage of other market opportunities. Malcom also took the initiative, flying over gone from “DEXUS who?” to people knowing It was a great timing play and a very smart $78 to visit our Southern California office. After who we are and understanding that we’re nimble million deal for us. listening to and discussing our plans for the and can close deals. KL

knowledge-leader.com Colliers international FALL 2011 | 27 Behind the Scenes

Credit Suisse’s smart investments include 1099 New York Avenue in Washington, D.C.

Swiss Notes Credit Suisse’s Top Real Estate Exec Continues to Innovate and Evolve. By Michelle Santos

Daniel Tochtermann began his career as a British Columbia (which is designed to meet “We can expand either organically or inor- researcher at Wüest & Partner AG. Today one Canada’s highest sustainability standards), an ganically,” Tochtermann explains. “We can of the best-known real estate consulting firms office project in Santiago, Chile and a forward- grow organically by taking on new clients, in Switzerland, at the time of his hiring, it was funding deal in Brisbane, Australia. or inorganically by acquiring and integrating a modest company. But his new employer gave He and his team also have a knack for timing new companies—which I think is the best way him plenty of leeway and opportunity to excel, markets correctly, as demonstrated by recent to grow in North America and Asia.” and in just three-years’ time, he was a partner in investments in such projects as 1099 New York As Credit Suisse plans for the future, Toch- the business. Avenue in Washington, D.C., Boston’s Indepen- termann sees several trends for the industry in “The field was open,” he recalls. “Real estate dence Wharf and London’s Earl Place Building. the coming year. consulting wasn’t there. And seeing a need for All these deals were done in the trough of the “We will see more consolidation,” he predicts. certain resources, my partners and I published markets in 2009 and early 2010, immediately “Investors are becoming more sophisticated. the first countrywide real estate market report. following the financial crisis. They are looking for more transparency, and, We also saw that valuation was outdated so we To date, the most successful transaction of in particular, for the best-in-class real estate produced the first cash-flow model, which is still Tochtermann’s career has been the joint acquisi- investment managers with a proven track the market standard today. Innovation was the tion of 78 Shenton Way in Singapore. Purchased record who are able to manage property invest- key to success.” for SG $348 million in 2007, the property sold for ments successfully in boom phases as well as in His career evolved over the years, smoothly SG $650 million only 12 months later, generating downturns. In addition, real estate regulations transitioning from research to valuation to con- an internal rate of return (IRR) of more than 80 are changing. Both these factors will bring sulting, strategy and transaction services—all percent after factoring in costs associated with about consolidation. On the property side, we the while delivering the stellar results both his adding a second office tower to the property. will see more sustainable buildings with older, firm and his clients desired. Risk assessment, timing, and facts and figures non-sustainable buildings unable to compete In 2004, Tochtermann decided it was time for aside, Tochtermann also relies on certain intan- in the leasing market in the long run.” another career move, and sold his stake in Wüest gibles when determining the validity of a venture. Indeed, Tochtermann’s passion for real estate & Partner to join Credit Suisse, jump-starting “The first thing I set out to know is whether (a must-have, he says, for newcomers to the his global career. His first orders of business were I can trust the counterparty. It’s a matter of real estate industry) and forward-thinking . to establish a worldwide platform and begin to looking into each other’s eyes and doing a hand- approach to transactions have garnered him m o c invest globally. Today, Credit Suisse Real Estate shake deal. Deal security is not only about the great success in the business. Contemplating o. t o

Asset Management manages US $45 billion in money—it’s about finding people you can trust. his professional journey, he recognizes the h P r direct real estate investments in 17 countries Once you do that, it will be a great transaction, role his superiors and teams have played in his o ayl from Sweden to Spain, Canada to Chile and with both sides wanting to come to a successful achievements. “I always had excellent bosses T Japan to Australia. Tochtermann, Global Head closing. More importantly, you don’t waste time. who gave me the freedom to create, try new ric of Real Estate Acquisition and Sales, was the Time and timing are always of the essence.” things and be entrepreneurial,” he acknowl- g: ©E main person responsible for all investments out- Credit Suisse Real Estate Asset Management edges. “Trust from superiors, combined with uildin side of Europe. plans to expand further in real estate—first in one’s entrepreneurial spirit, is very impor-

Tochtermann’s approach to his career and Europe, where they already have a prominent tant. I experienced both at Wüest & Partner, enue B projects includes a willingness to take certain presence, then subsequently in the Americas and continue to do so at Credit Suisse. And I rk Av well-calculated risks. Recent transactions include and Asia, where they are looking to strengthen always have had a great team. I’m only success- a development project in downtown Vancouver, their reach. ful with my team.” KL new Yo

28 | knowledge leader fall 2011 knowledge-leader.com Swiss Notes

Investment/Leasing Opportunities A SELECTION OF COLLIERS INTERNATIONAL AVAILABLE PROPERTIES

FOR SUBLEASE FOR lease Brian Canfield Now Pre-leasing Centre Eighth Avenue 3777 Kingsway Place West Tower Burnaby, British Columbia 585–8th Avenue SW Calgary, Alberta

• Floors 15–21 • Canada’s first LEED® Platinum • Fully improved floors Rob Chasmar high-rise office project • Average floor size: 16,311 SF +1 604 661 0822 • +/- 786,000 SF total rentable Jim Rea • Total available area: 114,179 SF [email protected] • 38 floors; average floor plate: +1 403 215 7250 [email protected] • Expansive views Marco DiPaolo 24,000 SF • Abundant on-site amenities +1 604 661 0838 • Possession date for fixturing: Randy Fennessey • Close proximity to Skytrain [email protected] Q2-Q3 2014 +1 403 571 8762 • Parking ratio: 1 per 2,100 SF randy.fennessey@ Jason Mah • Estimated completion: 2014- 2015 collierscalgary.com +1 604 692 1460 [email protected] www.eighthavenueplace.com

FOR lease FOR SALE OR LEASE Marine Gateway Class A Office on Canada Line Building For 8440 Cambie Street Sale or Lease Vancouver, British Columbia 75 Tiverton Court Markham, Ontario

• High-profile leasing opportunity on • 78,776 rentable SF (vacant Cambie and SW Marine Drive possession) • Large mixed-use with 800,000+ SF of • Impressive atrium lobby building area Sheldon Scott • Full fitness area, lockers, showers • 220,000 SF retail component, +1 604 662 2660 and squash court anchored by a major theatre and [email protected] • Combination of open areas and private offices grocery store Matt Saunders • Estimated occupancy: end of 2014 • Full-service cafeteria with walkout +1 604 661 0802 veranda Patrick Cowie [email protected] • Ravine setting with Highway 404 +1 416 791 7223 www.collierscanada.com exposure [email protected]

FOR Lease FOR sale or Lease Build-to-Suit Prestigious Opportunity Industrial Property 8645 Regional for Sale or Lease Highway 25 2130 Dagenais Milton, Ontario Boulevard West Laval, Québec

• 483,482 SF of new construction at • Detached industrial property with 32' clear height multi-tenant capability • Configurations starting at • 57,335 SF of building area 200,000 SF • 17,335 SF of office area • Ready-to-go site allows fast-tracked • 40,000 SF of industrial area development • 22 to 26 feet in clear height • Existing rail to the site • Close proximity to Highways 15 Colin Alves Michel Boileau • Trailer parking and outside storage and 440 • Close proximity to Highways 401 +1 416 620 2848 +1 514 764-2821 and 407 [email protected] [email protected] www.collierscanada.com/3340 www.collierscanada.com/831

Investment/Leasing Opportunities A SELECTION OF COLLIERS INTERNATIONAL AVAILABLE PROPERTIES

FOR lease for lease 100,000 SF Broadway of New Office and Oak Space 984 West Broadway 225 Commissioners Vancouver, British Columbia Street Toronto, Ontario

• office space strictly for film, media, • New LEED® Gold building entertainment, communications or • Main-floor retail, 9 floors office related uses • Building naming rights available • 12-to-18 month delivery time from Tim Bristow • Built by BlueSky Properties, a Robert lease signing +1 416 643 3408 Bosa Family Company • Direct bus from Union Station [email protected] • Decks on most floors • Abundant parking Steve Keyzer • Windows that open Marco DiPaolo • Part of a 2.4-million-SF, mixed-use, +1 416 643 3770 • Efficient floor plates +1 604 661 0838 future development [email protected] [email protected] • Largest sound stage in North America on-site www.collierscanada.com/764 www.broadwayandoak.com

FOR lease FOR sale Northport Sleep Inn Hotels Business Park (2 locations) 129 Avenue & 170 Street 101 VFW Avenue Edmonton, Alberta Grasonville, Maryland 406 Punkin Court Salisbury, Maryland

• New, high-cube modern distribution / • (2) Sleep Inn hotels for sale light manufacturing facilities Rod Connop • 137 total rooms • Ideal location in Northwest Edmonton +1 780 969 2994 • Historically consistent, positive offering 25,200 – 176,400 SF [email protected] operating history • Multi-building, master-planned • Asking price: $8,250,000 Evelyn Stolk David A. Dannenfelser industrial development with ($60,219 per key) +1 443 297 9034 developer guidelines +1 780 969 3002 [email protected] • Dock and grade loading [email protected] • Yard storage trailer parking available David Kraus Stephen C. Weiss +1 780 969 3026 +1 443 297 9004 [email protected] [email protected]

FOR sale FOR lease Park River North Rhett Apartments Commerce Park 737 N STILSON 5801 North Rhett Avenue Boise, Idaho North Charleston, South Carolina

• Price: $5,150,000 • Best logistics location in Charleston • Price unit: $56,600 • over 10 acres of laydown yard • Rentable SF: 63,476 • Served by CSX rail • Cap rate: 6.7% • 300.000 SF available • Year Built: 1990 • on-site dual-axle truck scale • Lot size: 3.6 acres • Site includes 24/7 security with a • Units: 91 fully fenced perimeter Clay Anderson +1 208 489 6177 Hagood Morrison, SIOR [email protected] +1 843 270 5219 http://bit.ly/nXpW6V [email protected] Investment/Leasing Opportunities A SELECTION OF COLLIERS INTERNATIONAL AVAILABLE PROPERTIES

FOR sale FOR lease Rite Aid Drug Pinole Point Store Portfolio Business Park Shafter, California; Selma, 2900 Atlas Road California; Fresno, California; Delano, California Richmond, California

• Priced at $24,498,000 • 200,000 SF Class A warehouse/ • In place assumable financing manufacturing space • Double digit cash on cash return • 7,800 SF office • Requires only $6,125,312 down • ESFR sprinklers payment • 26' minimum interior ceiling clearance Greig Lagomarsino • NNN lease with exception to roof, wall Christopher E. Maling, • 24 dock-high doors (rear loading) & 1 +1 510 986 6770 and structure Senior Vice President grade-level door [email protected] • Excellent locations +1 213.532.3292 • 205 truck trailer spaces with large • Perfect for 1031 exchange buyers yard area Todd Severson, SIOR [email protected] • Family trusts looking for preservation • Close proximity to Port of Oakland +1 510 986 6770 of capital and safe, secure income www.malingteam.com [email protected]

FOR Sale FOR Sale Osceola San Melia Gateway Apartment US Hwy 192, just east Community of Seralago Blvd. 14435 S. 48th St. Kissimmee, Osceola County, Phoenix, Arizona Florida

• 450 acres of commercial land in • A+ Property constructed in 1998, Central Florida; 210 usable acres of renovated in 2011 uplands • Located in exclusive submarket Cindy Cooke • Highest & best use – mixed-use Susan Morris which boasts some of the highest multifamily occupancy rates & market +1 602 222 5039 development +1 407 843 1723 rents in Metro Phoenix [email protected] • Last large site near Walt Disney [email protected] World and Major Highways • Extensive resort-style amenity Brad Cooke • Close proximity to Disney World, Kane Morris-Webster, package +1 602 222 5088 • Excellent infill location with limited SeaWorld, Universal Studios, Orange CCIM [email protected] County Convention Center +1 407 843 1723 new development in area due to lack • Excellent traffic volume: 44,500 AADT [email protected] of available land www.collierscooketeam.com

FOR sale FOR sale & Lease Sherwood Class “A” Ice Arena Warehouse / 20407 SW Borchers Distribution Drive Facility Sherwood, Oregon 1780 Industrial Drive Stockton, California

• 51,644 SF building on 4.71 acres • Building size: 111,160± SF • 16,284 SF of mostly leased • Divisible: 41,685± SF Mike Goldstein, SIOR commercial/retail spaces • Lot size: 6.43± Acres / FAR 39.7% +1 209 475 5106 • Family Circle’s 2009 Ten Best • office area: 1,345± SF [email protected] Communities for Families • Clear height: 30'± - 32'± Gregory O’Leary, SIOR • Includes sale of real estate and ice • Power: 2,000 Amps, 277/480 Volts, +1 209 475 5108 arena business 3 Phase [email protected] • NHL regulation-size rink • grade doors: Two (2) (12' x 14') • Expansion opportunities Jon M. Rubey • Dock doors: Twenty (20) (9’ x 10’) Greig Lagomarsino, SIOR • $5,500,000 +1 503 499 0051 +1 510 433 5809 [email protected] [email protected] Investment/Leasing Opportunities A SELECTION OF COLLIERS INTERNATIONAL AVAILABLE PROPERTIES

FOR lease for sublease Located in The Zangmeister Northern Center Kentucky 3100 Plaza Properties 2100 Litton Lane Columbus, OH Hebron, Kentucky

• 195,000 SF +/- total space available • Available spaces include: ambulatory • over 60,000 SF +/- contiguous office surgical center; clinical, office and shell space spaces • Immediately adjacent to Cincinnati/ John Gartner, III, SIOR • One of the most recognized medical Northern Kentucky International Airport +1 513 562 2207 buildings in central Ohio • Easy access to I-71/I-75 via I-275 [email protected] • 1,046,721 residents within a 20-minute • Numerous neighboring amenities Erin Casey, GA-C, MCRE drive Paul Heiserman • Renovation completed in 2003 +1 513 562 2225 • Retail pharmacy, physical therapy and +1 614 437 4497 • Crane Served: 7-7.5 Ton state-of-the-art radiology on site [email protected] [email protected] CincinnatiIndustrialTeam.com medicaloffices.blogspot.com/

FOR lease FOR sale Dallas Logistics Amway / Hub I & II Distribution 4800 & 4900 Langdon Facility Road 5101 Spaulding Plaza Dallas, TX Ada, Michigan

• Largest new logistics park in North • 791,148 SF America (617,814 whse/172,334 office) • Located near Union Pacific Intermodal • 101 acres Terminal & Planned BNSF Intermodal • 7" very flat floor facility • 40 docks Tom Pearson, SIOR Duke Suwyn SIOR, CCIM • 4800 Langdon: 150,000 – 321,123 SF; • 36' clear height +1 616 581 7777 32' clear height +1 214 217 1277 • ESFR system [email protected] • 4900 Langdon: 25,000 – 151,900 SF; [email protected] • Expandable by 200,000 SF 28' clear height Chris Teesdale, SIOR • Potential rail John Kuiper SIOR, CCIM • FTZ, Triple Freeport +1 214 217 1233 +1 616 901 3500 ® • LEED Gold Certified buildings [email protected] [email protected]

FOR sale for sale For Sale The Brockman Lofts Las Vegas 530 W. 7th Street Boulevard Land Los Angeles, California Las Vegas Boulevard Las Vegas, Nevada

• 100-acre parcel located on the • Beautifully renovated 12-story building Northwest corner of Las Vegas in Downtown L.A. Boulevard and St. Rose Parkway • 80 elegant lofts with desirable • 260-acre parcel located on Las Vegas common area amenities Blvd. between Starr and Cactus • Flexibility to sell the units as Roads condominiums or lease them as luxury • I-15 frontage apartments Kitty Wallace Michael Stuart • Parcels are adjacent to the M Resort • World-class dining, entertainment, +1 310 622 1900 Senior Vice President and employment opportunities within [email protected] +1 702 836 3739 walking distance [email protected] • $29 billion in new area developments www.kittywallaceteam.com follow the leader Profile in leadership

Internet tweeting ceos 1. Tony Hsieh, CEO of Zappos. com. Twitter account is @Zap- Connections pos with 1.8 million followers. One recent tweet: “Scientific Large corporations and small businesses are embracing study on how to get kids to eat more vegetables (perceived online sites like Facebook, Twitter and YouTube. Social media control): http://t.co/yyhHT7Y” expert Aaron Blank shares his tips on using these popular sites as highly effective marketing tools. 2. Richard Branson, founder of Virgin Group, which includes To tweet or not to tweet, that is the question I am only an intern. My last day is tomorrow. Virgin Atlantic Airways. Twitter for today’s business owners and top executives. I wouldn’t be tweeting this if not!” Another account is @RichardBranson The answer, however, is not a simple yes or no. warned: “Good luck! I pray for you all. If you get with 1.1 million followers. One Consider the example of Tony Hsieh, chief the job! I’m out of here. See ya! Don’t want to be recent tweet: “Any more inno- executive officer of Zappos.com, an online shoe ya! Roberts a tyrant! Seriously! He is tough!” vative green business plans out store selling boots, sneakers, dress shoes and Would you ask an intern to serve as a company there? Two weeks left to submit sandals. Since he started using social media and spokesperson in a media interview? Most top yours & win €500,000! http://t. granting access to his employees, his company executives would say no, and yet, that’s essen- co/dOHGIMO #GreenChallenge” has seen a dramatic increase in profits each year. tially what Duffy did. In fact, his company is so profitable that Ama- Starbucks Coffee Company also has a huge 3. Peter Aceto, President and zon.com bought it for $920 million in 2009. social media presence, but its social media CEO of ING Direct (Canada). Hseih is one of five hundred Zappos employees accounts are managed by internal marketing Twitter account is @CEO_ING- who tweet. teams. It’s doing so well that Starbucks CEO DIRECT with 5,800 followers. On the flip side, a hospital CEO—we’ll call Howard Schultz recently said that social media One recent tweet: “Thanx. RT @ her Michelle Doe—is busy dealing with 1,000 has “perked up the Starbucks brand.” davidleger: Thx to Peter Aceto doctors and has no time on her schedule to send The company even turned to the public to help (@CEO_INGDIRECT) & team 4 tweets; instead her marketing and communica- reshape its brand and image by launching the a great time at family day. Put tions department manages the hospital’s social website www.MyStarbucksIdea.com, where cus- on a GR8 event & take care of media presence. As a result of her guidance and tomers can submit and discuss ideas on what they their ppl!” support—and awareness of her own time limita- want to see in their local Starbucks. The results tions—the hospital and its healthcare system are include the creation of a free “Gold” loyalty club 4. Brian J Dunn, CEO of Best recognized nationally for its social media cam- card for its frequent coffee drinkers, healthier Buy. Twitter account is @BBY- paigns and online presence. pastry options, and free music and WiFi. Social CEO with 10,284 followers. One Who’s tweeting? media served as instant feedback for Starbucks, recent tweet: “@Brylski Thanks Every executive must decide whether they want helping to make the company profitable again. for letting me know and thank to personally engage with the public or assign you for shopping with us!” that responsibility to a trusted social media team. Connect with your friends There is no right answer. Both directions are fine; and followers 5. Martha Stewart, media just be careful about which one you choose. One common social media pitfall that compa- mogul. Twitter account is @ Marc Jacobs CEO Robert Duffy learned this nies encounter is trying to promote themselves marthastewart with 2.3 million the hard way. After opening a Twitter account or their products without engaging in a con- followers. One recent tweet: for the fashion label, he realized that he didn’t versation. Imagine if you walked into a coffee “The surprising backstory to have the time to personally send Twitter mes- shop and met someone in line, who ten seconds @google's name & iconic look sages, so he hired an unnamed intern to update into the conversation tried to sell you a product. in this sneak peek of my July @marcjacobsintl, the company’s Twitter account Would you buy it? Not likely 18 Hallmark Channel special: with more than 114,000 followers. But what if, after chatting for about 20 http://ow.ly/5EXV6.” According to Britain’s Daily Mail, one mid- minutes, you learn that she grew up on the same night posting from the account read, “You guys street you did as a child? Later, she mentions a and gals have no idea how difficult Robert is. signed framed photo of New York Yankees third

34 | knowledge leader fall 2011 knowledge-leader.com Top Social Media Tools

Twitter is a micro-blogging service LinkedIn is a business connection social through which you send 140-character text media tool. Originally used primarily by job messages to people in your network. The tool seekers and recruiters, today it is becoming allows you to find real-time conversations on more of a business networking site, similar to subjects that interest you and communicate Facebook. with people around the world—asking questions and receiving feedback. Some tools to Google+ is a newly launched social enhance your Twitter experience include: media platform by Google. Its goal is to place www.TweetDeck.com www.Seesmic.com Picasa (photo sharing), Gmail (mail) and Google www.Twidroyd.com www.Bitly.com Maps—as well as Google’s other products and www.Twitpic.com www.Search.Twitter.com offerings—onto one platform.

Facebook is one of the most popular social YouTube is a video sharing site that is media networks in the world. Personal pages the second most popular search engine in the allow you to connect with friends and family. world. Businesses and individuals looking to Business and group pages serve as a blogging expand their online brands can develop com- tool that connects you with people who want to pelling videos which will drive traffic to their know about your products or services. If your websites or social media sites. business has a Facebook page, you can click on “View Insights” on the info page, which will help you to measure your return on investment.

baseman Alex Rodriguez, which she is selling as 2. Listen. Hear what people are saying connect a fundraiser for her church. You’re more likely online. to support her and her cause because of your 3. Learn from the professionals. Follow with connection and relationship. people who you find interesting and who colliers Like your coffee-shop friend, your online persona use social media well. See how they use it should share and engage people in a conversation, has a marketing tool. @ColliersIntl Twitter: first and foremost by building a community. Pro- 4. Engage with people. Build and foster Facebook: www.facebook. mote on occasion, but be indirect about it. Get to an online community. Start a dialogue com/pages/Colliers- know your friends or followers first. with someone on a topic you find interest- International/145688428821725 Social media is meant to be just that: social. ing and relevant. Grow your network of LinkedIn: www.linkedin.com/ When engaging online, listen, learn, engage— online friends. company/colliers-international and then talk. Create a brand online. Develop a 5. Talk. You will gain authority to speak presence and network. Be interested in what oth- once you follow the steps above. By the ers have to say and you will be successful. time you get to this step, you should have Dylan Taylor, CEO, USA Before you engage with anyone online, follow a burgeoning network of people and are Twitter: @ColliersUSCEO these five steps: meeting your goal. If you want to promote Blog: www.colliersusceo. something, do so, but subtly. KL blogspot.com 1. Identify your goal. Why do you want to go online and engage with anyone at anytime? Aaron Blank is senior vice president at The Fearey Knowledge Leader Having a goal will help guide you. There Group (www.feareygroup.com) in Seattle, a public are thousands of different social media relations, public affairs and social media agency. A Magazine tools to use. The question you should ask sought-after social media coach for top executives, Twitter: @KnowledgeLeader yourself before diving in is, Will this help he can be found on Twitter at @SeattleBlank and me reach my goal? online at www.aaronblank.com.

knowledge-leader.com Colliers international fall 2011 | 35 personal biz Enhancing the executive lifestyle

plane. If possible, begin resetting your body clock a few days before departure by shifting your bed- time to your destination’s time zone. If your trip is short, try to schedule your meetings for times close to when you’d be awake anyway. It may not be worth resetting your internal clock if you’re flying home again in a day or two. Upon arrival, go for a walk. Exposing yourself to daylight and external stimuli will help your body chemistry adapt. If you must take a nap, keep it short. Get on a normal schedule for your destination as quickly as possible.

Staying Healthy Before leaving home, check your health insurance to determine whether or not you’re covered overseas. If not, consider purchasing travel insurance, particularly if you will be vis- iting remote locations or making numerous or extended trips. In the U.S., consult the Centers for Disease Control (CDC) website (www.cdc.gov/travel) for information about recommended vaccinations and other health issues for your destination. In Canada, visit the Public Health Agency of Canada (PHAC) website (www.publichealth. gc.ca). If immunizations or special prescriptions are needed, visit a travel medicine clinic. Some vaccinations require repeated administrations over time to be fully effective, so plan ahead. Both the CDC and the PHAC websites have general and country-specific information on staying healthy while traveling, including information on food and water safety. Pepto-Bismol (bismuth subsalicylate) in liquid or chewable Business Class form can help deflect stomach problems. If you do become ill, drink plenty of liquids to avoid traveling abroad for business? Read this first. dehydration. Drugs such as IMODIUM (loper- by Annika Hipple amide hydrochloride) can suppress symptoms and help you get through meetings, but if your In today’s increasingly globalized world, traveling internationally for business is becoming a illness is bacteria-related you may also need necessity for many professionals. Here are some tips for making your next business trip overseas a antibiotics. Your hotel should be able to arrange huge success—even before you walk into your first meeting. doctor’s visits if necessary.

Reducing Jet Lag Passport and Security Issues Staying healthy and getting as much rest as possible en route are keys to minimizing jet lag. Bring a Before departing, ensure your passport is travel pillow for comfort, as well as earplugs and a sleeping mask to block out distractions. Even if valid for at least six months from your travel you can’t sleep, just closing your eyes and listening to relaxing music can help. dates—which is required by many countries for Get up and move about regularly during the flight. It can be tempting to knock yourself out with entry—and that you have all necessary visas. sleeping pills, but staying inert for extended periods can increase the risk of blood clots. If you do Consult your destination’s embassy or consul- take a sleeping aid, stick to short-duration pills or halve the recommended dosage if your flight is ate for current requirements. Make photocopies shorter that a full night’s rest. of your passport and relevant visa pages. Leave Eat lightly before, during and after your flight. Dehydration exacerbates jet lag, so drink plenty of one at home and keep the rest separate from water, and avoid alcoholic beverages. your passport. Change your watch and start mentally transitioning to the new time zone as soon as you board the If your passport is lost or stolen, contact your

36 | knowledge leader Fall 2011 knowledge-leader.com personal biz Enhancing the executive lifestyle

country’s nearest embassy or consulate as soon destinations where their use is common, there as possible. Information on consular services is may be a minimum purchase price for using a available on the U.S. State Department’s travel card. In many countries you can use dollars as Business website (www.travel.state.gov), which also well as the local currency for travel services and maintains up-to-date information about condi- tips, so it’s worth bringing some smaller bills. Travel tions in most countries. Canadian citizens Avoid bringing bills that are heavily worn, torn, Resources should visit the Foreign Affairs and Interna- or otherwise damaged, as these will be rejected tional Trade website (www.voyage.gc.ca). Both in many countries, particularly in Asia, Africa, These handy, online resources will help websites are good sources of information if and Latin America. prepare you for your business trip over- you’re traveling to an area that is politically seas: volatile or has recently experienced a natural Driving Overseas disaster. If you plan to drive overseas, consult your desti- Seatguru.com: Detailed information The State Department encourages U.S. citizens nation’s embassy, consulate, or national tourist about seat configuration and services to register for the Smart Traveler Enrollment office for current rules. Many countries require on most major airline flights. Program (www.travelregistration.state.gov), or recommend that foreign drivers carry an which helps the government provide information International Driving Permit (IDP), an offi- XE.com: Currency website with user- and assistance in emergency situations. cially recognized multilingual translation of friendly currency conversion tool. your driver’s license information. The IDP is Money Matters valid only in conjunction with your regular FlightBoard: Mobile app that Once upon a time, travelers’ checks were the license and must be issued in the same country provides current flight arrival and way to go on any foreign trip, but they’re no lon- as your license is. departure information for airports all ger as easy to exchange in many countries. Cash If you are renting a car, check with the rental over the world. machines such as ATMs are now the most com- agency for any additional rules. Rental agencies mon way of obtaining foreign currency. Call and insurance companies sometimes require the All Subway HD: App providing maps your bank to find out the fees associated with IDP even if it is not mandated on a national level. of 128 subway systems around the withdrawing money overseas; typically you will In the North America IDPs cost $15 (U.S. or world. be charged a small transaction fee by the ATM’s Canadian) and are available through the Amer- bank, your own bank, or both. You may also ican Automobile Association (www.aaa.com), Google Maps: Popular online map- be charged a conversion fee, which is generally the National Automobile Club (www.thenac. ping service, now also a free mobile around three percent. If your ATM card is also com), and the Canadian Automobile Associa- app (m.google.com/maps). a debit card and has a Visa or MasterCard logo, tion (www.caa.ca). Permits are valid for one you can also use it to charge purchases directly. year and may be issued no more than six months Google Translate: Website and In such cases, you’ll pay a conversion fee but before the desired effective date. app providing translations between typically no transaction fee. Before getting behind the wheel, also be sure more than 50 languages. Credit cards are also a good bet in many coun- to familiarize yourself with international road tries. Most major credit cards charge a 3 percent signs, speed limits and other regulations. Free Wi-Fi Finder: Online search foreign exchange fee, but the exchange rate you tool and free mobile app that identifies receive will usually be quite favorable. Cultural Etiquette free and paid wireless Internet hotspots Before leaving home, call your credit card It’s easy to cause accidental offense if you’re around the world (www.jiwire.com). company or bank to let them know when and unfamiliar with your host country’s culture and where you will be traveling. This lessens the etiquette. How should you greet and address for- likelihood that your debit or credit card will be eign colleagues? Should you bring gifts? What Useful online resources also exist, including frozen due to suspicious activity that doesn’t should you do when invited to someone’s home? Executive Planet (www.executiveplanet.com) match your usual spending patterns. What unspoken conversational and behavioral and the British website Travel Etiquette (www. Jot down your card numbers and customer rules should you follow? All of these things and traveletiquette.co.uk). Both have detailed coun- service phone numbers—which are listed on more affect how you are perceived, which may be try-specific information on how to behave in a the back of the cards—and keep them in a safe critical for the success of your business meetings. variety of situations overseas. KL place. If your cards are lost or stolen, notify the Fortunately, resources are available to help issuer as quickly as possible. you navigate the minefields of international eti- Raised bilingual and bicultural, Annika S. It’s always a good idea to carry a decent quette. Check your bookstore travel section for Hipple calls both the U.S. and Sweden home. amount of U.S. cash in case you encounter relevant books for your destination. General She took her first international trip at the age of problems using your cards overseas. In less- books on international etiquette include Essen- five months and has been a frequent traveler ever developed countries credit and debit cards are tial Do’s and Taboos: The Complete Guide to since. From Egypt to New Zealand, Mongolia to not widely accepted outside of major hotels and International Business and Leisure Travel by Chile, she logs tens of thousands of miles annually high-end shops and restaurants; even in Roger E. Axtell. as a freelance travel writer and tour leader.

38 | knowledge leader Fall 2011 knowledge-leader.com

In Focus From the President & CEO Network Solutions Technology in general and social media in particular enables us to share, collaborate and succeed together. by doug frye

I am always fascinated to learn what our laboration and radically accelerated the field, people are up to away from work—whether it’s transforming alchemy into chemistry. bicycling hundreds of miles for charity, leading Likewise, the Web accelerates the ability of a community center, getting immigrant children people to share, collaborate and advance. ready with back-to-school supplies or facilitating So, bring that idea into an organization. Our an online support group for new parents. Chief Information Officer Veresh Sita, often They do this stuff for free. says, “if only Colliers knew what Colliers knows,” Doug Frye is the global president and chief In an industry where time is money, that is making the point that we must constantly fight executive officer for Colliers International. especially significant. When people choose to silos, to connect more people to more informa- spend their free time contributing high-value tion in a way that encourages collaboration. we address their complete cycle of needs. We talent and expertise to causes they care about, We have launched several new search tools to estimate that owners must work with as many whole industries are shaken up, because the tra- give our people broad access to data about col- as 40 different vendors to service a single invest- ditional rules of economics no longer apply. leagues, clients and properties, all with the aim ment property, so it’s a breath of fresh air to I love it when that happens. of enhancing a culture of collaboration. I like bring these service providers together and know What I’ve noticed among our people is the the “Ask Me About” feature that encourages that they’re also talking to each other behind subject of Clay Shirky’s recent book, Cognitive everyone to be an expert: not only can I can the scenes, ensuring everything is working Surplus. He suggests that people are spending find out about office leasing in Brisbane and together in concert. less time on passive entertainment, such as TV, retail accounting in Bulgaria, I can also find You’d also be surprised how often new busi- and more time online connecting, collaborat- Colliers experts willing to share their knowl- ness opportunities emerge simply because we ing, and devoting their time and talents to the edge of bass guitar, triathlons or how to make tap into Colliers’ own cognitive surplus. In the causes they care about. the perfect pie crust. United States, we noted $5 million in revenue Technology, and particularly social platforms, Another key point of learning from the Invis- that happened because of this collaborative sys- transform what used to be free time spent as ible College is the rather embarrassing similarity tem—business that otherwise never would have couch potatoes into voluntary, productive, between knowledge-hoarders of the seventeenth happened at all. creative time—what Shirky calls cognitive sur- century and contact-hoarders in our industry A final way we can tap into the cognitive plus. He points to Wikipedia, PickupPal and today. Too frequently, professionals jealously guard surplus is through social media—many pro- the Apache project as examples of how people their client lists for fear that someone (maybe from fessionals in professional service fields spend with similar passions are willing to devote their their own office) will “steal” that client. considerable time blogging, tweeting and giv- expertise to a cause, free of charge. At Colliers, we see it differently. Relation- ing their expertise for free. By some estimates, adults average 20 hours of ships can’t be stolen—but they will break down To be sure, this information requires a good TV time per week, globally. Shifting just part without proper care. The Invisible College filter, but I think of social media as a new way of that time could have a major impact. developed a system for sharing and collabo- for us to listen. We can get closer to our cli- I love following Shirky, a New York Uni- ration, and we’ve done the same thing with a ents and the property industry not simply by versity professor, as he looks beyond today’s system called Client Engagement. We bring marketing ourselves on social platforms, but by achievements to highlight how London-based our professionals together in teams (based on using social media as a tool to learn more about scientists and thinkers formed the “Invisible geography, service type or industry) in sessions the marketplace. College” in 1645 based on shared knowledge held worldwide, and help them share their best For all of us, there are only 24 hours in a day. and experimentation. Up to that time, sci- knowledge and relationships. In short, we make I love the way new technologies are enabling osterman ence was typically a closed practice, with each sharing a habit. us to spend more of them connecting and l alchemist hoarding his or her own knowledge. Ultimately, this benefits clients by creating a supporting our clients, our colleagues and our

The Invisible College brought a culture of col- truly collaborative, integrated solution, where communities. KL KennaK

40 | knowledge leader fall 2011 knowledge-leader.com