BACK to the OFFICE-2022!

Coworking And Flex Office Providers Say They're Past The Pandemic And Set To Expand…

“Back to WORK…in the office…well, partially.”

Wenston DeSue

Government officials across the U.S. are lifting mask mandates, a long-awaited sign that companies can start to think seriously about returning workers to their offices. But it isn't as if nothing has changed, and many expect new ways of working will replace the old.

That may mean good times ahead for flex office providers.

“The dark cloud of the pandemic is starting to blow over a little,” said Joe Brady, CEO of the Americas at flexible workspace company The Instant Group. “But no one believes there’s going to be a return to pre-pandemic behavior.”

Brady said he expects many employees will increasingly make clear they want to keep working from home, at least for portions of the week. When they do return to their offices, they will want more amenities and a wide range of spaces that can offer privacy if needed. And if landlords and employers want to entice their workers back, they will have to follow through and provide what they want.

“The pandemic made a tectonic shift,” Brady said, adding more power now resides with workers. “[Employees] can demand that one day they are going to go to an office, one day they will go to a WeWork and one day they can work from home. Employees are going to vote with their feet about where they choose to work.”

That isn't a recipe for business as usual, he added. Companies will experiment with various hybrid strategies and work schedules, and it may take time to hit the right mix of spaces, from private cubbyholes to high-tech conference centers that can host whole workforces. That could mean a burst of demand throughout 2022 for coworking and flex office spaces, especially for small firms just returning to the office and large firms looking to establish offices in new markets.

“No one is going to sign a 10-year lease right now,” Brady said. “But there are going to be a lot of cases where companies test out a flex office space for six months.”

Flex office and coworking providers typically rent out large spaces and then divide it into small portions for companies and individuals who buy memberships, sharing the amenities with other users.

The industry turnaround started in 2021 after a rapid dip that saw nearly 25% of such locations in North America shuttered between the start of the pandemic and Q2 2021, according to Upsuite, a Denver-based flex office data and analysis platform. But the pain wasn't felt equally.

“Providers who had been bullish on rapid expansion pre-pandemic faced challenges that were well-reported; however, we’ve found that the smaller operators suffered the most,” Brady said. “In Chicago, which mirrors much of the U.S., small operators saw locations decline by 19% while the top 20 operators actually expanded their market share.”

The bleeding stopped in Q3. In the last few months of the year, demand began soaring, even during the rise of the omicron variant, according to Upsuite.

North American flex and coworking spaces saw demand increase 40% from Q3 2021 to Q4 2021, Upsuite found, a 50% increase from Q1 2021 and up 26% from pre-coronavirus levels recorded for Q1 2020. Metro areas such as Atlanta, Houston and Los Angeles are leading the demand surges, with increases of at least 91% in Q4 2021.  

Rents and inventory also started growing again, Upsuite added. The average asking price for each flex seat grew 2.5% between Q3 2021 and Q4 2021, the biggest jump since the pandemic began and 5.8% higher in Q4 2021 compared to Q1 2020. 

“The pandemic was a major crisis for the industry,” Upsuite noted in the Q4 2021 report. “But with recovery well under way, operators should be scouting new locations and planning for growth. In short, the operators who survived should not waste a crisis – they should accelerate out of it.”

Some industry leaders say they are ready to do just that.

Check out the rest of the facts and figures on:

Bisnow Chicago

Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access, purpose and often times, power.  These articles represent aspects that affect the business of real estate.

Crypto Regulations on the Way…

 Crypto Beware

Dems-Get rich by regulation…

Reps-Get rich by deregulation…

The rest of us just get regulated…honestly, you didn’t think the “crypto craze” would last forever?!?!?

Wenston DeSue

Cryptocurrency home sales barely have a toehold, and a new exec order from Pres. Biden may change the rules. The order suggests regulation and a U.S.-owned version. 

WASHINGTON – President Joe Biden signed an Executive Order that appears to be a first step to regulating the use of cryptocurrency, a form of unregulated virtual money that includes Bitcoin.

The size of the growing cryptocurrency market likely played a role in the timing of the announcement, complicated by concerns that any attempted economic lockdown to punish Russia for invading Ukraine could be weakened by the use of cryptocurrency.

The Executive Order starts by summarizing the quickly growing use of cryptocurrency, saying it’s seen “explosive growth” over the past few years – a $3 trillion market cap in November 2021, up from just $14 billion five years earlier. The White House says about 16% of adult Americans – 40 million people – have invested in, traded or used cryptocurrencies.

Over 100 countries are exploring or piloting Central Bank Digital Currencies (CBDCs) – a digital form of a country’s sovereign currency.

“The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security and climate risk,” according to the Executive Order.

The Order lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.

Executive Order key points

• It directs the Department of the Treasury and other partners to assess and develop policy recommendations that address the digital asset sector and the changes in financial markets for consumers, investors, businesses and equitable economic growth. It encourages regulators to ensure sufficient oversight and safeguard against systemic financial risks.
• It encourages the Financial Stability Oversight Council to identify and mitigate economy-wide financial risks posed by digital assets, and to develop policy recommendations to address regulatory gaps.
• It directs “all relevant U.S. government agencies” to mitigate risks. It also directs agencies to work with U.S. allies and partners to ensure each one is “aligned and responsive to risks.”
• It directs the Department of Commerce to create a framework to drive U.S. competitiveness and leadership in digital asset technology – a framework that should act as an operational approach agencies can use going forward.
• It calls for oversight to make sure the use of digital currencies is safe, affordable and accessible to everyone, with a consideration of any disparate impact risk. The Secretary of the Treasury is tasked with creating a report on the future of money and payment systems.
• It says the government should take concrete steps to study and support the responsible development, design and implementation of digital asset systems – and prioritize privacy, security, the prevention of illicit exploitation or any negative climate impact.
• It wants the U.S. to “explore” the creation of a U.S. Central Bank Digital Currency (CBDC). It encourages fast research and development for a potential United States CBDC, should “issuance be deemed in the national interest.” It also encourages the Federal Reserve to continue its research, development and assessment efforts for a U.S. CBDC, including development of a plan for broader U.S. Government action in support of their work.

Cited: 2022 Florida Realtors

Real Estate

Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access, purpose and often times, power.  These articles represent aspects that affect the business of real estate. 

GO GILBANE!

 

Gilbane commits $4B to diversity, will strive again to hit 20% goal!

GO GILBANE…now let’s see if the article matches the outcomes of Diversity…Wenston DeSue

Dive Brief:

• Gilbane doubled down on its industry-wide push for more diversity in construction, committing $4 billion in contract awards to underrepresented firms over the next five years, including veteran, minority and women-owned businesses.  
• Annualized, the amount would represent about 13% of Gilbane's revenues, which were $6.2 billion in 2021. The firm awarded $812 million in projects to minority- and women-owned companies, as well as small businesses, last year. That was 18% of the awards it put out, short of its 20% goal. 
• In an exclusive interview, recently appointed President and CEO Thomas Laird said Gilbane's executive bonuses could potentially be tied to hitting diversity goals in the future. "It needs that level of intensity," Laird said. "We're shining a bright light on it, and our leaders know that.”

Dive Insight:

Gilbane has been a vocal advocate of advancing diversity and inclusion in construction in the wake of George Floyd's murder. A conversationbetween Gilbane Chairman Thomas Gilbane, Jr. and Turner Construction CEO Peter Davoren during the subsequent social upheaval led to the industry's inaugural Construction Inclusion Week last year. 

And for good reason. Examples abound of hiring practices that shut out underrepresented contractors, and the field's macho and racist image. The result has been young, diverse workers staying away during a historic labor shortage. 

Laird said Gilbane needed to do more to change that. 

"And that means 18% on a goal of 20% is not good enough," said Laird. "So we are going to strive harder yet."

Part of the challenge of hitting those goals, Laird emphasized, is the smaller number of diverse contractors who are big enough to take on multi-million dollar projects. That was an issue discussed in a recent Congressional hearing on diverse contracting practices. 

Laird pointed to the Cleveland, Ohio, market as an example. 

"It's an area where it's very diverse, yet the diverse contracting capacity is very thin," Laird said. "So we are very focused on trying to create that capacity in Northeastern Ohio."

Since November 2020, for example, Gilbane has targeted the issue with its Rising Contractor Program, which pairs diverse contractors with mentors in its business units. Participants engage in classroom curriculum focused on real-world opportunities to win work. If a bid is unsuccessful, they get feedback on why. 

"Until we provide that support, that help, that nurturing, it will continue to be a struggle, and it's just not acceptable," Laird said. The program has produced 138 graduates since inception. 

A focus on ESG

The pledge to commit $4 billion in contracts to diverse contractors and veteran-owned businesses — and report on those efforts publicly — is also part of Gilbane's forthcoming environmental, social and governance (ESG) report.

Investors are increasingly focused on how public companies conduct themselves in those three areas, and Laird said customers are now pressing the privately-held firm about it, as well.  

"It's becoming more of an expectation," Laird said. "We have clients asking for our ESG platform. A year ago, those questions weren't being asked, and now they are." 

Laird was initially appointed interim CEO of the 153-year-old, family-owned company in January, before being named president and CEO shortly after. He started with the firm straight out of college in 1986, and has held positions throughout the firm's Mid-Atlantic and Central Regions. 

Laird's promotion followed the hasty retirement of CEO Mike McKelvy, who resurfaced three weeks later as CEO of energy contractor McDermott. While McKelvy's eventual retirement had been planned for, the acceleration of the timeline took the firm by surprise, Laird said.  

Asked if he could change one thing, Laird said it would be to bring down the company's attrition rate in today's highly competitive jobs market. 

"There's a lot of opportunity, and people have been recruited away for financial reasons," Laird said. "I'm a good example of somebody that stuck to it with a great company, and has benefited from that. Seeing others that feel differently make different decisions, I wish I could stop that."

Cited:  Construction Dive

Real Estate

Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access, purpose and often times, power.  These articles represent aspects that affect the business of real estate. 

Monopoly Money…2008-2022

 “Shoulda bought (10) houses in 2008….oh well!

Wenston DeSue

Buyers who took a chance on a foreclosure or short sale around 2012 have seen values double or quadruple. But if they want to sell, where do they move?

FORT LAUDERDALE, Fla. – The real estate market in South Florida has ebbed and flowed over the past few decades, bringing with it soaring home values in some periods, followed by devastating downturns.

When the housing bubble of 2006 and 2007 burst, the market dropped precipitously, with values reaching their lowest levels around 2012. The typical home value in South Florida in 2007 for example, peaked at $339,171 before falling to $162,918 in the beginning of 2012, according to numbers from Zillow.

During the low period, people grabbed up homes at very low prices, hoping, of course, that the market would rebound, but not knowing how just much it would skyrocket years later.

Those who were able to take advantage of the market have seen their home values double or even quadruple in the last decade.

Lantana homeowner Blair Alshut is one such homeowner. She purchased her three-bedroom, two-bathroom home with a pool in east Lantana in a short sale for $95,000 in January of 2011. Working as a waitress at the time, she was searching for a property that would fit her budget of $100,000. Eleven years later, she’s a Realtor in Palm Beach County, and estimates her property could now go for $425,000.

It was a home she saw potential in, as she and her husband put about $12,000 in renovations, redoing the kitchen themselves, and updating the floors in her home. Buying during the downturn gave her the chance to afford something that was closer to the water, a location she’s always wanted to be in.

“It’s honestly crazy how much it has risen,” said Alshut. “I would expect it to be a multiple offer situation,” she says of what would happen if she listed it.

Though it would be nice to sell now and make a profit, she doesn’t know where she would be able to go in today’s market.

Many homeowners are realizing how much equity they have gained after buying low decades ago. Home values rose steadily from 2013 to 2020 in South Florida, but have skyrocketed throughout the pandemic, fueled by dwindling inventory in the region, intense demand from out-of-state buyers and low mortgage rates. These factors have combined to create a market where bidding wars are the norm and homes are flying off the market in a matter of days.

Take Lantana, where the average home value dropped in the beginning of 2012 to $124,867, according to numbers from Zillow. The current average home value is $350,339.

After the downturn, it wasn’t unusual for homeowners to wait out the market to see if values would return.

“It was very common for people to stay in their property for a long period of time,” said Ken H. Johnson, real estate economist with Florida Atlantic University. “They were waiting for value to go where it was or slightly above where it was.”

And property taxes for some of these homeowners who bought decades ago haven’t skyrocketed too much, despite home values soaring. Many of them have homestead protections under the Florida “Save our Homes” law, which caps how much homesteaded properties can raise in value, either by 3% annually or the change in the National Consumer Price Index, which ever one is less.

A homestead property is defined as the primary residence inside a municipality up to one-half acre, and those outside of a municipality up to 160 acres.

Is cashing out possible?

If homeowners were expecting to cash out in the current market, they may be in for a shock.

“What really factors into that decision is where can I go? What can I buy?” said Eliot Koolik with the Koolik Group at Compass Boca. “Some people have ended up refinancing to keep their overhead low. They are looking at this market that they might as well stay in the house with a lot of space and still have a decent sized mortgage,” Koolik added.

It’s a decision Shauna, who preferred not to use her last name, and her family were weighing. They were looking to sell their Boynton Beach home they bought in foreclosure in 2011 for about $240,000. Similar homes in their neighborhood are now selling for about $700,000 and up, bringing them the possibility of a handsome $500,000 return.

“It’s nuts; I’d be able to afford my kid’s colleges,” she said.

However, they realized their decision has been limited by how little inventory there is left in South Florida and how high prices have risen. Not only would it be almost impossible to find a home in the right school district for her kids, but the market has also become so pricey and competitive, that they would probably end up in a far more expensive home. They decided against selling.

“It’s frustrating because where do you go?” Shauna said. “You can make a lot of money, but then you end up buying a home that is between $800-900,000. What does that house look like that I don’t already have?”

Inventory levels in South Florida have dropped, leaving buyers with few options.

“One of the trends I am seeing is individuals selling their second homes, or investment properties. These sellers do not have the concern of low inventory and the fear of not being able to find home,” said Karen Pica, real estate agent with Lang Realty in Delray Beach.

Brenda and Michael Smith, a retired couple living in Delray Beach, bought their rental property for around $24,000 in 2011. After fixing it up and renting it out for the past ten years, they’ve realized they could get about four times the amount on their investment.

They don’t plan on selling due to their current tenant, who is disabled.

“We’re here to help her,” Smith said. “Otherwise we would be selling it in the peak of the market.”

Paula Mendez, 36, is another homeowner who was able to purchase a home a decade ago on the cheap. She bought a two-bedroom, two-bathroom townhome in Boynton Beach for $50,000 and has used it as a rental property to generate income over the years.

Now she says homes in her area are selling for around $200,000. She doesn’t plan on selling, as she wants to make sure she has a home in case of an emergency.

“If I would have to sell and then buy again, there is no capital gain there. I want to have a roof that is paid off if anything should happen,” she said.

Cited:

© 2022 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.

Real Estate

Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access, purpose and often times, power.  These articles represent aspects that affect the business of real estate. 

 

Senior Living Operators Financially Squeezed But Target Aggressive Margin Expansion…

Early in 2020, senior living operators had hoped the pandemic would result in only a temporary hit to margins. They are still under bottom-line pressure as the pandemic enters its third year.

WANTED in Miami…FAKE REALTORs

 Don’t play with the DBPR, FREC or the Florida State Attorneys Office…this is a serious profession called real estate…Wenston DeSue

3 People Sought in Real Estate Scheme

The Miami-Dade trio pretended one was a Realtor. They lured victims to vacant homes, often put “buyers” through background checks and then asked for a down payment.

MIAMI – A woman and two men are being sought in connection with a real estate fraud scheme in Miami-Dade that has targeted more than a dozen victims, authorities said.

Priscilla Marie Contreras, 32, Yordani Carriles Diaz, 43, and Deinoser Bravo, 47, are wanted in connection with the fraud scheme, Homestead Police officials said Thursday.

Officials said Contreras would act as a Realtor and lure victims to vacant residences through social media. Once the victims were there, Diaz and Bravo would pose as homeowners and conduct money transactions with the victims, officials said.

“In some cases they would go to the extent of having their victims go to a police department, get background records, fill out paperwork, and then call them back and say, ‘You have been approved, but we need some type of down payment,’” Homestead Police Capt. Fernando Morales said.

Police said the group is involved in at least eight cases in Homestead and about the same number in Miami-Dade County.

“The Homestead Police Department believes that these subjects are actively engaged in this fraud,” police said in a statement. “We want to alert the public to these subjects and hopefully avoid further frauds.”

One victim, a father of two, said he hoped to move into a home after a long search for a place to rent. The man, who only wanted to be identified by his first name, Kenny, said he provided the group pay stubs, signed a lease agreement and paid more than $5,200 in a deposit.

“We saw the property, we like the property, we went through the whole process,” Kenny said. “We showed up with the truck, it was fully loaded. When we pulled up there were three other families, all here, everyone trying to move in.”

Real Estate

Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access, purpose and often times, power.  These articles represent aspects that affect the business of real estate. 

The Trifecta of Construction Woes…

 Instability seems to be the norm for the construction industry, but things STILL get done…Wenston DeSue

Inflation, material delays, labor issues: Pros face a trifecta of pricing woes…

When Providence, Rhode Island, architect David DeQuattro bids on a new office building project, he's rolling the dice. But it's a crapshoot in any city.

Odds are steep that no bid will hold up in the face of 40-year inflation peaks, labor shortages exacerbated by COVID-19 and retiring workers and delivery delays of up to two years.

Every bid is a bet against a "three-headed inflationary dragon," said DeQuattro, owner of RGB Architects Corp., which has been in business 76 years.

Recent government data backs that up. The Producer Price Index for construction climbed 22% last year. Eye-poppers ranged from 42% for fabricated structural metal products, 87% for iron and steel and 127% for steel mill products. 

Softwood lumber prices spiked almost 24% in December alone.    

Despite a surprisingly strong U.S. January jobs report, nonresidential construction employment fell by 9,000 workers in the heavy and civil engineering sectors as an aging labor force retires or quits. 

The construction unemployment rate rose to 7.1% vs. 4% across all industries, the Associated Builders and Contractors reported last month.

And the third wild card: supply-chain snafus make it harder to count days to completion or shareholder profits. 

"Construction management and supervision has always been fast-paced business but the supply chain crisis has made it even more difficult to manage, has increased stress and pressure on project teams and tested our resilience," said Tony Cingoranelli, a chief estimator for Adolfson & Peterson Construction, based in Minneapolis.

He said the company has become "more selective," pursuing projects it is confident can be successfully completed.

Adolfson & Peterson, he added, will start "project procurement earlier than we ever have before, research alternate materials and partnering with our subcontractors and sharing the project vision early on so we have an army of resources to cement the project's success."

Watching interest rates

Of course, not everyone is chagrined.  

The Cumming Group in Los Angeles, a nationwide project and cost management services consultancy, is seeing a "settling down" of pricing and a reduction in the inflation rate "in most materials and commodities in 2022. In fact, we're already seeing a moderation of price spikes," said Mark Fergus, executive vice president.

Interest rates, however, could be a gamechanger. 

"If they increase, it will have a greater inflationary impact on materials and labor," Fergus said. "Meanwhile, it may take up to two years for the supply chain to settle down."

Meanwhile, more time means more risk.

The office buildings DeQuattro designs typically take 14 months, during which costs could rise 10% to 30%. 

"We buy the components now and store them somewhere or we use different components," he said.

It's almost a must. Historically, DeQuattro said, a steel fabricator gave a contractor a price and told him, "'I'll hold my number for three months, six months, but now the price may go up tomorrow."

Higher costs

If the rate of inflation continues, it could choke off construction spending.

"Construction service delivery costs — the inflation in material prices like copper, aluminum and energy — have been skyrocketing," said Anirban Basu, chief economist for Associated Builders and Contractors in Washington, D.C. "These higher costs are not only limiting the project's upside rate of return, but they are persuading owners to either forgo construction or delay the start of construction."

The economist pointed to Intel's recent decision to invest $20 billion to build two semiconductor fabrication plants in Ohio to combat the global chip shortage. 

Basu believes high materials prices will fall in the "near term," but when that happens is anyone's guess. And Russia's incursion into Ukraine could raise the stakes for many industries, including the risk of cyberattacks.

But the clear and present danger is the lack of skilled workers.

"The construction industry has been plagued with a lack of talent in the skilled trades for a long time, and it’s been difficult to get projects done on time and on budget, even in the best of circumstances and that was pre-pandemic,” Basu said. “Now, you have retiring older workers who were the best and most productive construction employees, who took shop in (junior high and) high school, classes that have been weeded out."

Staring down the "three-headed inflationary dragon," contractors like DeQuattro fear lack of talent may prove the most deadly.

Cited:  Construction Dive

Real Estate

Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access, purpose and often times, power.  These articles represent aspects that affect the business of real estate.