2 great tools to study cities with

This week, the Smithsonian institute released a tool that overlays aerials of major American cities with windows of how they were a hundred years ago. Click here for more.


The second tool comes from Rural Data and it provides quick snapshots and economic overviews of any county in the country. Click here for more info on Bernalillo County.

If some of the results look familiar – they should -they are modeled after BLS.gov ‘s LQ calculator,

Aerotropolis interview now available on video

CCIM has just released the video interview with Greg Lindsay, author of Aerotropolis: The way we will live next from the CCIM Live 2011 conference held in Phoenix last month.

Earlier this year I wrote my review of this fabulous book which can be read here.

Greg’s powerpoint webinar from August 2011 is available at the CCIM website.

Book review: Best read for 2011: Aerotropolis

Aerotropolis, the way we’ll live next
Authors: Greg Lindsay & John D. Kasarda,
Publishing Info: Farrar, Straus and Giroux, Nonfiction, First edition published March 1st, 2011

As an international instructor for the CCIM institute I discovered that the book, Aerotropolis: the way we’ll live next dovetails nicely with what the just-in-time delivery model as a primary driver of demand for industrial space that we teach in the CCIM 102 course, I would highly recommend it to anyone in commercial real estate.

As a rabid book consumer, I will easily digest about 100+ books a year, and without a doubt, Aerotroplis: the way we’ll live next has become not only my favorite book of this year, but one of my all time favorite business books. It is one of those rare books that I thoroughly enjoyed reading that I found myself moderating how much I could read daily so I can push the ending of the book out as long as possible.

My favorite magazine, The Economist recently offered a glowing review of Aereotroplis, stating “In Aerotropolis, John Kasarda of the University of North Carolina and his co-author, Greg Lindsay, convincingly put the airport at the centre of modern urban life.”

The theme of the book is that successful cities of the future will be wrapped around successful airports and those cities that can’t adapt may be passed by. Its authors state the books hypothesis as an equation related to time “The aerotropolis is a time machine. Time is the ultimately finite commodity setting the exchange rates for all the choices we make.”

Author and reporter, Greg Lindsay, expands and expounds on the John Kasarda’s original idea that airports are the highways of the future. As a former Fast Company and Wired magazine reporter, Mr. Lindsay racks up the frequent flyer miles talking with civic leaders, CEO’s and company logicians as he interviews them on their home turf about the importance of air transit to their communities, companies or supply chains future.

As a fellow traveler, I reminisced about Mr. Lindsay’s travels to well-known airports like Chicago’s O’Hare, Atlanta’s Hartsfield, Amsterdam’s Schiphol, or even Hong Kong’s International, but I was green with envy over his trips to Dubai’s Al Maktoum International Airport or South Korea’s Incheon airport and adjoining master planned Songdo International Business District. One story of Mr. Lindsay tracking his gift of flowers from the Aalsmeer flower auction in Amsterdam to his mother’s front porch will endear Mr. Lindsay to the reader as an extremely diligent reporter and respectful son. Even more surprising than his few thousand mile journey for flowers was his mother’s reaction.

Some of the books concepts in the book are eye opening such as “The world’s urban population is poised to nearly double by 2050, adding another three billion people to places like Chongqing. We will build more cities (and slums) in the next forty years than we did in the first nine thousand years of civilized existence. The United Nations predicts the vast majority will flood cities in Africa and Asia, especially China.”

Or this quote about South Korea “South Korea’s capital is the archetypal twentieth-century megacity, doubling in size every decade or so since 1950 to twenty-four million inhabitants—the second most populous on earth after greater Tokyo.”

Or my favorite quote about a Chinese based manufacturer: “We had barely crossed the border before he opened his laptop and began walking me through the true costs of those shipments. He’d built a widget calculating every conceivable variable: the weight, volume, value, and quantity of the products in question; the lead times for sourcing and building them; time spent in transit; their shelf life; the spread between paying his vendors and being paid himself; the cost of money in the meantime; and the cost of returns. An entire calculus, in other words, underlies the pivotal question of our era: What is the price of speed? The widget’s answer: slow is more expensive. The only thing faster than a FedEx 777 Freighter out of Hong Kong is the velocity of money, and the last thing Casey wants to pay for are the days his parcels are stuck on a boat. Obsolescence sets in the moment they leave the factory. “Revenue evaporation,” he calls it. “Air freight is key,” he muttered while running the numbers. “We like to work with products that can go by air. We build them in Shenzhen, and they’re in New York two days later. Time is often our number one currency, and the dollar is second.” ”

And this quote summarized the breath taking feelings I experienced in my many visits to China for CCIM’s education program: “China is placing the single biggest bet on aviation of any country, ever. Even before the crisis and China’s subsequent stimulus, the central government announced as part of its Eleventh Five-Year Plan that it would build a hundred new airports by 2020, at a cost of $62 billion. The first forty were ready last year. The vast majority lie inland, hugging provincial capitals and secondary cities bigger than any in the States. Full-scale aerotropoli are planned for China’s western hubs, Chongqing and Chengdu, and its ancient capital. Besides airports, China laid as many miles of high-speed railroad track in the last five years as Europe did in the last two decades. The trains, in turn, are meant to keep people off the highways, to which China’s adding thirty thousand miles—enough to eclipse the American interstate highway system. China’s planners have internalized the lessons of America’s Eisenhower-era infrastructure boom, designing a world-class system for moving people and goods quickly, cheaply, and reliably across any distance, whether locally by highway, regionally by rail, or globally by air. The plan is to pick up and move large swaths of the Delta hundreds or even thousands of miles inland. There is nothing to stop them.

And this quote on where the future global cities will be “Finding another five hundred million passengers 7should be easy. China has anywhere between 125 and 150 cities with populations greater than a million. The United States has nine; Europe, thirty-six. When the first phase of China’s airport-building boom is complete, the number of hubs handling thirty million passengers annually—more than Boston’s Logan or Washington’s Dulles—will have risen from three to thirteen, all of which will be the host of aerotropoli. By the time they’re finished in 2020, 82 percent of the population—1.5 billion people—will live within a ninety-minute drive of an airport, nearly twice the number today.”

The book dovetails nicely with some of my other favorite business reads like Marc Levinson’s “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger” and Sasha Issenberg’s “The Sushi Economy: Globalization and the Making of a Modern Delicacy” both of which deal with just in time delivery and creating new markets.

Additional topics addressed in Aerotroplis include Peak Oil vs. Peak Food, globalization as a tool to pull the poor into the middle class vs. the carbon footprint of globalization via air travel, and the true cost of air travel in both economic and environmental terms.

If you enjoy Aerotroplis as much as I did, you might also read the June edition of Southwest Airline’s Spirit magazine as Mr. Lindsay has recently penned an article titled “Corporate Latter”. In this article he builds on the concepts discussed in Aerotroplis and discusses how technology has allowed us to shift away from being tied to an office, setting up shop at any location (http://www.spiritmag.com/click_this/article/the_corporate_latter/) . One economic development guru and author, Mark Lautman, is pushing this idea as the next evolution of cutting edge business recruitment – to scale down the benefits big corporations receive so communities can chase the highly mobile, quality of life comes first businessperson/consultant who eventually expands their business and hires staff. According to “When the Boomers Bail: A Community Economic Survival Guide”, this segment of our economic businesses is one of the fastest growing.

Not only would I highly recommend you read Aerotroplis, I would encourage you to purchase copies to share with your family, friends and clients as the conversations started from the concepts in the book are engaging, enlightening and very relevant to anyone with commercial real estate.

Todd Clarke CCIM

Aerotropolis can be purchased at: http://www.amazon.com/Aerotropolis-Way-Well-Live-Next/dp/0374100195/ref=sr_1_1?ie=UTF8&qid=1306590616&sr=8-1

More bricks and mortar fall to clicks

In a Wall Street Journal article dated today, Borders Group has indicated that they are making preperations to file bankruptcy in the forthcoming days.

Similar to the fallout of music stores after iTunes, Amazon website and digital readers has encouraged many readers to abandon physical stores. Companies that have figured out how to the digital frontier continue to thrive, while those that haven’t die. Interestingly , the same articles mentions that Borders tried going dot com a while back, threw in the towel and sold their initiative to Amazon.

“I think that there will be a 50% reduction in bricks-and-mortar shelf space for books within five years, and 90% within 10 years,” says Mike Shatzkin, chief executive of Idea Logical Co., a New York consulting firm. “Book stores are going away.””

—wsj.com 2/12/2011

Borders Group currently has over 600 locations, less than 1/2 of what it had in its peak at 2005.

In our market, Borders has a prominent location in the ABQ Uptown lifestyle center. I will be curious to see what the new highest and best use of that store will be.

The passing of an era

Posted in our sister blog, Todd Clarke’s Technology Corner, is an obituary of the man who developed the hardware for the first personal computer.

His fulltime job was as a scientist at Sandia National Labratories, but his interests were in developing computers that the public could use.

His company, MITS, developed the hardware, but he needed a software operating system to make the machine more accesible, and he and heard of a bright young programmer in the Seattle Area, Bill Gates, who might be able to write what he needed. Bill and his partner, Paul Allen worked around the clock from some down and out Route 66 motels to write the first operating system under their new corpoorate name, Microsoft.

This corporate photo, taken in 1978, shows the original Microsoft staff.

Thank you Dr. Edwards for cementing Albuquerque’s role in computer history.

A possible solution for all the commercial real estate debt that is coming due?

Reading this article at the Economist got me thinking…

What if borrowed and lenders had a prenegotiated arrangement that converted debt into equity a commercial real estate deal? I don’t mean like todays, expensive involuntary conversion that happens through foreclosure, but a more organized rational, prenegotiated, pre-nupital like document that said something like “in the event of a capital crisis, or the mid-term (a average of this property’s value over the last 24 months) value of this asset decreases below the loan limit, borrower shall have mortgage their interest converted into an equity interest, thus unemcumbering the asset of all debt, freeing up cash flow which shall be distributed as follows… (cash flow going to lender, tax benefit going to equity position)… until such time as…”

Certainly debt would cost more, but an equity player might be willing to go into a deal knowing the downside was much lower.

The Economist has such a way with words

Take this example whereby they explain the inputs a home buyer needs to make a decision:

Most people face a future that comprises a combination of Donald Rumsfeld’s known and unknown unknowns. Choosing to buy a house, for example, involves a series of bets on land prices, interest rates, taxes, job prospects, future planning decisions in the area selected and the structural soundness of the property concerned. It is impossible for any buyer to be confident about so many variables. Any decision must be a guess.

Economist’s, Buttonwood:Bribing the Markets.

Bad news, good news, have you heard the joke about the economist?

The juxtaposition of news story about the economy are interesting – on one hand the Federal government has declared a victory on turning around the economy, on the other, those of us in the commercial real estate business know that until there is transparency in the lenders holdings, the loans will not flow, the capital markets will not return, and the transaction volume will remain virtually non-existent.

Good news from the Albuquerque Journal (need I say anymore?)

The not so good news about capital markets in the commercial real estate world, from yesterday’s RealShare conference titled Warning Signs.

The Wall Street Journal had a dour article on the ballooning balance of commercial backed securities.

President Truman once asked an economist his opinion –the economist replied with something like “on one hand it could be good, on the other hand it could be bad” to which Truman quipped “next time bring me a one handed economist”

Overreaching legislation

Special thanks to fellow Realtor Ric Thom for sharing this:
This is an important message from Ric Thom, President Security Escrow Corporation, Albuquerque, New Mexico.

May 26, 2009
HR 1728: The Taking of Private Property Rights
Congress is trying to greatly restrict seller financing. This is a taking of our private property rights. The US House recently passed HR 1728 which limits you as an individual to sell real property using seller financing to only once every 36 months (HR 1728 Sec 101 Definition (3)(E)).

This bill was written to amend the Truth-In-Lending Act to regulate residential mortgage loan originators. This stems from the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, or S.A.F.E, which established a national registry and standards for mortgage brokers. This is all directed at mortgage brokers, mortgage companies and banks. These are third parties that provide loan proceeds to the buyer to purchase property. That’s a good thing, but for some reason Congress has included private property owners who wish to sell their property using seller financing. Seller financing is where the buyer and seller negotiate a price, a payment plan, and interest rate. It’s an installment sale where the buyer pays the seller monthly and the buyer gets the use of the property. This is a frequently used method of buying and selling real estate especially in this economy of tight money. Banks are just not lending on, or are requiring huge amounts of cash down on, certain types of properties.

Seller financing is used tens of thousands of times every year, if not hundreds of thousands of times, to sell real estate. In New Mexico alone, with a population of fewer than 2,000,000, it is used over 5,000 times a year.

These acts are over-reaching and will have unintended consequences. The definition of a residential mortgage loan according to the Housing and Economic Recovery Act of 2008 means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or on residential real estate upon which is constructed or is intended to be constructed a dwelling (Sec 1503 Definition (8)). This means any vacant land would fall under this act. A dwelling can be a house, condo, or mobile home. Here are just a few examples of the consequences:
• Let’s say you are about to lose your home and you need another $1000 a month to make ends meet. You decide to sell your five acres in the mountains and your 1982 single-wide mobile home on one acre by the lake to make your mortgage payment. Banks are not lending on these types of properties and you need a quick sale, so you use seller financing. The problem is you need to sell both to get an extra $1000 per month, but the government has prohibited you from doing so because of the one every 36 month rule.
• Suppose you have a self-directed IRA. Every year you buy property with cash out of the IRA. You then sell it using seller financing so you can get a 6% interest rate. You will be prohibited from doing so under the Act.
• Let’s say you have four rental houses that you own free and clear. Part of your retirement plan was to sell them using seller financing with a 6 to 7% interest rate and a 30 year amortization providing a nice, monthly income. You don’t want cash because CDs only pay 2% and you already lost money in the stock market. But, under this act you are prohibited from selling them now. You can only sell one every 36 months.
These scenarios go on and on. They are as unique as the individuals and the properties. Real estate is not just a house in a California suburb. It is also vacant land, non-conforming housing, land and mobile home, duplexes, triplexes, farms and ranches, and recreational properties. These types of properties would fall under the Act. Not everyone invests in the stock market. A lot of people invest in the above types of real estate. Not everyone wants to cash out when they sell their property; some people like seller financing for the income stream. Most states have escrow companies that hold the deeds or releases for buyers and sellers. They also keep track of the principal and interest and report interest to the IRS.

This bill takes away our right to use seller financing as we see fit. House Bill HR 1728 should exempt anyone who offers or negotiates terms of a real property sale financed in whole or in part by the seller and secured by the seller’s real property.
Why should individuals who had nothing to do with this crises be punished for the sins of the greedy Wall-Streeters? These acts are for mortgage machines, not Ma and Pa. I know the government is concerned about predatory practices, but is seems the local district attorney would be a more effective hammer than to regulate, restrict, and police every real property owner in America. Besides, seller financing is not lending. It is an installment sale. The seller has agreed to receive their equity over time, plus a negotiated interest rate.
House Bill HR 1728 is headed for the US Senate. Please write your senator and have them exclude seller financing from these acts that are supposed to regulate the previously unlicensed mortgage brokers. Write your state’s Realtor Association and the National Association of Realtors and ask them to help stop the government from taking away our right to sell our property the way we want to and when we want to. There should not be any restriction on how many properties we sell during a certain time period.

What’s next – just one transaction every 5 years, or no seller financing at all? This restriction is the last thing America needs in this great real estate compression. Please act now. Exempt Seller Financing From HR 1728. Please forward this to anyone you think should know about this issue.

To locate your Senator go to http://www.senate.gov/senators
To locate your state’s Realtor Association go to: http://www.realtor.org/leadrshp.nsf/webassoc?OpenView

For further information contact:
Ric Thom
Security Escrow Corporation
Albuquerque, NM

Film Channel relocates from MN to NM

A Copyrighted article from the NM Business Weekly indicates that Albuquerque has landed 100 new jobs and a corporate headquarters for the ReelzChannel.

Gov. Bill Richardson made the announcement today with Stan E. Hubbard, chairman and CEO of ReelzChannel – TV About Movies. ReelzChannel is owned by Hubbard Media Group, which also owns KOB-TV, Channel 4, in Albuquerque.

With this addition, maybe its time for the Hubbard Media group to look at relocating Channel 4 from the back end of the Albuquerque Country Club to the middle of downtown. Doing so would create more vibrancy (think of Good Morning America) around downtown and would free up some valuable land near the Bosque, Kit Carson Park, Zoo/Bio Park for additional residential development.

How far will retailers go to understand how you buy?

In the December 20th, 2008 issue, the Economist covers the latest trends in how Retailers are analyzing your shopping habits.

Would you believe?
– Camera’s that read your facial patterns?
– receiver’s that record your wherebouts based on your cell phone?
– reorganizing the store so the things you buy the most are in the back?
– video cameras hooked up to computers that “mine” your traffic patterns, expressions, and more?

It all reminds me of Paco Underhill’s Why We Buy: The Science of Shopping-Updated and Revised for the Internet, the Global Consumer, and Beyond a favorite read of mine.