July 2009: Commercial News Round Up

News briefs to keep you in the know about the commercial real estate industry.

July 1, 2009

Green Energy Spurs Land Demand

The U.S. Department of Energy's ambitious goal to use wind power for 20 percent of the country's energy needs by 2030 has upped the demand for land on which wind turbines can be built, says Brandon Blevins of the Southern Alliance for Clean Energy in Knoxville, Tenn.

Leases for wind rights can be a significant source of income for property owners, especially in the Midwest and Texas where wind currents are strongest. The so-called "wind economy" is expected to result in $782 million in direct payments to landowners, as well as some $1.88 billion in property tax revenues through 2030, Blevins said, citing federal estimates.

Payment depends on how much energy is created on your land. Wind farm operators generally pay a royalty of 2 percent to 3 percent or an annual flat annual fee of between $2,500 and $4,000 for each megawatt of power generated, he said. And since that land can also be used for farming (so long as sprayers aren't used) and recreation, the revenue stream is an add-on to current property returns. "I've heard farmers call it 'the new cash crop,'" Blevins said.

Time for Business Development?

If today's market is leaving you with some extra time on your hands, then make the most of it. Start preparing your company for when the market recovers, says Bill Gladstone, CCIM, SIOR, of the Gladstone Group at the commercial brokerage NAI CIR in Harrisburg, Penn.

Gladstone, who frequently writes and speaks about issues in commercial real estate, shares these suggestions for building your business through smart marketing.

  • Stay in front of people. Use a combination of print and e-mail to communicate with your clients and contacts at least several times a month. "It doesn't have to be that elaborate—even a one-page newsletter will work," Gladstone says. Gladstone, with the help of six assistants, sends a bimonthly, eight-page print newsletter, a bimonthly "Hot Topic" trends sheet, a 36-page full-color magazine three times a year, and weekly broadcast e-mails to a selected 3,000 brokers and prospects in his database.
  • Let the other guy do it. Although he likes to write, Gladstone uses a variety of sources for his content, including articles from industry publications such as the Society of Industrial and Office REALTORS®' Professional Report and the CCIM Institute's Commercial Investment Journal, with permission, of course. He also asks local experts—attorneys, engineers, government officials—to write articles for his newsletters.
  • Provide facts, not fluff. "Readers want useful information, not 'It's a wonderful day in the neighborhood,'" Gladstone says.
  • Network with the big guys. Recently, Gladstone has shifted his focus to serving on boards and committees with high-profile members and attending top-level business events. "See the right people at the right events," he says.
  • Have fun with social networking. Gladstone didn't get much buzz from sites like Facebook or LinkedIn. But when he posted a YouTube video of his seven-person team dancing and singing a spoof called "Commercial Agent Man," he started to see action. "We spent $600 for a dance instructor from Arthur Murray and $300 for a singer we found on Craigslist. In the first 45 days, we got 1,156 views," he says. (To see the video, go to www.youtube.com and search for "Commercial Agent Man.")

Telework Threatening Office Space?

Corporate cost-cutting is creating ideal conditions for telecommuting to expand, says Dominic Mazzone, managing partner of Regent Global Funds in Chicago. "It's the perfect time to send certain employees home to work and lower operating expenses," he says.

Mazzone predicts that telework could expand between 5 percent and 15 percent in the next five years. And if he's right, it will likely cut into companies' need for office space and related support services. Here, he answers some of our questions about the trend.

What factors, other than cost cutting, are contributing to the growth of telecommuting? Employees that telecommute spend less money on gas, lunches, and parking. They're less stressed and happier, which lowers attrition. In addition, companies are finding that their telecommuting employees are more productive because there are fewer coffee breaks.

Are there social factors that make telecommuting more viable today? I recently asked attendees at a conference how many of them sent e-mail to the person sitting right next to them at the office. Of course, everyone did. It shows that we've become much less reliant on face-to-face.

How has technology evolved to support telework? Ten years ago, if you wanted to do a videoconference, you needed a lot of expensive equipment and an IT person to run it. Now, you can use a video camera built into your laptop and an inexpensive Web-based conferencing program.