What I Heard From Global Leaders at MIPIM 2010

by Joe Stampone on March 25, 2010

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I always get excited when I receive emails from Jean-Claude Goldenstein of CREOpoint, covering the latest mega real estate conference. Here is what the global leaders had to say at MIPIM (check out their site to see videos from the conference):

  • Hope is back but some of the survivors are concerned about a double dip recession.
  • European investors clearly favor the U.K., “hard core” plays and the office sector followed by retail (while in the US, investors are currently most attracted by the residential sector).
  • End users are focused on slow growth, portfolio rationalization and new models (including more flexibility and better collaboration from their landlords).
  • The role of the public sector continues to grow (with many economic development agencies in attendance to attract fewer investors and to discuss public private partnerships).
  • Marketers are experimenting how to actually do more with less thanks to Twitter and other new online platforms.
  • Interesting new projects in places like London, Paris, Korea and Bahrain.

A better mood:

Everyone returned home tired yet hopeful compared to last year (which was all about «gin and panic»). This year the going is still tough, but the tough had champagne in their hands and were happy to have survived the last 12 months.

We started last Monday with an exclusive pre-MIPIM party in my family home in Cannes with many friends encountered over 21 consecutive MIPIMs. People were speculating over who might mint money in this new environment—and how they might accomplish it. However there were no premature celebrations due to lingering issues such as debt, the possibility of a double-dip recession, growing European unemployment, uncertainty regarding the looming UK election and likely new regulations.

Attendance at MIPIM 2010 was down 38% from the 2008 peak and there were far fewer yachts and lavish parties (even our friends at CBRE did not have a party). However the sun was out and most people enjoyed a serious MIPIM where quality decision makers took their time to source new business, present new projects and launch partnerships. What was also evident right from the start was that governments and banks are stepping up and becoming major players and funding partners.

Some of the exhibitors from the Middle East and Russia from past MIPIMs were gone. Many of us did however notice how many times male property figures took the shortcut through the small Russian area and could not help but glance at the beautiful models dressed in outrageous red satin outfits.

The buzz online reflected the mood and the new mix of attendees professions (source: CREOpoint proprietary data mining of 4,000 CRE-relevant sources of information you could also leverage for your brand and content development):

What I heard from global leaders:

The presentations certainly were not the group therapy sessions we witnessed last year. I had a chance to meet a number of fascinating people listed below and, if you are interested in what some of them said, watch this short “Best of MIPIM 2010″ video and/or scroll down.

From left to right Boris Johnson (Mayor of London), Denis Tersen (CEO PREDA Paris Region Economic Development Agency), Mark Dixon ( CEO Regus), Dr. Jan Siemons (Partner and head of Real Estate Consulting Ernst & Young Holland) and Gordon Dugan (CEO W.P. Carey) and Tim Strongman (Head of Real Estate, Environmental Resources Management)

From left to right Paul Danks (Senior VP-Corporate Services, NAI Global), Laurent Lehman (Directeur Général Adjoint, CBRE France), Reggie Winssinger (Board Member, W.P. Carey), Francois Ortalo Magne (Department Chair, Wisconsin School of Business), Dan Fasulo (MD Research, Real Capital Analytics), Mark Faithfull (Editor, CNBC and Retail Property Analyst) and Ahmet Kayhan (CEO and Co Founder REIDIN.com)

Investments moving to the U.K. and from risky to core, core – hard core!

The biggest investors in Europe in the last twelve months were Blackstone, La Caisse des Depots, Union Investment Real Estate, RREEF and Area Property Partners per Real Capital Analytics, a CREOpoint partner.

There were some fine distinctions between Europe and the US as well as between the Continent and the UK:

‘Whilst European investors clearly favor the office diet phentermine pill prescription sector followed by retail, US investors are currently most attracted by the residential sector; the office sector ranks only third.’ Raymond Torto, Global Chief Economist for CB Richard Ellis

Michael Rhydderch, head of cross border capital at Cushman & Wakefield, also commented that “Investors, including UK institutional and retail funds, rushed to buy UK commercial property in the second half of 09, despite the continuing slide in rents. This is unique across Europe and to some, looks like madness.”

I also had an interesting conversation with Laurent Lehman of CBRE (they advised HSBC for the $2Bn sale of their London and Paris HQs.)

Change is in the air with corporate end users:

Paul Danks, Senior VP-Corporate Services, NAI Global commented that “although top markets in Europe will continue to be a source of opportunities, more significant, long-term prospects will be outside Europe in markets like Brazil, India and China.”

Nigel Baker, senior director for EMEA real estate and facilities at Microsoft added: “Investors don’t understand occupiers. CRE is one of the least advanced in adoption of technology.”

“We listen to our tenants through a global tenant survey program. But, there is a caveat about tenant surveys” says Bernhard Klein Wassink, Chief Marketing Officer for GE Capital Real Estate: “Owners shouldn’t seek tenant input unless they’re wiling to take action.”

Mark Dixon, Regus CEO (who was recently shortlisted in the FTSE 250 Entrepreneur of the Year awards), was interested in collaboration technologies: “In a recession you have to be more flexible. People today are not working in offices as they used to do. Thanks to technology and an increased focus on cost reduction, offices will be built where people live, not where they commute to.”

Philip Ross, CEO of Unwired Ventures added: “More people have the freedom to choose where they work than not, especially as businesses retreat to a single corporate HQ. As this happens this will give rise to a new network of third places that in effect become the office.”

I enjoyed the new white paper by Regus and Unwired Ventures based upon opinions of the BBC, BP, Nokia, RBS and Accenture. The report makes the following recommendations:

  • Real estate: gather data on utilization rates and churn costs to identify real costs of occupancy;
  • Culture: move from management by supervision to a results based approach;
  • People: accurately profile and understand the needs of four generations of workers;
  • Technology: fully unify corporate technology so that employees can effectively work anywhere;
  • Transport: reduce employees needs to travel through polycentric working; and,
  • Sustainability: reduce carbon output through adoption of intelligent building management systems.

Tim Strongman of Environment Resources Management agreed there was “increasing talk by end-users and investors alike on cost reduction through operational efficiency measures and portfolio restructuring. The hot topic seems to be green buildings and the carbon reduction commitment” (is compliance enough or should we be market leaders?)

In any case, change is in the air and this should be a good thing for Paul, Philip, Tim and other leading consultants. Tenants had some leverage to renegotiate their leases, but were slow to transact. Now they seem focused on new models and portfolio rationalization. “Services for end-users will be one of the fastest-growing activities for CBRE here” said Michael Strong, president EMEA at CBRE who currently derives 45% of its revenues from corporate services in the US, compared with 15% in Europe.

Growing importance of the public sector:

Cities and regions were also present in large numbers (specially from the UK), with hundreds of entities claiming to have a very good story to tell, including the best location. Some of them were also very present online, with most conversations about the UK (London, Manchester) and some about Paris, Poland and Russia. Except for China, there was little or no mention online of Asia or the U.S.

Mayor of London and capital cheerleader in chief Boris Johnson was not shy about commenting about competitors. He said that London was the best place to live and do business and one is 4 times more likely to be murdered in NYC than in London who will soon “host the world” for the Olympic Games. He also joked about moving his office to the upcoming tallest building in Europe to have a view of France…

Denis Tersen, CEO of PREDA, the Paris Region Economic Development Agency and the largest exhibitor (federated and showcased 40 organizations at MIPIM) had an interesting reply about the competitive advantages of the Region: “Paris is the first real estate market in Europe neck to neck with London. However the future is at the intersection of creativity and technology and both are uniquely very present in Paris.”

Marc Lhermitte, the Ernst & Young Partner and author of the European Attractiveness survey, provided unique data about a decreasing number of European FDI projects (about 3,000 in 2009) while the competition among locations continues to increase.

Dr. Jan Siemons, head of RE Consulting Ernst & Young Holland, recommended: “Governments could save money by unlocking value out of their own real estate and by giving higher priority to public private partnerships.”

Francois Ortalo-Magne, a renowned economist from the University of Wisconsin, agreed that “Public Private partnership is not a dirty word anymore.”

Many development agencies were working more closely with private sector organizations, sometimes in novel ways. The cities of Amsterdam, Rotterdam, The Hague and Utrecht, which all had booths at MIPIM 09, opted to rent beach pavilions this year in a bid to cut costs and are weighing legal action on MIPIM rules. The case follows a similar incident involving Drivers Jonas Deloitte which was recently fined EUR 100,000 for piggy-backing the event and organizing activities outside the MIPIM tradeshow area in 2009. It has organized a “Not in Cannes Event” instead while “No-Cannes-Do” parties popped in other cities.

Jackie Sadek, chair of the British Urban Regeneration Association and head of regeneration at CB Richard Ellis, recommended: “We need to devise a blueprint for public sector attendees at MIPIM to get the best price for participation, and the best value for so doing. We need to track contacts made by local authorities at MIPIM over the last ten years and see what investment was leveraged as a result.”

So much interesting information here, what are your thoughts?

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