KINGSLEY INSIGHT
>> May 2005
INSIDE THIS ISSUE
Sports Franchises and Real Estate: Birds of a Feather?
What does the Empire State Building have in common with the New York Yankees? Well, obviously, both are in New York and both are worth hundreds of millions of dollars. But what about their similarities as investment products?
On the surface, an office building and a professional sports brand appear to be very dissimilar assets. For one thing, the vast majority of the value of a sports franchise is tied up in intangible assets, like tradition, player popularity, and competitive performance. For real property, the situation is reversed, with the intrinsic value of the asset tied up in very tangible things: brick, mortar, land, etc.
Yet sports franchises have long operated under similar market conditions as what we now call "unprecedented" in the real estate industry, with big dollars chasing small operating margins and making it up through appreciation. Has real estate investment turned toward a similar path? Are institutional investors becoming increasingly attracted to potential appreciation at the expense of current income?
To read the entire article, please click here. (PDF)
As cities continue to grow into the twenty-first century, local governments, slow growth activists, and real estate developers, are all looking for ways to provide “quality growth” and minimize sprawl. Quality growth initiatives like corridor, “greyfield,” and mixed-use developments are increasingly popular. These developments offer lively 24-hour living, with everything – office space, restaurants, shops, and apartments – within walking distance, which is attractive to city residents who have seen their commutes balloon.
Yet, while there is growth in downtown areas across the country, the exurbs remain the fastest growing areas in many cities. As the Echo Boomers start their own families, many place more value on having their own space, a bigger home, and fewer neighbors. Furthermore, their parents’ vitality means that the population of residents 65 or older will grow at 3.5 times the pace of the general population over the next 25 years – not exactly the mixed-use crowd.
Can desires for larger homes and quiet neighborhoods be reconciled with apparently competing desires for walk-able communities and minimal commutes? How can developers accommodate the complex demands for residential real estate? Will one model prove superior over the other? What will be the "winning" strategy, and will there be only one?
Executive Insight with Steve Kingsley
Kingsley Associates recently celebrated its 20th anniversary. To mark the occasion, the CEO recently sat down to share his thoughts about the company, the real estate industry, and what has changed in the 20 years of the firm’s existence.
Q: What has changed the most in the industry since Kingsley Associates was born? Is there anything surprising about the state of the industry today?
SK: Real estate has become more sophisticated, but it still has a long way to go relative to other industries. It will always be based on relationships, but using systems to integrate metrics from the top to the bottom of the organization is becoming much more important. Real estate has had its ebbs and flows, but I’ve never seen it so popular as an asset class. There is a lot of desire to be involved, and that’s driving changes in the way things are being done.
Q: What has made the company so successful over the last 20 years?
SK: We’ve had a commitment to quality, to providing value to our clients, and to building long-term relationships. It’s also a compliment to our team of strong, dedicated principals and other professionals. We’re built to endure. We’ll be continuing to expand our team and our services, not only in response to what our clients are telling us, but also proactively.
Q: What similarities do you see in successful real estate firms?
SK: It's about having a vision for the future and a plan for how to get there. Dealing with key constituencies (investors, clients, employees, and tenants) over the long term is extremely important. To do that, companies have to start by developing ways to measure their own performance and take appropriate action. The companies that do this are the ones that continue to be successful.
Q: What have you enjoyed most about starting and managing your own company?
SK: Just as with anything else in life, it’s the relationships that are the fun part. I feel very blessed to be working with great clients and, especially, great partners and a great team. I really view it as their company, which makes everything worthwhile.
Multifamily Demographics - Do You Know Your Residents?
Resident Satisfaction Drops after Initial 'Honeymoon' Period
KA's research has uncovered that residents' satisfaction drops immediately before their firstrenewal and thus negatively affects their likely renewal.To improve retention, property managers should focus on delivering exceptional service during this critical time period.
Does Income Affect Satisfaction?
Residents earning an annual household income of $40,000 to $50,000 per year give the highest ratings across three Key Performance Indicators (Overall Satisfaction, Renewal Intentions, and Property Recommendation). Residents on the low and high extremes ($25,000 or less and those earning more than $100,000) are significantly less satisfied across the same three KPI's.
Getting Better with Age
Renewal intentions of residents 65 and older are 19% higher than residents 25 years and younger.