Archive for November, 2010

Changes in FASB 13 Rules to Change Commercial Real Estate Industry

New lease accounting standards are currently being developed in a joint project between the IASB and FASB that could result in a complete overhaul of the way in which leases are reported in financial statements.

The new standard would effectively eliminate all “operating leases” and require them to be capitalized on the company’s balance sheet. It would also replace rent payment expense reporting with interest and depreciation expense reporting.

Some industry projections estimate over $1.3 trillion would be transferred to U.S. corporate balance sheets, with roughly 70% being in real estate leases.

NAI Global’s Jim Garrett is hosting a webinar on this topic with Deloitte Financial Advisory Services to discuss the impact of the FASB changes on the commercial real estate market. The event will be held December 2 at 1PM Eastern. Register here.

Shaping Tomorrow’s Commercial Real Estate Leaders

The great recession has had a tremendous impact on the commercial real estate market. Shaking market fundamentals to their core, corporate users and property owners are struggling to find confidence in the market once more. As the credit crisis locked down financing, all but saving the commercial real estate market from overbuilding during the months leading up to the recession, brokers have had to think outside the box to find financing for their clients. And with fewer tenants and buyers in the market, brokers are finding themselves working harder than ever, with little to show for it on their monthly bank statements.

The brokers in the industry today, those who are sticking through the recession, honing their skills and building those ever-important relationships with clients, will find themselves extremely successful once the market returns to a pre-2007 levels. What the industry is experiencing is a sifting period, where brokers who were never committed to the industry are leaving the market for good. And those who remain are building the skillset to help them achieve success once transaction velocity increases.

The junior brokers are learning a great deal, and senior brokers are remembering how they made it through similar downturns, as in the 1990s. Those who don’t have the skills to find business on their own are leaving for good, generally any broker who became reliant on waiting for their phone to ring for business to come to them. And others who are pounding the pavement, thinking outside the box and developing new strategies and business channels, they will be just fine when things get better.

A Disastrous Decade

First Decade of the 21st Century had a Roaring Start and a Punishing Conclusion, Says NAI Global Chief Economist Dr. Peter Linneman

Despite a roaring start to the new millennium, the U.S. economy has little to show for the past 10 years. NAI Global Chief Economist Dr. Peter Linneman examines the key factors and trends that led the U.S. and global economy on a volatile roller coaster over the past decade, from a promising start to a punishing conclusion in a new white paper.

“In 2000, our federal budget surplus was over $200 billion and the world was at relative peace. In 2010, the federal budget deficit is in excess of $1.3 trillion and the U.S. is engaging in two major military operations around the globe,” said Dr. Linneman. “During the past 10 years, we have seen the country has weathered two recessions, two wars and we witnessed the horrors of the September 11th attacks. We experienced oil prices of nearly $150 per barrel, a booming and plunging housing market, a booming stock market and an extreme financial crisis.” Dr. Linneman examines where we have been and what we can learn from this last decade.

Dr. Linneman provides analysis of real GDP growth (and contraction), household wealth, unemployment, industrial production, federal spending and looks into the true causes of the financial crisis. He also provides insight into what will happen with the economy in the coming decade.

A Disastrous Decade, NAI Global’s white paper, is a scorecard for the 10 years from mid-2000 through mid-2010, reviewing how the economy has changed over the first decade of the 21st century.

This latest white paper follows A Robust Rebound to Mediocrity?, Dr. Linneman’s view of the economic recovery’s impact on the jobs market today and tomorrow. NAI Global’s white papers and research resources are available for free download at www.naiglobal.com under Publications/Articles & White Papers.

Dr. Linneman is also Professor of Real Estate, Finance and Public Policy at the Wharton School of Business, University of Pennsylvania, and Principal, Linneman Associates.