Retail Market, Social Networking, and Software trend & issue

June 24, 2010

3rd day of class, we discussed retail market, technology, social networking, and software trend and issues. The first issue that came up in retail market trend was potential changing in near future, dominated perspective is summarized as “shrinking” because on-line industry, on-line shopping mall, is growing so fast compare to traditional retailers. In reality, on-line shopping mall is so competitive, most of time, offering price of goods are competitive; if not, we can find out chipper goods with couple of clicking anyways, offering promotions such as free shipping and tax benefit are so attractive purchasing goods on internet. Presumably, particular business sectors, such as off-line video rental service and bookstore which are venerable to fallow up these trends will be closed within couple of years and is already happened. In contrast, restaurant and bar industry is still growing up and is even displacing traditional retail area. In developers or owners perspective, this trend could make matter for worse because there is huge finish out cost difference between traditional retail store and restaurant, which is going to be financial burden for developers.

In terms of using internet and social networking at real estate industry, available information of proposed property released to the market has significantly improved in both side, quality of information and quantity of information. As far as I experienced before, sometimes the information taken from on-line was even more accurate than real estate agent, in the same context, I’m quite wondering how this trend may impact on real estate industry, specially, how does it influence on participants of real estate industry such as sales brokers and leasing agents. As one of the article describe, more than 80% of potential buyer start their searching from the internet and require more and more specific information also known as “long-tail’ search, which make real estate agent less important than ever before.

The next interesting issue that we discussed in class was the relationship between property value and interest rate, especially in this economy down turn, as Dr. Forgey noting that purchasing power to buy property is highly depending on interest rate. Recent lower interest rate make buyer more affordable to purchase expensive property, sometime it curses overspending regardless of their earning, however if interest rate has backed up to previous level, the property value will be going down and interest burden on borrower will be increased. Making long story short, during last couple of decade, without anything changing in market, value of property has been going up because of lower interest rate. Eventually, sudden increased interest rate will significantly influence on residential market and on individuals who borrow excessive money from banks. If it happen, consequence will be catastrophe.

Green Building, Sustainability

Second day of class, we discussed sustainability, green(LEED certified)building, and retail property trend in near future.

We started discussion from musing three issues related to sustainable development.

1. How do we become more efficient, effective and equitable.

2. What are the challenges that we face, and how do we overcome.

3. What are the rewards if we succeed?

Sustainability has become an important concept that should be applied to every man made development, traditionally, sustainability is defined as policies and strategies that meet society’s present needs without compromising the ability of future generation to meet their own needs.
What is specially noteworthy on this definition is sustainability provide long term solution rather than short term solution that only be satisfied present demands. Sustainability also include the notion of efficiency and of effectiveness that efficiency refer to conserve energy use as well as minimize environmental impact, in the same context, the definition of effectiveness is distinguished by doing the right thing to do rather than doing things right.
As far as I’ve research on history of sustainable development, the concept of sustainable development was described in a 1981 White House Council on Environmental Quality report: “The key concept here is sustainable development. If economic development is to be successful over the long term, it must proceed in a way that protects the natural resource base of developing countries.”
In reality, one of biggest obstacle that majority of owners or developers who are concerning “going green” is initial cost, owners and developers generally believe cost savings resulting from green building are achievable however they are still not convinced that initial costs are competitive, the third article says 75% of CEO believe green construction costs are 13% to 18% higher than conventional buildings, moreover appraisals and lending process are still in a early stage, which increase uncertainties on “going green”.Despite construction cost for going green has constantly decreased as construction technique has developed, I’m still wondering whether green premium is negotiable with occupants and in lending process because, in case of triple net lease, owner or developers can’t receive direct benefit from energy savings as long as tenants are more focusing on lowest lease rate rather than lowest operating cost and financial benefit, such as better interest rate and long term amortization period, from lending process.

Consumer spending has shifted by recent economy meltdown, specially, reduced consumer spending largely impact on retail property. What has changed on consumer spending is not only quantity of spending but also consuming habit influenced in consumer’s preparation.
I think, consumer’s preparation on retail shape where they prefer to purchase is highly depending on the accessibility of shopping mall, ironically, long term trend of moving into outskirt and demand on living in comfortable suburban increased arterial congestion, inconvenience of commutability and unpleasant living environment. It seems to me that people more and more admire urban life and try to go back to the past life.
To me, this trends may represent the phenomenon that consumer constantly spend money on town center or inline street retailer rather than regional mall also known as “big box”.

June 10, 2010

Increased demands on green office space represent recent trends of people, more and more, concerning buildings energy efficiency and environmental responsibility. In the same context, importance of Leeds certification has also increased as a standard to measure how green the building is. As far as I know most of developers and owners are concerning about cost and benefit of green retrofit and are pointing out that the biggest obstacle to go green is initial cost. However, according to survey, the additional costs for Leeds certified building is less than 2% compare to none Leeds certified building, while operating cost is reduced more than 40% compare to none Leeds certified buildings. The survey also shows the fact that the higher level of Leeds qualification requires much higher cost of construction. To get higher level of Leeds certification, the cost on construction is increased more than doubled, on the other hand, reduced operation cost is tenuous. Therefore, it seems to me that conducting green retrofit to Leeds platinum level is more likely waste of money unless the developer or owner has different aim, such as advertising their evironmental responsibility, of going green.

On-line education is now widely using on every educational level, as time goes by, more and more educational institutions provide various on-line educational programs for students who don’t have much time to commute school or who expect maximized educational achievement through on-line education. However, as with any educational options, there are arguable pros and cons on on-line education.
In my perspective, on-line educations are still educational option when the company intent to improve employee’s job skill on particular area or to develop employee’s productivity, because one of biggest advantage on on-line education is freedom of time spending and possibility of providing same quality of education for large number of employee simultaneously. Additionally, education & training practitioner’s stand point, reduced educational cost, comparing with off-line education, is one of biggest concern. However, achievement from on-line education may vary, specially, in the regular education, such as primary education, on-line education may provide not more in depth of interactive education like communicate with peer group and attitude on leaning but only provide fragmentary knowledge.