The Way We Were: Our Best Conversations of 2021
December 21, 2021 30 Minute Listen
I'm Spencer Levy, and welcome to our season finale for 2021, a year end show to celebrate and reflect as the calendar draws to a close. On this episode, our second annual yearly take on The Weekly Take.
I'm thrilled to be here and talk shop with you.
So are we. That was retail consultant Dana Telsey, a fantastic guest who took time out of her schedule during the height of the holiday shopping season to share her trademark expertise on the retail business. Dana was a gift, as were the dozens of business insiders who helped make our show an important digital destination all year long. Our guest list comprised an array of accomplished thought leaders, innovators and C-suite executives from all corners of commercial real estate, along with top CBRE talent, some of the best in the biz. This episode raises a glass to them all. With highlights and insights, we'll revisit a year of recovery and resilience, one that was also a bit of a roller coaster ride as the world gradually reopened after the lockdowns of 2020 while grappling with the ongoing challenges of COVID 19, a pandemic that's still far from over. We spoke with owners and occupiers, brokers and investors, professionals and professors. We analyzed current events, shared personal stories and observations, and always kept an eye on the future. Coming up, we look back at some of my favorite conversations and stories, the best of twenty. That's right now on the weekly take.
Welcome to The Weekly Take.
Well, it's a great place to start Spencer
And now to deepen our discussion of current events and focus more specifically on commercial real estate… I'd like to welcome another great mind from the industry and the managing partner and CEO of real estate… Thank you for joining us.
Thank you so much, Spencer, for having me. It's a pleasure.
Thank you. This was a great conversation.
Thanks, Spencer. It was great. A lot of fun.
I always like our little banter.
Those voices belong to some of the memorable guests who joined us this year, a roll call that stretches from A to Z – from Allen de Olazarra of Parkway properties in Miami all the way through the real estate alphabet to the inimitable entrepreneur Sam Zell. After a year of uncertainty in 2020, they shared diverse perspectives of the recovery and response, as the accelerated vaccine rollouts in Q1 shined a ray of hope. Our year on the air began with an episode about the self-storage sector. Industry leader Liz Schlesinger offered a personal story that resonated with words of advice for our time.
My business is called Merit Hill because it’s meritocracy and it's a hill. You’ve got to keep going when life knocks you down. You don't build success without grit and determination,
Grit, determination and success. I'd add resilience, too, and other key themes that emerged during our programming year: Evolution and adaptation. Change in business relationships among occupiers and owners, labor and management, people and places. Wellness and ESG were hot topics, of course, as were flexibility and live-work-play. Some of the biggest words of the year were probably these: Culture and experience. And we'll talk about those soon. But as a pure real estate issue, perhaps the most stubborn question we routinely explored was the fate of remote work. The aforementioned Sam Zell, joined us in April and shared his thoughts on what businesses needed to keep in mind as they made tough decisions about what would last and what would return to business as usual.
My view is that business success comes from interaction, from sharing of ideas, from competition. What I'm saying in a broader sense is that companies have personalities. Companies have communities. Those personalities and those communities make a very, very significant contribution to the success of those companies. And I don't think that can be replicated by a decentralized version where people aren't interfacing with each other. And therefore, I believe that, you know, as Mark Twain said, the reports of my death are greatly exaggerated. So, too, would I say that reports of the death of office space are greatly exaggerated.
The consensus among our guests was that people liked working remotely, but also yearned to be part of something bigger.
I'm fond of saying that the internet can scale just about anything. But it cannot – it will not – be able to scale intimacy. When you talk emotion, I’m thinking intimacy. Intimacy becomes the new currency that we're all chasing.
Will Page the former Spotify chief economist came on last summer to talk about his book, Tarzan Economics: Eight Principles for Pivoting Through Disruption. And what could be more disruptive to a real estate audience than a pandemic shutdown? Maybe, Will suggested, we needed to rethink what the workplace was really about.
The intention might be to allow workspace for productivity to flourish. That is, how many people do you employ? You know, what's your head count? What's your requirements? And this is your floor space. You know, I think what we're going to see as we come out of lockdown is what you're actually selling is a place for culture to flourish. I'm kind of passionate on this point. Culture cannot flourish on Zoom calls. Culture cannot flourish on Teams meetings. Culture cannot flourish on Slack channels. I'm pretty sure you'll start to see casualties on the hard shoulder of the Internet already appearing there as people start to realize just how valuable it is for me to sit with Spencer in a room at a meeting, then walk out with Spencer after the meeting and talk to him in his year in the corridor. But it's something I noticed in that meeting, that intimacy – back to that word intimacy – is priceless. You can't put a price on something that's priceless. So what you're going to be in the business of selling is a piece of a culture to flourish.
In our midyear report, it was apparent that remote or hybrid working had empowered talent with choices that management now had to consider. But as CBRE’s, Julie Whalen, Global Head of Occupier Thought Leadership, explained on the very next episode, the data suggested that the business world had to find “a sweet spot”.
Our surveys are telling us and have been telling us over the last year that the world is moving to a more flexible place in terms of the way that employees engage with the workplace. We surveyed in June of 2020, we surveyed in September of 2020, and now we most recently have surveyed and we asked What type of culture do you aspire to as an organization? And these are real estate decision makers that we were asking in the future in a steady state and an overwhelming majority of them, like I'm talking in the 80 percent range, said we want a more hybrid workplace. But the nuance is, is that we offer them two options with hybrid. One is hybrid with company guidance, and the other was hybrid, where employees have total freedom to choose. And what we found is that nearly everybody chose that hybrid with company guidance, meaning that there are going to be some degree of guardrails put in place where employees understand how to operate in the flexible world that their employers are placing out there for them. Nearly none said fully in the office. Nearly none said fully remote. All of them really were in that sweet spot. And what was really interesting is if you look at June to September to April results, it was an upward curve in terms of the conviction that our survey respondents had in terms of that answer.
While the future of office remains a work in progress to this day, we explored real estate sector by sector. Industrial and multifamily ruled the world. While some new kids on the block like life sciences and data centers were on the move. Technology driven real estate was strong and, ironically, we also saw a return to something that sounded like a blast from the low-tech past: good old-fashioned wood. In May, we welcomed Laura Hines Pierce and Steve Luthman of Hines to talk about a surge in the construction of buildings made up from laminated timber or CLT.
One thing that I will say that's really interesting about these buildings is the way that people engage with them. People that walk through these buildings for their first times, they touch the building. They touch the columns. They engage tactically with the wood. And they smell different. These buildings smell like an old cabin. And I think there's something biophilic about that for people in terms of how they engage with it.
Steve was alluding to the idea of personal experience driving business in real estate. In sectors facing challenging paths to recovery, that theme of experience was even stronger.
Pre-pandemic, everybody was talking about the experience economy and people want experiences more than they want physical things. I believe that then and I still believe it now.
That's Marriott Hotels president Stephanie Linnartz. In August, Stephanie checked in to put the massive downturn in hospitality and travel into context. Marriott, she said, had endured some of its worst quarters since 9/11, a 90 percent drop-off in occupancy during the early days of the pandemic, 25 percent of the company's properties closing. On the show, however, Stephanie was bullish on her sector because of the same human need driving the recovery elsewhere.
Maybe after the pandemic, people want experiences even more now because they want to see their loved ones and have rich, meaningful experiences in their life. And that's really what travel is about, right? So I am a big believer that travel will come back. I think business meetings – it will change. We've all gotten used to Zoom and teams and all these tools, so I am not naive enough to think it won't impact us at all. But there's nothing like being with someone in person. If you've got to do a strategy conversation, you're trying to sell something. Nothing replaces that human connection.
Looking at another sector on the rebound, we devoted several episodes to retail, a sector challenged by the lockdown, by e-commerce supply chain issues and more. By the time the holiday season rolled around, retail numbers were looking good and the consensus among our guests, analysts, investors and operators alike was that creating experiences – there it is, again – experience is what lured customers back to stores that would be essential for the future.
I think there's a level of being immersive and carrying through the purpose of the brand, using as many of the senses as possible. So physical: it’s the build out. What does that actually look like? What is the experience you have entering the store? The level of service, you know, talked about a lot, but brands are spending an extraordinary amount of money to acquire customers and bring them into the stores.
Laura Barr leads a CBRE retail team in San Francisco. In August on one of our many shows devoted to the retail sector, she helped us spotlight the sustainable footwear and apparel retailer Allbirds, a digital native brand charting its own course, expanding from e-commerce into bricks and mortar. Here's Allbirds head of real estate Travis Boyce on the company's approach.
So let's go with this word that Laura used Travis experience. What is the consumer experience that you want them to get out of your store in, say, Northern California versus, say, Berlin? Is it the same experience? Different? Or do you try to make it locally focused?
Yeah, it's a great question that we try to have some consistent themes and aspects of that experience. And so from a visual perspective, you walk into one of our stores anywhere in the world, whether it's Asia, North America or Europe. You will sort of recognize very similar design elements, fixturing, obviously the products. So we try to have consistent visual cues. The actual try-on experience and the rituals tied to sort of the customer journey, we also try to keep somewhat consistent. And we found that the actual moment the person puts the shoe on is the make or break moment. And it's usually the a-ha moment when someone who hasn't tried our product steps into a brand new pair of wool runners for the first time and realizes why they've heard such great things and now believes the hype or what they've heard before they step foot in them. And so those types of things, we sort of hold precious and we try to keep those consistent around the globe. And then there's elements that we do adjust and change and we try to localize some of that. Obviously some of the graphics and the copy needs to be translated very obviously in different markets based on the language and then some of the nuances around customers and who comes into the store. We have some stores that are very neighborhood, locally focused. And so there's a lot of repeat customers and folks coming in that we get to know and spend a lot of time with over the course of a year as they visit every month, if not more. In other markets, we're heavily tourist driven, and so the pace of the store is different. The interactions are often first-time exposure to the brand versus repeat customers. So we try to tailor that experience depending on the type of customer and a little bit tied to the location and the types of individuals visiting the store. But we definitely have these underlying experiences that we want to remain consistent both visually and as part of the customer journey.
We also looked at the changing nature of markets. We spanned the globe to offer regional perspectives on the reopening –although we're not all business around here. At times, our world tour took us on site trips like this turn in our episode on Australia with a CEO of Charter Hall, Carmel Hourigan and Amanda Steele of CBRE Property Management Pacific.
So final final question: INXS, AC/DC, Men at work or other as the greatest Australian band of all time, Amanda?
INXS. So easy.
INXS. There we go.
Not only are they cool, but hello, very sexy as well.
Know what else was cool this year? We got to record a handful of on-location episodes, taking our show on the road for our first face-to-face conversations. The itinerary took us from the headquarters of Brookfield Properties in Manhattan's World Financial Center to Madrid with a host of Al Día con CBRE, Javier Chico, who shared what his team has been hearing from business leaders on that side of the Atlantic.
They've understood the value of real estate can impact every aspect of the business.
We visited Midtown Manhattan and the Bryant Park location of industrious to talk co-working. And we landed it in the innovative city of Lake Nona, Florida, where developers from the Tavistock Group have been creating a mixed-use plan that even includes what they call a “Vertiport”, a transportation hub ready-made to serve airborne commuters. Here's one of its co-founders, Rasesh Thakkar.
Our vision statement is creating the ideal place that inspires human potential. All of it through innovative collaboration. Those three elements of place. Inspiring human beings and collaboration is something that we are so obsessive about. We can't help but create an environment that I think will compete.
That episode touched on a huge topic that elicited different takes from our guests, namely: What is the city of the future? It's a question we explored with minds such as Joel Kotkin, author of 10 books, including The City and other big thinkers. On an October episode, we cut to the existential core of this question with the author of a thoughtful bestseller, The Rise of the Creative Class, urbanist and professor Richard Florida.
A labor market is really the definition of a metropolitan area. That's what a metropolitan area is. So it's an organized labor market that includes the center city, its suburbs and the rural periphery. That commuting shed makes up a metropolitan area. I think remote work changes the game a little and stretches the boundary of the labor market.
On that same show with Richard Florida, we were also joined by CBRE’s own Richard Barkham, our most frequent panelist, by the way. Our conversation delved into an interesting concept known as the agglomeration effect – the tendency of development, jobs, amenities, culture and creativity to cluster. Cities would be stronger, they suggested, precisely because of the urban flight we'd seen in the wake of COVID.
What actually ultimately it does as you shift out the jobs that don't need to be there because it's too expensive. You end up actually strengthening the city core because the costs don't accelerate as much as they would. And that allows kind of more creatives to move in. And you might be looking at some sort of dispersal of talent, but history doesn't say that. History says that talent will continue to flood in and benefit from what we in the business call these really powerful agglomeration effects.
I mean, I think you're right, and I think you said it better than anyone, but I've talked to everybody about this. I think the rebalancing, you nailed it. It's that the more routine activities, whether those legal activities or professional activities or the office work that was packed and stacked in towers, some of that will disperse. And I think you nailed it. What comes back to cities is the truly creative and innovative work. That, in fact, cities become more specialized in the things cities should do.
Another provocative idea came from the pages of a book that we cracked on the show, Healthy Buildings: How Indoor Spaces Drive Performance and Productivity. Harvard's John Macomber and Joe Allen offered a new way of thinking about real estate. That is, people don't merely utilize the physical structures and spaces in which they work. Those structures and spaces – the real estate itself – actually influence performance. Here's Joe Allen in November.
Things like, how does the air quality influence your strategic decision making performance? How does it influence how you seek out and utilize information? How does it influence your performance during a crisis? How you respond? And importantly, how do you recover from that crisis? And the study tested how simple changes to indoor air influences those parameters. These are not studies of some wild, extreme, unattainable, super healthy indoor environments. It's pretty much what every building can do right now, bring in a little bit of more outdoor air, use products that emit less of these chemicals, lower the CO2 concentration, and sure enough, people think more clearly.
The authors have spent years studying the effects of workplace conditions, testing hundreds of workers multiple times in different types of offices around the world. And what did they find? That something as simple as air quality, for example, has real benefits for productivity.
Every time you improve the ventilation rate, there's no threshold. There's no magical cutoff. So it tells us, importantly, that even the good buildings have room to improve.
So if I were to sum it up, if we do many of the things you're suggesting in your book, healthy buildings make you money. They may cost a little bit to install, but they actually end up making you a lot more. So John, now put on your construction hat, walked me through how you, Mr. Builder, see the return on investment from healthy buildings.
Part of what we used in our financial model is essentially a zone of possible agreement. We did some math saying, OK, here's a typical tenant – might be a law firm or an accounting firm or something like that. They have 40 employees and usually a firm like that, their payroll is about half of their income statement and their rent might be 20 or 30 percent of their income statement and their utilities, if it's a pass through like a net lease, are four or five percent. So if you think about trying to save energy on the tenant side, here we are trying to save five percent of five percent. That's peanuts. If the kind of research that Joe has found shows that people can indeed be a standard deviation clearer in their thinking, that potentially goes to the top line – the total holy grail. If that tenant, if people, can do two more reports, make a few more calls, do a couple more claims processes and analyze three or four months or business plans, that's even better than avoiding sickouts. It’s real revenue to them
In a world increasingly focused on this topic due to the pandemic, almost every show somehow touched on wellness, sustainability and, bigger picture, the emergence of ESG capital – or ESG plus R as some would have it: Environmental, Social, Governance plus Resilience. We covered ESG in conversations about subjects as varied as construction and higher education, and intertwined as solar panels and infrastructure, as emergent as diversity and inclusion, and, of course, physical and emotional health. It was a breakout year for attention to impact.
So the first thing I'd have to say is that wellness is not a destination that we achieve and have forever. It's a process
That's Lisa Furst, chief program officer of Vibrant Emotional Health on a July program we devoted to the wellness piece.
Do wellness policies procedures help attract and retain talent? And what are some of those policies and procedures you'd recommend to be able to maintain that for your organization, Lisa?
There's been a lot of studies about organizational wellness, corporate wellness that pre-date the pandemic, and all of them point to this idea that taking care of the whole person and allowing avenues for folks to take care of their whole selves doesn't just lead to more satisfaction in the moment, but people feel happier and more satisfied with where they are in the company that they're working for. So attention to wellness does pay off in terms of attracting and retaining talent.
Zooming out on the ESG investment landscape, we discussed this potential sea change in business thinking on a panel we put together last spring, featuring three influential CEOs who are leading in this discipline. Scott Dennis of Invesco, Chuck Leitner of CBRE Investment Management and Sonny Kalsi of BentallGreenOak. Here's an exchange between Chuck and Sonny, who starts our next clip describing this powerful trend.
The practical reality is the investors in our businesses want to see demonstrable, measurable improvement, and they are going to reward those managers who show that demonstrable, measurable improvement. And I think the U.S., you know, the Canadians, to be fair to them, are probably ahead of the U.S. investors. The U.S. ambassador is going to catch up quickly on this right. My view on this is you can have a long discussion about what the right thing to do is. You can have a long discussion about how much it impacts on top and bottom line. What's most important is the investors wanted and expected. And so we got to deliver on it. And that's why I say the table stakes
What Sunny talked about in terms of table stakes – measurable table stakes – that's how it's going to show up, right? People making quantifiable commitments to an objective. Now we all know it's hard to get to an absolute goal. I think the big step is your commitment to work on getting there, which makes a big statement and your willingness to measure progress against those goals. It takes a lot of bravery, though, to put a number out there and also be able to say, explain why you're not there or why you may never get there to an absolute, you know, net zero situation. So there's going to be a lot of nuance, I think around once again that measurable comment that Sony made is so accurate. But it also is how comfortable with measuring progress against and explaining why we may choose not to get to zero on a particular asset because you have to sacrifice other goals and objectives with your investment to get there. And I try to say to investors, I think they get it. You know, we also have a very important responsibility to deliver a financial return to them because they're delivering on retirement savings plans for their constituents, too. So you're constantly balancing how that works. But I think clearly it's not even a guess anymore. We need to put numbers on the table. We need to manage ourselves to those numbers, and we need to learn how to explain how we're progressing against those goals. Or I couldn't agree more with Sonny. You're just not going to be in the conversation if you don't do that.
Our guests’ own lived experiences, inspiring career journeys and personal stories often took center stage as well. We learned from corporate leaders and risk-taking entrepreneurs, self-made men and women, economists, athletes and even a bachelor – OK, The Bachelor: former CBRE broker Matt James, who offered some practical takeaways based on his television star turn. What works on a reality dating show, relates to the work we all do every day.
There's a million different ways to tell people the same information, and if you're finding a funny way to do it, then like do it. Be bold about how you go about that process because that's going to keep people coming back for more. And I think you do a great job of it and it's something that I want to model going forward from a professional standpoint is just find unconventional ways to be conventional when you make something digestible. For someone who wouldn't necessarily be interested in what you're saying, then that's when the real sparks fly. So just trying to find ways to keep it creative and keep it interesting is my biggest piece of advice.
Thanks for the rose, Matt. We also got some great advice from Mary Ann Tighe, CEO of CBRE’s Tri-State Region, when she appeared in March. Networking was her key to the city. Take the proverbial six degrees of separation, she advised, and tighten the connections. Create a professional network not only of bosses and colleagues, but anyone who might answer a question or solve a problem. That, she added, will grant you the invaluable power of saying yes.
Mary Ann Tighe
I have to say that part of my success in real estate is that I haven't waffled around trying to find answers to things I get from here to there quickly because pretty much in New York City, anyway, it's two degrees of separation, not six. And I should add that, you know, I was the first woman made head of the New York Real Estate Board in 2010. That's directly the result of having made all of those relationships. So I urge people to reach out to architects, developers, project managers, government officials know them all. They all have something to teach you, and they all want to learn what you have to share with them.
Mary Ann, one of the things you told me more than once was that when somebody calls you with a question about whether we, CBRE, can do something. Your answer is always: Yes, we can. And doesn't that speak directly to your network of relationships?
Mary Ann Tighe
A hundred percent. It's so funny that you are saying that because it has never failed me. That's the craziest part of the story. People ask the most obscure questions. I'm like, Yeah, I'm sure I can find somebody who can do that.
Well, we're glad you said yes to our show, Mary Ann. To you and everyone who appeared on our air in 2021, we are grateful for your time and perspectives. And to all of you in our audience, a big thank you as well. We're now one of the top business and commercial real estate podcasts on the air. And it's thanks to you, our listeners, especially those of you who share the show. We hope you'll continue to do so and encourage others to subscribe, rate and review us wherever they listen. We look forward to your feedback in the year to come. And as always, if you want to learn more about the show, check out our website CBRE.com/TheWeeklyTake.
I'd now like to take a moment to give a shout out to all who bring our show to life behind the scenes, both inside and out of CBRE. The Weekly Take is produced for CBRE by Foglight Entertainment, with episodes written and produced by Evan Kanew and produced by Gregg Backer. Shows are edited and mixed by Travis Stewart with additional editing and post-production work by Cooper Kanew. Our theme song is by John Viera and Mickey Drums.
For CBRE, The Weekly Take team is led by senior producers Brian Reed and Bradley Werner, with help from supervising producers Zak McIntyre, Rae Colley and our former colleague Teresa Bosso. We'd also like to acknowledge executive producers Jennifer Morgan and Benji Baer, as well as our colleagues in research, Julie Whelan and Richard Barkham, and, of course, the indispensable input from our partners in corp comms Kris Hudson and especially the indomitable Steve Iaco. Our digital marketing crew includes Lisa Anderson, David Ting and Casey Pennington. And our creative team includes Jamie Pabst, Shana Lengyel and Jon Low. Thanks to all who help make the show what it is and get it out into the world week after week.
We'll be back in January to ring in a new season. With ever-changing market conditions, emerging ideas and technologies and, alas, COVID variants continuing to challenge us. There are always new questions for us to ponder. So we hope you'll join our ongoing conversation about the world of business and commercial real estate. I'm Spencer Levy. Be smart. Be safe. Be well. And be merry. Have a happy holiday and a fantastic new year.
Global Client Strategist & Senior Economic Advisor, CBRE
Spencer Levy is Global Client Strategist and Senior Economic Advisor for CBRE, the largest commercial real estate services firm in the world. In this role, he focuses on client engagement and public-facing activities, including thought leadership work performed in conjunction with CBRE Research. He also serves as Co-Chair of the Real Estate Roundtable’s Research Committee.