Umm, yeah Miami Sounds good

I have always been a fan of people or groups willing to take a "big swing". I really enjoy seeing people seize the moment. Taking big risk and getting a big reward is a great feeling to have, like when Charlie and Rain man take Vegas. For the Foram Group, this big swing is going to miss. It's not going to just miss, it's going to miss bad.

In a New York Times article dated from 2006 near the highs of the real estate boom, there is noted criticism about growing too fast without the visible need for more office space. The fact that Foram Group was building A+ office space with over half a million square feet in an already over built space seems foolish.

The irony of it all is that former mayor of Miami, Manny Diaz, in the above article is, "cheer leading" much of the over development. "The developers building in that area that I know are responsible folks." Apparently the Mayor has a lot of faith in developers knowing when enough is enough. I guess Manny didn't get the memo, developers only get paid when they build something.

George Soros in his book "The Alchemy of Finance", espouses the idea of "market equilibrium" as an idea as faulty as the Theory of Efficient Markets.

He believes that markets do not always come to a balance that it will burn itself out and then start over and repeat the loop. From seeing the different booms and busts over the last 25 years, who can really disagree? Unwise gambles like building a 600,000 sq ft premium green office space at the end of building boom in an area known more for beaches then business doesn't prove Soros wrong.

Maybe a warning flare should have gone up when Foram had to cancel it's effort to build a second phase to its office complex, or losing its anchor tenant, Bilzin Sumberg law firm in 2009.

This reminds me of something that happens a lot in the world of pop culture and sports. Normally a sports team dangles itself out there and suckers a city into building a new arena. The city uses hundreds of millions of tax dollars and "to be even" the team throws in two million. Citing all kinds of unseen benefits to the economy that will make this deal a "no brainer". Well this time the city won. The city got all kinds of benefits of new construction jobs ,zoning and building fees. The developers for all their vision currently have no tenants as of the writing of this article. That comes as no surprise because in Q4 of 2010 Miami ranked in the top 10 across the nation in square footage of new office completions and under construction (click on completion and construction).

I am a firm believer if you offer criticism you should offer a solution. Foram if you look at their portfolio. Eight of their nine properties are in the Southeast region, with the exception of Triple J ranch in Colorado. Going off the idea they wanted to emphasize staying in the south. Orlando just makes a lot of sense. Orlando is dead last in square footage of new completions(55 K) and fourth worst in under construction(105 k). A high end green space would command its lion share of rents, as well as stand out compared to the construction currently underway.

I understand Miami and Orlando are different. Orlando doesn't have the same beaches, same atmosphere, or same reputation. Business that requires high end office space is done during the week, not the weekend or with a Mojito in your hand. The sensible choice for Foram should have been a development in Orlando. Let's see how they do.

-The Inside Associate

A New Day, A New Blog, A New Perspective

It's my great pleasure and personal honor to welcome you to my blog The Inside Associate. The idea to have a blog has been marinating on my brain since about late December of 2010. I wanted a forum to point out interesting developments in RE coming about from Macro-Economic events.

My personal goal for this blog is to be a place where somebody involved within the industry can visit. Look around and add to their perspective on current events and things happening in our field. I will focus on things directly and indirectly "making waves" in RE and provide thoughts that are "Sub Rosa" hence the term "Inside". I will be looking at this from the point of view of a "Young Turk" making my way through our industry hence the term "Associate".

I will consistently try and gather information from both sides of orthodoxy. The optimist, the pessimist, the bull, the bear, the extravagant, the frugal. I will not try to referee who or what is right or wrong at the time. In my experience life and business isn't black or white. Many times it's shades of gray.

The format will revolve around finding an interesting view on the industry in it's current state. I will try to do some groundwork and provide a take to add to the topic or news and move from there. Every so often, I will try to get some opinion leaders, industry movers, and thought drivers to provide their perspective on things.

So to recap, this blog will provide a point of reference on large scale events causing ripples or movements within the RE industry. This blog will try to give context and proportion, and a little of the "inside baseball" that is beneath the surface. What this blog won't be is political beyond talking about government actions and ideas or a platform to push an agenda. What this blog will be is informative, expansive, unafraid, and possibly a little irreverent.

For now, that's all I got. I'm looking forward to getting underway and getting your feedback.

Till next Time

The Inside Associate