Browse Tag: Wall Street

On Wall Street, Profits And Bonuses Dont Live On The Same Ledger

In 2013, Wall Street’s profitability was down 30.1%.  Naturally, this effected bonuses for that year.

They rose…by 15%.

In the Guardian piece You eat what you kill: Wall Street bonuses keep soaring as profits decline, we get a clear picture of what investment banking really means. “Too big to fail” has become “too big to fail to take a bigger bonus no matter the performance”.

It’s while reading stories like this that I’m most relieved that the commercial real estate industry has an entirely different framing than Wall Street’s, one I like to call “reality-based”.  From the piece:

This year, bonus payouts will amount to a whopping 170% of the profits reported by New York stock exchange member firms – profits that continue to be eroded by legal settlements and regulatory expenses. Back in 2009, that figure was slightly more than 36% of profits, and it has crept steadily higher.

Wall Street prefers to look at bonus payouts as a function of revenue. Even so, that still means that banks like JP Morgan Chase, Goldman Sachs and Morgan Stanley are handing over about 40 to 50 cents out of every dollar of revenue they generate every year in bonuses. The argument is that they need to do this to keep their top performers in place, and to provide them with an incentive to keep bringing in more revenue. “You eat what you kill” is the motto on many a trading desk.

[…]

The problem, of course, is that if anything, Wall Street should be becoming more cautious. Investors have created a bubble in parts of the bond market thanks to ultra-low interest rates, and it has sparked a craving for any securities that will generate a steady stream of income. Bankers have earned big bonuses for helping to foster this: for feeding the bubble by issuing more and more junk bonds, even as the safety level of those below investment-grade securities deteriorates.

There are two arguments that you’ll hear from Wall Street. First, that bonuses are big because base pay is low. Secondly, they’ll tell you that they need to fork over the big bucks in order to hang on to talent, because if they don’t, hedge funds are just waiting to snap up promising young traders and bankers. Both arguments are flawed.

Read the entire Guardian article here.

Commercial Real Estate News Roundup for Sept. 10, 2014

Phoenix_AZ_Downtown_from_airplane

Disrupting the taxicab industry is a job that needs more elbow room, the rise of the “dirt REIT”, and Phoenix, AZ (pictured above) rises from the ashes like a…well, like a Phoenix.  It’s all here in the Commercial Real Estate News Roundup for September 10, 2014

General

Some Retirement Plans Include Private Commercial-Property Funds, WSJ, Sept. 5, 2014 – The 401(k) industry is learning that commercial real estate is an earner when equities don’t quite meet expectations.

Brokering New Ground in California Commercial Property, WSJ, Sept. 2, 2014 – The double-commission comes under scrutiny in the Golden State legislature.

 

Office

Conshohocken, Pa., an Old Steel Town, Now an Office Hub, New York Times, Sept. 2, 2014 – Renovation, restoration and new vision in Pennsylvania’s steel country leads to a white-collar boom.

Prominent L.A. developer to build unconventional office at Playa Vista, LA Times, Aug. 28, 2014 – A major shaper of the downtown Los Angeles skyline returns to the development world, plans in hand.

Uber has already outgrown its brand new offices, SF Chronicle, Sept. 4, 2014 – Taxi-industry-demolishing web application’s home offices grow too fast for their floorspace. No word if Uber drivers will haul any packed-up boxes on moving day.

Silicon Valley Offices Are Stunningly Pricey, Just Like the Workers Inside, Wired, Sept. 3, 2014 – “You have to spend money to make money,” observes everybody who ever made money. Coincidentally, spending money is a great way to lose money, but few in Silicon Valley would admit it.

 

Industrial

Shovels are turning for Twin Cities industrial projects, Minneapolis Star-Tribune, Sept. 6, 2014 – Twin Cities Metro area enjoying an industrial resurgence as projects aim to fill in the space between the 10,000 lakes.

Tesla: Envisioning the impacts on life in Nevada, Reno Gazette Journal, Sept. 6, 2014 – Big doings promised in the desert, as a 5 million square foot battery factory is planned by Tesla Motors.

 

Retail

Looking for retail, office space in downtown Mobile? Try this new tool, Alabama.com, Aug. 26, 2014 – Handy snapshot of retail space opportunities in downtown Mobile, AL.

SouthCoast malls adapt to fend off e-commerce giants, South Coast Today, Sept. 7, 2014 – Physical shoppers: they exist, they spend money, they prefer laying hands on product and they’re not all over 30. Take heart, retail sector.

Retail vacancies at five-year low, North Jersey.com, Sept. 2, 2014 – Absorption in the Garden State has driven vacancies down.

 

Multifamily

What slowdown? Phoenix, Valley cities considering a number of real estate projects, Phoenix Business Journal, Sept. 2, 2014 – The jewel in the desert, so recently marked by bustout residential developments, has picked up steam in the multifamily sector.  Booms and busts come and go, but demand remains.

Many in Seattle are taking a stand against rise of micro-apartments, Seattle Times, Aug. 28, 2014 – Dorm-style housing is enjoying a boom in Seattle, but are residents happy with what comes attached?

 

Land

Time to Buy the Farm? WSJ, Sept. 7, 2014 – Ladies and gentlemen, presenting dirt REITs.

Virginia farm real estate value increases, Hampton Roads Pilot, Sept. 2, 2014 – Tobacco and other cash crops are driving prices skyward in Virginia.

 

Debt Man Walking

The following is the beginning of a blog post by Ken Ashley,  CCIM, MCR, SIOR  and Senior Director of Cushman & Wakefield, that recently appeared in the Atlanta Business Chronicle.  A special “Thank You” to Editor David Allison for allowing us to reprint a portion!

 

 

As Americans deal with the uncertainty in Washington and the instability on Wall Street, there has been a lot of press about how we should deal with these issues on a personal level. But what should  business leaders do?

Bill Gross of investment giant PIMCO coined the phrase “Debt Man Walking” to describe the apparent dire straits the US faces with its significant borrowing “issues.” How do you as a business leader turn this into Wise Man Walking? More specifically for this real estate focused space, what should you do with office or factory projects that are on the boards today?

To continue reading,  please click for original post in the Atlanta Business Chronicle.

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