freemium

Just read excerpts by Financial Times John Grapper and Wired Magazine's Editor Chris Anderson about the new business model some are calling "Freemium". It is definitely geared towards the new Internet model 2.0 where things are not pushed at the consumer but rather given openly and freely and on a "Hi, I am here to help you if needed and in the meantime here is free information etc." This model or idea is not new to the real estate industry when you think about it. Google is the master. It does not get the information we give it free information and it aggregates it. So in essence it does not pay for content and in return gives it back out. A "Freemium" to us the user. It makes it's money by having ads placed by a few who want to be first or higher in the search content results.
But the real estate industry has not taken it to the full extent that Google has. We still pay to place or view information on a system (MLS, PropertyDrive,CoStar etc.) and very little in the advertising or placement venue as a revenue stream. As a broker we offer this information to clients or customers and the real value is we are able to interpret and make sense out of the information. Guidance Counselors in a sense. That is why and where our value comes from. Our experience and knowledge in the profession. We can help our clients get the best possible price, in the shortest amount of time with the least inconvenience and we are paid well to do it. Of course, there are some out there that do not need us to do so and that is all well and fine. 80/20 rule. We will work with the 80% and that is more than enough.
So let's embrace all that free information out there. All that "Freemium" means more work for us to help clients make sense of it all.

summer sentinels

Just another typical cool rainy day Monday here in "Madtown". Barely 60 degrees, cool and wet. In two weeks it will be the Summer Solstice.
photo "union sentinels" by dmk
Daylight will get shorter. Less time to spend outside especially at one of my favorite places. The UW Memorial Union on Lake Mendota. It is a special place on a Friday or Saturday early evening. Reminds me of my College Days but yet is even more exciting and entertaining now than it was then. Those famed chairs staring like sentinels until one by one, as they beckon people to sit down and relax, fill up through early eve.
The feeling of the warm sun as it starts to descend to be extinguished by the Lake, the smell of popcorn, burgers and chicken on the grill, and the refreshing taste of a cold beverage( beer is my choice on a night like this) as one listens to the lapping waves of water. Soon almost all chairs and picnic tables are filled and a band starts to set up for evening entertainment. The Boathouse Whistle screams as the steam is released warning everyone that the sun is setting and time for non lighted vessels to return safely home and enjoy the festivities. I love to bring my Golden Retriever down and she loves meeting the children and people that walk by. Maddie is a people magnet for sure. And knows she will be afforded a few treats for her great behavior. Being a Pet Pal at the UW Children's Hospital, well you can bet she knows what to do and is so mellow. I marvel at her and her demeanor. When a child tugs on her long fur she just stares up at me as if to say "Don't worry Dad, they need to do this and it doesn't bother me at all". Then I toss her some popcorn and I understand. One in the mouth is worth two in the bag. It is getting late so we head out and immediately our spaces are gobbled up by others. It is truly one of Madison's Gems and an eclectic vibrant place to be. But tomorrow the chairs will be empty again and gradually work their magic to attract any and all of those who need to unwind and get a taste of summer.

don't choke the chicken to lay the eggs

Like many of you in the industry, it came time to refinance one of our commercial real estate buildings. The 3 year term came due. Now with the slow down in the economy ( I refuse to use the word "recession" unless in a really foul mood) we have experienced vacancies that are above average. We have also given some rent concessions to keep certain tenants, and a few have just gone "dark" or out of business. This lowers your cash flow for as you know, expenses do not proportionately fall at the same rate.
This in turn is how lenders value your property, mainly on the cash flows. It came down to the point where we almost had to put more equity into the property to get to the loan to value(L/V) ratio required. If not, we could have been in default of our mortgage terms and basically out of luck. I am sure many of you have gone through or are in the midst of this quandary yourselves. Even though the new rate would lower our payments, they said at first we were possibly in default of our mortgage due to the L/V ratio. We have never missed a payment, always on time for 20 years. How ironic. Basically told it was due to the new lending guidelines and that since the institution in question had taken government bailout funds, their hands were tied. Well, we came in under their L/V after some lengthy negotiation and we did refinance.
But many others have not been so lucky I have to believe. It is a catch 22 in the real sense. When this will all change is any ones guess. I am sure when we come out of the downturn, commercial lending guidelines will be a new and different animal than before. I just hope it is for the better and lessons learned. Don't choke the chicken to lay the eggs.

Tax day with a capital T

Like many, I have just signed sealed and delivered, albeit electronically, our 2008 tax returns plus checks. Ironically, there are protesters at the State Capitol, dropping off tea bags as a symbol of the original Boston Tea Party, which was a protest of "Taxation without Representation". Lipton Tea's parent stock is soaring. Great marketing idea, ha. Actually, we seem to be getting back to revolutionary times more and more. And maybe we should get back to a simple single pay taxation and a balancing of the budgets on all levels. Seems we the people need some real representation and the ground swell has just started. The Founding Fathers were very wise and the Constitution of the United States is more relevant now than ever. Maybe time we all review it as well as the Amendments and our Rights as citizens.
Also ironic, is that Abraham Lincoln died this day in 1865 from his assassins' wounds. Here are the last words of his Gettysburg Address to remind us all that freedom and our great government does not come without some sacrifice no matter how small it may be.
"It is rather for us to be here dedicated to the great task remaining before us — that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion — that we here highly resolve that these dead shall not have died in vain, that this nation under God shall have a new birth of freedom, and that government of the people, by the people, for the people shall not perish from the earth."

Voting is a privilege and may require some sacrifice..getting off our chairs and going to the polls. Not sure if we can count writing a check to the IRS as a privilege, but it is sure a sacrifice.

the times they are a changing

More than just the name of a great old song things keep on a changing. Who would have thought Michigan State would be in the NCAA BB Championship, an upstart looking to unravel the grip of a perennial champ. No, I am not just talking BB here, but the same could be said for the Dane County Executive Race. I am comparing the two, Michigan State and Nancy Mistele both in a great position to make a major upset bid. Can you believe it? Both have a chance and both are the underdog and the trip to the finals has been what everyone expected it to be. Hopefully it will be a knock down drag 'em out championship game with the best team/person ( and I guess we could say team for Mistele's campaign team) winning. The one thing we know is constant is "change". Change in the good sense. Some cents and sensibility back in the Dane County and back in Big Ten Country. Just make sure your voice is heard in front of the TV and more importantly on election day. "You make the call!" in the very sense of the word.
And for Major League Baseball? That generates millions of dollars in revenue for southern Wisconsin and especially SE Wis. Let's wish them all the luck and keep the Cubs/Brewers rivalry going. They drink beer too don't they?

real estate spring madness or numbness

The anticipated Spring Madness has finally arrived and no doubt many of us are numb to the events and how and why Bucky should have or should not have made the Big Dance. We probably put more time into Bracketology than into our businesses of Commercial Real Estate.
But Spring is finally here and the feeling of a new awakening should have our spirits lifted. But does it? Is there that looming economic cloud hanging over our heads that dampens the excitement or are we feeling the change and realizing that we are not that much worse off than last year and in fact see some progress and gain. I certainly hope so because I feel it myself.
And that brings me to our next survey. Do you think 2009 will be better or worse for your Commercial Real Estate Practice or just the same drudgery. Let us know your opinion.
Ralph

transportation to somewhere?

The Governor has just stated we are looking into rail service from Madison to Milwaukee to Chicago and possibly use some of the states economic stimulus for it. I know I have driven many times to Columbus to catch the Amtrak Empire Builder to Chicago for the weekend. A bit pricey but an easy ride right to downtown. Just think if it left from downtown Madison? Brewers Games, Shopping and Musicals in Chi Town. But at what price? If the convenience does not outweigh the price, we will still be hard pressed to give up our auto's. I am curious aren't you? Take the next survey to sound off or reply to our Blog.

The results are in for our survey on "how will the economic stimulus bill affect commercial real estate in our local greater madison economy"
33% say will depress it.
46% say not much
3 % say somewhat