Colli Real Estate

Influenza and recessions: the fear and reality catalysts affecting commercial real estate

As I wrote in "impact technology in commercial real estate recession, the recession becomes a possible catalyst for more distance and space use office. The point the article was not just that technology is the catalyst for an evolution of telework, but also Sometimes it takes a catalyst to bring all the consequences of a likely imminent. Over the last two days, the world awoke to headlines about a possible pandemic of swine flu, and found the catalyst for a new possible. With the fear that this is a reaction excessive or not a pandemic on the horizon, the idea of going to an office with several hundreds or thousands of people do not seem very attractive, not to mention public transport to get there. One might think that any person capable telework may have chosen to stay home those days.

My position is always the effect of technology on certain types of commercial property increased in the initial article, and extrapolate is also important to understand what would happen if a pandemic occurs in altogether. Not only is that office space and retail space associated with them, but can not go further into the supply chain to consumers. For example, in parts of America North, online shopping has been abolished, but not as many have expected. However, to use the terminology of Malcolm Gladwell in his book now famous "The Tipping Point", has not opted for a consumer trend of law or an epidemic, as saying a Netflix or iTunes. However, if the idea of going to the grocery store and getting the flu seems too risky, may suddenly cause people to attempt to purchase online for the first time. Once buyers start ordering their groceries online, then would create the possibility that they do their shopping Online, even after that fear has disappeared? In addition, online shopping and telling their family and friends who are in fear of contracting the flu, also convince others groceries online as well?

Supermarkets are one example, but in general any place where there will be many people in a confined space is likely to be avoided during an influenza pandemic (or the fear of one). However, the Mall will also be a place avoid, and could lead to new online buyers. The point of all this is that catalysts assist trends occur naturally. I like many, believe that the natural order of things will cause a movement growing in cyberspace, businesses and consumers. What makes a pandemic Influenza is interesting to note that could start to hit major retail properties. We are not talking about 2000 square meters Blockbuster stores, in this situation is beginning to hit its 10,000 + supermarkets per square foot. What is very worrying, not only for supermarkets themselves, but for any additional details supermarkets around and feed on their business.

Before you go and begin to sell all its properties Commercial realize that we are talking about extreme situations and not something that happens overnight. Definition of investment based solely on the probability pandemic influenza Full Blown is as strategic as hitting 19 in blackjack. However, do we contemplate the fragility of economic models current that rely on physical space. These models are based on bricks and mortar stubborn attributes are threatened by new models that use technologies that are cheaper, faster and, in this case, safer for the consumer. An example of models of the new technology revives an old industry online activity BasicFunerals.com. Funeral seems very first online service and cremation with no assets material. No big head, providing all the services of a funeral home to about half the price. This is an example of an older who do not think anyone would change. This does not mean that all commercial real estate will suffer a transition to cyberspace, other types commercial real estate may well succeed or see no effect. For example, some large retailers such as Costco, depending on location, could be more for a facility centralized storage to provide such products to consumers' homes. In my opinion, the types of assets such as the multi-family and mixed use light should not be affected by what the people need a place to live, and convenience stores outside of malls are more practical for a world increasingly more constrained in their homes. In addition, as described in the previous article, "Effect of technology on commercial real estate in a recession "I spoke of office space is generally more affected by distance. However, I think the space doctor's office may do very well, especially with an aging population.

What is important to consider is that only you can take the fear of some something like a pandemic flu to be the catalyst, not the event itself taking place. When markets are afraid, sale actions and a flight to alternative investments such as gold and other precious metals is a common theme, all based on fear to invest or disinvest is not new. In addition, I believe, like many others, is likely to face a double-dip recession inflation created outside the government "over-stimulation" to crush an incipient recovery and begin a much longer, painful recession. Anyway, companies that have moved into telecommuting, the need to reduce costs while trying to maintain productivity, is no office space for rent short term. In addition, retail clothing are in fear of a prolonged recession will not be seeking new business premises. The fear of a cold or the reality of a recession in the results of business models, like it or not. For more narrow-minded people to feel a physical space is essential for business, ask yourself and your friends they have never been to a music store after downloading songs from their iPod, or the last time I went to a video store after using the application or Netflix, or if you still have a newspaper subscription. Change is only afraid when you're not ready to adapt. And you?

Copyright: Sunday Mazzone, Regent Global Funds, 2009

This article has been written by Dominic Mazzone, Managing Partner and Fund Manager of Regent Global Funds.

This article and others like him can be seen in www.investingsymposium.com part of Regent Global Funds Network.

Regent Global Funds, is an alternative investment fund that offers its participating investors and asset backed investment assets through loans based.

Managers of Regent Global Funds have an expertise in commercial real estate loans and created a vehicle for successful investment alternative which is diversified through this structure. They separate other fund managers invest their own money in the individual side by side with their investors in the funds, creating a structure of absolute surrender accounts. Sunday Mazzone has written about the need for this type of liability in an article entitled "Fund managers should be accessible and personal investment."

About the Author

As a Managing Partner of Regent Global Funds, a private equity and debt fund, Dominic Mazzone brings a track record of success and innovation to his current position as a fund manager with his experience in the real estate and lending business. His experience in real estate led him to being responsible for maximizing revenue through strategic best-use practices, as well as property rehabilitation in a portfolio of investment properties within the U.S. Dominic has been involved with development projects throughout the U.S. including California, Arizona, Florida, Kansas, and Hawaii, and is currently part of a consortium of investors in Scottsdale, AZ, developing an 80-acre site for an exclusive enclave of luxury homes overlooking the Estancia Golf Course. Dominic had his start in the lending business underwriting loans in Canada on properties that were precluded from conventional financing. This led to similar lending opportunities in the U.S. and the eventual formation of Regent Global Funds in Chicago.

Formal education includes Mesa College in San Diego and the University of Southern California in Los Angeles.

Dominic is a general partner of Scottsdale Partners LLP, which is involved in real estate development in Scottsdale, AZ, as well as Waikoloa Partners LLP, a syndicate of real estate investors in Hawaii. Dominic sits on the advisory boards for the technology companies Voice Cloud and Nile Source Outsourcing.

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