Transcript: Top Trends in CRE that Impact the Future- w/ Michael Bull

the trends impact the future. You know, I've studied the market for 30 years. I'm still learning. But I think you also need the people element involved. Because when we see challenges, it's when too much technology, too much email was used, and not enough discussions.

One of the things we like to do with tenants and corporate tenants when they're looking for space is, sure, we want to view the leaders and the CFO. But we also want to say, look, allow us to talk to a lot of your people. They may say things to us that they may not say to you. And let us get a big understanding of how your business operates, how you're running your business, what your pain points are, and where we can make some changes maybe in your space, in your location, in the amenities around you that will really help you be more productive.

Hello, I'm Brittany Campbell-Turner. And this is The Constructor Podcast, episode number 39. Hello, and welcome to The Constructor Podcast, The Best Way to Build It. This podcast is dedicated to helping property owners have certainty in their decisions about their construction projects. We talk about fostering trusting relationships within your project teams, help you understand how to lower risk, be under budget, and on schedule in your construction projects, and most importantly, exceed your end user's desires.

My talk today is with Michael Bull. Michael is the president and CEO of Bull Realty, based out of Atlanta. He also happens to be the host of two shows, the longstanding, widely known and reputable, America's Commercial Real Estate Show, and Atlanta's Commercial Real Estate Show. On this episode, I talk with Michael about the emerging trends as it relates to corporate real estate, like urban development, internet of things, crowdfunding, driverless cars, and most importantly, investing into training and development of employees. We have a fun time during this interview, especially because Michael has a true care about his customers and employees that really shines through in this interview.

He really wants to help reduce the uncertainty when making commercial real estate decisions. Listen in to my interview with Michael Bull. Hi, good morning, Michael. Welcome to the Constructor Podcast. Good morning, Brittany.

Just to give the audience a sense, you are the CEO, real estate advisor at Bull Realty, and America's Commercial Real Estate Show host, and Atlanta's Commercial Real Estate Show host, and you've been doing that for seven years. You interview people about everything corporate real estate. Yes, I have. Yeah, it's been a lot of fun. One thing I really like about your show is that you provide actionable market and business intelligence.

So could you tell us a little bit about who your most common type of interviewee might be and also your audience? Sure, I'd be glad to, Brittany. You know, the people that I interview are typically economists, they're analysts, they're market leaders that are involved in commercial real estate in some way. Like we interview people from CoStar, Rees, RC Analytics, and people from like PWC, and just the other day I interviewed the real estate guru from the Fed. And like you said, we try to provide a lot of information very quickly that the viewers and listeners can use in their daily business to be more productive and do better with their commercial real estate decisions.

Wonderful. Who do you believe is your most common audience? You know, we have between 80 to 100,000 viewers and listeners a month, and they are involved in the commercial real estate industry. They're mainly US based. There's a lot of listeners in DC, Boston, New York, Atlanta, major cities in California.

And they're in some way involved in commercial real estate. You know, maybe they work for big companies that have real estate departments. They are architects, they're lawyers, they're accountants, they're brokers, they're investors, they're managers, they're REITs. You know, people that are listening, catching my show are not house flippers. They're people who are involved in the commercial real estate industry, and they're all over the country.

Oh, that's wonderful. And that's who Constructor is wanting to reach out to as well because we talk a lot about reducing uncertainty as it relates to construction projects. And one thing that I've noticed with also interviewing economists, demographers, and other people who are touching the industry, owners themselves that manage the construction projects, we find that it goes back to how are you investing? You know, what is the purpose of your property in the first place? And how can you get further upfront in that decision making process to reduce that uncertainty?

So my next question for you is about trends, specifically from the owner's perspective. How do you recommend real estate investors invest and make the best out of their real estate portfolio long term? Well, Brittany, I think it, of course, depends on who they are, the size of the organization. You know, we suggest they look at their goals, their risk tolerance, and look at their investors or their company and make long term decisions. You know, you want to anticipate the market, kind of escape where the puck is going, so to speak.

You want to pay attention to the real estate cycles. We've been in a great cycle here for a while. So I think you want to watch that. And of course, you want to pay attention to job growth, population growth, trends. I think you want to look at the market.

You know, a lot of times we'll look at a portfolio and analyze every property independently, depending on its lease structure, capital stack, the loans, when they're due, the interest rates. You know, we'll look at the trends for occupancy and rate growth in the market and in the subject property, you know, compare it to its peers. And then we'll look at the goals, the facility itself, the age and its competition in the market, what new supply is coming on in the market so that investors can make decisions that are based on reality, that are based on facts, and not, you know, kind of back of the napkin.

That's really practical. So what trends are you seeing related to urban versus suburban real estate? Well, I think that's been an interesting situation because obviously the urban in-town cities and overall around the US have done really well. A lot of people have moved in town. Millennials like it.

Baby boomers like it. But at the same time, we're seeing some growth in suburban, kind of close in city centers where people are kind of creating mixed use environments that are in some of the suburban cities around the major markets. So suburbia is not dead and it's kind of reviving, you know, some of those markets. It's hard to build new supply in. You know, the NIMBYs, the Not in My Backyard is there.

And, you know, there's a barrier to entry in some of those markets that can make investing office property or building a new development. Great if you can get in. Zoning is a big issue in permitting in a lot of these markets. So, yeah, I think you got to look at each suburban or urban market on its own and compare it to your goals and your company's needs. But suburbia is not dead.

That's really interesting that you mentioned the baby boomers and the millennials as they're really interested in occupying the urban area. It's interesting also that you're saying that suburbia is not dead and there is definitely a market depending on what you're ultimately trying to achieve. Yeah, there's opportunities everywhere. But there's also some of those suburban markets that are smaller tertiary markets where, you know, you have some of the major retailers that may have been a draw to some of those markets that are going bankrupt or closing up, that haven't kept up with, you know, a new way of selling retail products.

And, you know, some of those tertiary smaller markets where a Sears or a Macy's closes, you know, I think you might find some of those areas suffering. So, and you want to be careful, you know, where you're investing. One of the questions I had is for those markets where the Sears or, you know, what have you might be closing, what are the opportunities for organizations to invest in those locations? Well, I think you want to be careful in those locations. If it's a tertiary smaller market and, you know, the Sears or the Macy's or one of the major retailers closes down, that might be a draw in some of those smaller markets for people to come to those areas.

So, be careful. So you'd have to be a heavy hitter ultimately if you're going to occupy any of those spaces then? There doesn't need to be a reason to be there. I think when you're investing in real estate, you really want to look at the trends for market area. You know, what do you expect for drive growth in that area of population growth?

And if you're looking for the real estate to be the primary driver of your return, now if you're looking long-term for your company, you're looking for a great place to have your facility. Then you want to look at the employer base around there, the education around there. You know, maybe it's a long-term location for you. But I think also a lot of corporations, a lot of companies are looking to be near, they're competitors these days looking for the employees. I think recruiting and retention is really big today.

Absolutely. All right, we're going to talk a little bit about disruptive technologies in real estate. So, I want to understand what role do you think the following will play in real estate investments? How do you think big data will affect real estate? Well, big data is very important.

And I think that's what's driving a lot of our decisions and the data that we have today is remarkable compared to what we had even five, 10 years ago. So I think you really want to pay attention to the data, to the trends of your customers, to the trends of your employees. And like we said, if you're making real estate investments, the trends for the market around you. I had a potential client call me from a city in New York and we have three systems that track all the data on all the commercial real estate in all the major markets.

So we were able to look at his building, the market, tell him what the potential for lease up, what his rates should be, what his tenant improvement dollars should be. And what the vacancies trending, the rents were trending, the values and cap rates. So, there's just a lot of data. And if you have someone that focuses on what you're trying to do and they use that data and understand your business and your goals, then that's really how you want to make decisions today. Blockchain, how do you think that's going to affect real estate?

You know, I'm not sure. I think one of the things that I look at in real estate transactions on the brokerage side of doing transactions, whether it's a corporate lease transaction where we do tenant representation or it's an investment in commercial real estate. One of the things that we see where challenges occur is when you take the people and communication out of it. So I think we have to be careful with all these technologies and we're certainly using a lot of technology. You know, like just recently we created a new website at Bull Realty where you can go online and get automated notice of specific properties, areas and price ranges as soon as they hit the market.

You can sign a confidentiality agreement online with e-signature and then access the due diligence documents, review them and make an offer online and sign the offer online through a letter of intent. So we're certainly using technology to make things flow and work faster. But I think you also need the people element involved because when we see challenges, it's when too much technology, too much email was used and not enough discussions, not enough meetings. You know, it's like if you look at these autonomous vehicles and you know, driverless cars, well, you know, they make decisions right now based if there's a problem, an accident, what's gonna be best for the people in the vehicle and the car and make decisions.

Well, if that's a small kid on the side of the road, that computer is gonna make the decision that that's the best for those occupants. Well, obviously we know reality, that's probably not the best for the occupants to run over a child and ruin their life and the child's life. You know, so I think you gotta be careful with all these technologies and make sure, especially with some of the millennials, you know, are not wanting to be as personal. They wanna do things with technology. And for some of them, it's causing challenges.

You know, they need to be able to talk to people, meet people, ask questions, and really understand what's going on to help a company. You know, one of the things we like to do with tenants and corporate tenants when they're looking for space is sure we wanna interview the leaders and the CFO, but we also wanna say, look, allow us to talk to a lot of your people. They may say things to us that they may not say to you. And let us get a big understanding of how your business operates, how you're running your business, you know, what your pain points are and where we can make some changes maybe in your space, in your location, in the amenities around you that will really help you be more productive.

That's a really great point that you made. You have to understand the perspective of organizations in a general sense from all the perspectives. Of course, yeah, understanding the leadership perspective is they're ultimately taking the initiative to provide for their employees to execute the overall vision of the organization and the short-term and long-term goals. I'm curious as to whether crowdfunding, how do you think that might affect real estate investing? Well, you know, Brittany, I think crowdfunding is very interesting because some of the real estate experts suggest to me that crowdfunding is a revenue of last choice that if you can't get the funds you need in other places, then you go to crowdfunding, which in their view means that the investors in crowdfunding may not be getting the best real estate deals.

At the same time, I have proponents of crowdfunding that say otherwise, that say, look, we're concentrating on great properties, on great sponsors, and these are good deals. So I think it's a growing business. I think it democratizes real estate investing and that enables the investors to spread their money over a lot of different markets and areas and property types, as one guy said, you know, spray and pray. But in some of those cases, I have seen some of those projections and things that kind of raise some eyebrows.

So I think as people who are not as experienced in commercial real estate are using crowdfunding to invest in real estate, I think they want to learn more about it, learn more about commercial real estate and investing. You know, I think that's one of the things that our show has been very helpful to people and why it's had so much growth is, you know, if you can go invest $5,000 or $10,000 today in a commercial real estate deal, then you probably want to understand the terminology.

You probably want to understand the pro forma. You probably want to understand a lot about commercial real estate, and it's hard to learn that, you know, where you need to go get a degree, go get your CCIM designation. You know, I've studied the market for 30 years. I'm still learning. So, you know, the show has been a good way for people to get a good understanding of what's going on and understand the market a little better.

But I'm a proponent of crowdfunding. I think people just have to be careful when they invest in anything. 100%. And I think you made a good point about, you know, speaking to people who obviously are teaching this, right? You're teaching it on your show.

It makes sense for you to do some training, get your CCIM. It makes sense to educate yourself, and that a lot of the time is researching online and speaking to people, and it goes back to your earlier point. Sometimes, especially if it's a younger investor, a millennial investor, that really wants to start making a mark and investing in real estate, they likely should be taking the time out to speak to an expert, to speak to someone who really understands the market and move forward from there.

So that's really interesting. And I like the fact that you are a proponent of crowdfunding. I think maybe there is some education that needs to be built. Maybe that's an opportunity within the market that hasn't been tapped into from a training perspective. Yeah, yeah, I think it's interesting.

If you look at the shows out there, TV, radio, podcasts, that are on investing in the stock market, those weren't out there and weren't popular when you needed a stockbroker to invest in the stock market. Years ago, since you could invest online, well, now people want to understand a little bit more about it, right? They want to watch and listen to these shows. And so I think that's one of the reasons my show's been growing, is hey, if you can invest online, it's a great way to learn.

So my next tech item is internet of things. How do you think that's gonna affect real estate? In a big way, in a very big way. We're seeing a lot of changes in commercial real estate from a lot of technology. And things like having cell phone service throughout your entire office building.

One of the things that we do if we're when representing a company for their space is say, hey, look, how important is cell phone service connectivity for your people? Especially if they're in sales, they have a lot of salespeople, it can be very important, especially if they're in and out of the office. So you might check your cell phone service as you pull into the parking deck, as you pull and go up the elevator. So there's technology that you can put in these buildings that help that reception work.

And then some companies, as you know, are going away with phones and wires and some of their employees are just using cell phones. So I think there's just a lot of technology, a lot of things where we have smart systems that are connecting with each other that is really making life better. Yeah, it's interesting that you mentioned cell phone service, especially from a sales perspective, but that naturally just rolls into internet connectivity, of course, and the infrastructure in order to provide that to a building, ultimately.

I think that's probably just as important as obviously the cell phone connectivity. You'll need that repeater, you're gonna need those wireless access points all over the building, you're gonna need fiber soon enough. So I think that's really interesting. Mm. So what are you seeing in regards to the development of driverless cars?

You mentioned that before, but how do you think that will actually affect the real estate sector? You know, I think it's interesting as people are just using less cars in general, even if you look at right now with people taking Uber, more interested in the live work environment. And I think people understand that being in a vehicle and driving around is not the best thing to do with your life. But maybe they can listen to your podcast or mine, but it takes a lot of time away from work and from family and friends.

So it is changing real estate. You're seeing a lot of changes in the way, office buildings, apartment buildings, retail properties are designed. You need more room for deliveries, for packages, for drop-off and pick-off, pick-up. You're seeing buildings and codes where there may be a lot of parking required in the code, but the builders and developers today are saying, look, I'm gonna build this arbitrage of a parking deck that maybe in 10 years, we won't need much of it at all. So you design the parking deck so it can be converted to another use later, which means investing more.

It costs more to build it that way. So you have to have your investors on board to understand that, your lender, your tenants, and everyone involved in understanding that, hey, we may not be as dependent on these cars and these parking lots, and that's a good thing. Absolutely. And we have to be prepared for it ultimately. So I think watching those trends and understanding how quickly the environment, the urban layout is going to allow for that ultimately.

And then obviously, the investments in Uber, right? From a day-to-day perspective, more and more people are opting to utilize Uber, or Lyft, or any other... It's not a driverless car, but ultimately, it's a service that you can automatically schedule a pick-up, schedule your drop-off, and I think just the adaptation to choosing that mode of transportation will make it really easy for transitioning to obviously scheduling a driverless car as well. Yeah, oh, it's interesting. I think recently I took a Uber ride to the Hawks game in Atlanta from my office at 285 and 400.

There was a lot of traffic, and I thought, you know what, I'll just take Uber. When I got there, the bill was 50 bucks, and when I first paid the 50 bucks, I thought, wow, that's a lot of money. And then I thought for a moment, no, wait, I just worked for a solid hour without any people interrupting me in the backseat of this Uber. Well, guess what, I make more than $50 an hour. So it was really a great investment that didn't occur to me until I thought about it for a few minutes.

I think more and more people are gonna see that regular value. Even something simple like I ended up having to drive just recently to work, and I'm very used to taking public transportation. I really do feel like I've lost a couple hours out of my day, so I can completely identify with what you just said there. Well, thanks for talking with us about disruptive technologies in real estate. Let's jump into a little bit about mindset and culture.

We talk a lot about that here on the Constructor podcast because when we're ultimately trying to be more efficient in construction, or anything for that matter, there's a level of transparency that needs to take place. So I wanna ask you about culture in regards to training and development for your employees. How do you operate it, and then how do you review the returns? Culture is very important to us. We have a small company, we're licensed in nine Southeast States.

We're headquartered in Atlanta. We have about 42 people. One of the things I tell them before they come to work for us is that, look, we have a culture of helping people, being positive. If you're negative or you're not client-oriented, don't come here because you're not going to last. And as far as training, I am so involved in training.

I continually train myself. I've taken three classes in 2017 so far. I train our people constantly. I'm creating a training company. I've been training commercial agents around the country for 20 years at my company.

And we're starting a new company called Commercial Agent Success Strategies. We'll be offering video training, streaming video for professionals for leasing and sales. So I'm all about training. I think the days are gone where you worked, well, you trained and then you worked and then you retired. I think we're doing all three all the time.

The world's changing too fast. We have to stay on top of our training. And I think the culture, I think people are real concerned about retention and recruiting today. And I think you want to have that culture in your office environment, in your location. When they come in your office, how does it feel?

How does it look? Like we have flowers that come in once a week and we put all these beautiful flowers all over the office. And I noticed the difference before those flowers were put up on Monday morning that the office just seems so much different and you don't know why, but after the flowers that they are, and you come in and you go, wow, this just feels a lot better. And we use a lot of plants and a lot of light. And I think when our clients walk in, when brokers walk in, think about working with us, they come in and they just feel good.

I think sometimes they don't know why they feel good, but you just feel good. It creates a great environment and a great culture. It's funny that you mentioned that as it relates to training. I think there's a huge correlation as it relates to your capability to be more creative and be well-thinking when you create that environment. And that's actually something that I've been studying and I have a couple interviews set up for the future that talk about a healthy workplace.

So especially bringing in those natural elements, whether it be flowers or plants or just natural daylight, I think those are key elements to get people just feeling better. And it may be subconscious, it may be that you're breathing more oxygen or whatever the case might be, but I think it's hugely valuable. And in addition to that, you said you're doing online training. So the fact that you're giving people the flexibility to do training is something that must take place. Ultimately, you said we're doing all three.

And I think it's something that we need to consider from a technology standpoint, that yes, all three may be taking place. You have to create those means for adaptation if you will. Yeah, I think it's important. In our business, we're competing with really, people do a great job, they're really good at it, they've got a good head start on you and you need everything going for you. And then our clients are very successful people who run businesses, invested real estate, and you really wanna be at the top of your game, understand the market, understanding best practices, and you gotta continue training all the time.

100%. What do you think the best mindset is in order to stay on top of the trend? I think just understanding that the trends impact the future. And if you're making decisions for your business or for investment, you really wanna understand the trends and how they're gonna impact you moving forward. We do some shows where we look at emerging trends.

We talk to some of the experts for emerging trends that can impact commercial real estate investment and companies using the space and the trends impacting them so that we can predict the future. So we can look at the space when it's designed, so we can look at the buildings when they're built to anticipate the future, cut down on cost of adaptation to new technologies in the future. So I think you've really gotta understand the trends and if you think, oh wow, I don't care about social media or gee, I don't like the mindset of millennials, well, you have a problem because millennials are here.

They're huge. I wanted to reference my talk with demographer, Ken Gronbeck here. He talks with us on how millennials have just recently surpassed the boomers in numbers. So check it out at episode34atconstructor.com slash ep34. Back to the interview.

They're impacting your business, they're your customers, they're your clients more and more every day. So I think you've gotta look at all the trends and pay attention so that you can make the right moves for your business. So what would you recommend that the listeners start doing right now? Well, I guess depending on what they do. If they're running a business and they're making corporate real estate decisions, I would concentrate on the trends on the future, on your big goals.

Think about what's important to your business. Sometimes we're seeing that the big things today are flexibility, flexibility in the space, flexibility in the furniture, flexibility in the lease. Wellness, there's now Wellness International has a well-building institute. They have a certification that you can get for your space. You think about healthy foods, healthy drinks, plants, healthy air, filtrating through the space, sunlight, exercise options.

I think you wanna think about all the things that are gonna help you recruit, retrain, retain people and help them be more productive and happy and healthy. And I think all of us people who run businesses are really a lot more concerned about our employees and their health and their happiness than maybe we get credit for it, the C-suite, but it is important to us, not only in productivity, but just because there are people. And I think you just wanna take a big picture view of what your main goals are, look at the trends and use some of the technologies, the things that we talked about today to make good decisions.

Thanks for that. Do you recommend any particular resources? I know you mentioned the Well-Building Institute, but do you recommend any other resources that will enable the listener, especially if they're making decisions about real estate investments, do? Yeah, for commercial real estate investing, one of the easy buttons is my show, CREshow.com. It's on iTunes, YouTube, and it's free, and you can do it on any device at any time, and there's great experts.

We make sure, like you do on your show here, that there's great information for people in a very efficient way, great takeaways. And then if they wanna understand the analysis, the best training, if they want very good training, is through CCIM, ccim.com. For a big-time investor, a developer, then that's great training. If it's not your main job, if you're a lawyer or a doctor and you're investing in commercial real estate, you may wanna look at an advisor that has that type of training, has access to great tools and resources, that they have CCIM training to do analysis, and if they're an expert in what you're doing.

One of the things I see for people when they're making real estate investments or corporate real estate decisions is make sure that your advisor is a specialist in what you're doing. You don't wanna go to a general practitioner, doctor for brain surgery, right? You wanna make sure that if you're going to do an office space, use a tenant rep who just does tenant rep for offices, understands your market area. If you're investing in multifamily, and wanna invest typically with a broker that's advising you that that's all that they do every minute of the day.

So I think I would look and have the right professionals around you to help you make the best decisions. Wonderful, and it goes back to having that conversation once again, right? Yeah, the conversation about what's important to you, what's important to your people, and working with someone that's not just talking all the time, but it's asking you questions to understand your goals and your mission. Thank you so much, Michael, for doing this interview with me. You have an amazing show, and I'm gonna absolutely put the links to, actually both of them, in the show notes for today, and also Bull Realty.

I'll put the link for people to access that as well. Do you have any other ways that people can find out more about you and or contact you? You know, I'm on social media, on Twitter, at Bull Realty, I'm on LinkedIn, just look for Michael Bull. You know, I'm easy to find at bullrealty.com or commercialrealestateshow.com. So there's a lot of Bull in real estate, but only one Michael Bull in the US.

I love it. All right, well, thank you once again, and we appreciate having you on the show. Brittany enjoyed it, thank you. I hope you enjoyed this podcast with Michael Bull about emerging trends in commercial real estate. If you learned something today, you can find me on Twitter at BrittanyCT, or LinkedIn, I'm easy to find, just search Brittany Campbell Turner, or just email me at britneyatconstructor.com.

I want to know how this podcast is helping you. Even if you haven't implemented it yet, if you just want to learn more, still email me. Again, that's B-R-I-T-T-A-N-I-E at constructrr.com. Next week, we will be talking with Bruce Welty, CEO of White Logistics and Locust Robotics. We talk about practical implementation of robots for this day and age and this decade.

It's funny, because he was initially skeptical about the use of robots, maybe like many of you. Tune in next week to listen to this interview with Bruce. Don't forget to subscribe at constructrr.com to get email updates from me. If you haven't already subscribed to the podcast, you can do so at iTunes and Stitcher. Please leave a review to show your support and let me know you're enjoying the podcast.

I look forward to talking with you guys next week.