Last month I wrote a blog about an inefficient concession in the real estate market. As might be expected of opinion writing, I received appreciation and accolades, as well as scorn. One email I received literally stated “Hallelujah” and thanked me for mathematically proving the inefficiency of said incentive. On the other hand, I apparently offended many in the real estate community, which was certainly never my intent or desire.
As a result, I’m concerned that my point—that said incentive is mathematically ineffective and should be eliminated from the market—was missed entirely. I blame no one but myself for this misunderstanding; I obviously failed to write my opinion as intended.
When I was first asked to write for RealPoints, I agreed to do so with hesitation for a number of reasons, but two in particular. First, with both my New York and analytic background, I know I can be perceived as overly blunt. After all, these backgrounds taught me to state an opinion, back it up with facts, and then reiterate my position. There is no room for emotion or spin, just the statement and supporting facts. In return, I expect people to read my work as such and remove all personal emotion from their interpretation.
I realize now that I failed to adequately make this pact with you, my reader. So please, in the future, note that I am attempting to leave emotion out of my blog entries except when specifically stated otherwise or for humor’s sake.
Second, I tend to run against the current. People who know me know that I will not accept, ”because that is how it has always been done” or “everyone is doing it” as a reason to do something. I believe that in order to do well in business, one must constantly question the norms in order to see what works and what does not. Conventional wisdom is rarely wise. This holds especially true for real estate, a business that has been around longer than sliced bread.
This trait of mine can, admittedly, irritate some. People, by their nature, don’t like change or criticism of commonly accepted practices. (There are many teachers in my past who tried to teach me this through non-stellar grading. Obviously, it did not take.) In fact, I see it as my duty as a real estate professional and citizen of Dallas to point out inefficiencies in our market so we all can better compete.
Ultimately, I decided to write this monthly blog for two reasons. First, it’s an opportunity to introduce my company to a much wider net of professionals. As a small private company, we need to take advantage of modern technology in order to disseminate information about ourselves that larger public companies do through more traditional avenues. The second reason I decided to participate in this blog is because I have a real interest in seeing Dallas become the next big growth market. Besides owning Bryan Tower downtown (plus over a million square feet throughout town), Spire owns more than 12 contiguous acres of land adjacent to the Arts District. Therefore, I’m keenly aware that the better Dallas does as a whole, the better Spire will do. To that end, anything I can do to make this a more efficient market will benefit all.
Regarding my previous entry, I stand by both the math and my central point. This is an inefficient incentive. I apologize if it was interpreted as an assault on anyone or any group as that was not my intent. On cursory glance, this incentive appears equitable in that it lowers the rate for the tenant while maintaining a higher face rate for the landlord; on the other hand, so does free rent (without creating inefficiencies).
When I said I’d never agree to such an incentive I meant it—and I haven’t over the course of the last 15 years I’ve been in Dallas. This should not be construed as my not wanting to be competitive. I will always try to create incentives that make us competitive just not ones that are inefficient. In fact, I take great pride in the fact that Bryan Tower has been competitive throughout my tenure and has proven so with an above-average occupancy and as one of the few downtown buildings not on market watch. I further intend to keep this valuable reputation intact as we bring over an additional 2 million square feet of space over the next decade at The Spire.
Caleb Smith is president and owner of Spire Realty Group LP. Contact him at [email protected].
