Magazine article Journal of Property Management

Interview: Andrew Wood

Magazine article Journal of Property Management

Interview: Andrew Wood

Article excerpt

JPM. What is the most important industry trend you see today?

Wood: The key trend is consolidation, but that, in turn, is giving rise to two further trends-the need for the transparency of market information and the need to be more efficient. Both of these trends result from the demands of an increasingly competitive capital market. Historically real estate has been a private market dominated by small entities that added value by holding private information not available to their competitors. The public markets not only demand more information, but they require information to be presented in a standardized format.

JPM: But hasn't this trend been growing for several years?

Wood: Until now, most standardization efforts have been centered on operating expenses. In the future, this demand for transparent, standardized data will extend to service contracts and, eventually, to leases.

Today, it is almost impossible to evaluate a commercial lease without analyzing a dozen or more factors that can impact the true value of the income flow. For example, if someone tells me that an office building rents for $20 a square foot today, that figure is of little value unless I know what the provisions for expense escalating, subleasing, first rights of refusal, and so forth, are. If lease terms become standardized and only the rent is negotiated, suddenly our ability to analyze the strengths and weaknesses of market conditions become infinitely greater.

JPM: Commercial leases are so different today; will this happen? …

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