As heads spin and iconic Wall Street companies disappear, the financial industry diminishes before our very eyes. How many jobs will be lost in these various shotgun marriages, bankruptcies, and shut downs? The toll will be huge -- many tens of thousands, including a high percentage of big ticket bankers and traders. Poof. And they won't be coming back anytime soon.
Once re-energized regulators get through, all those sleight of hand transactions, which created a Wall Street fee bonanza over the past decade, will either be eliminated or become prohibitively expensive to undertake. So long credit default swaps and CDOs. When companies finally recapitalize, lending activities will be constrained by conservative underwriting requiring strong credit from borrowers, and without free flowing leverage, transaction activity will be muted for quite a while. What's left of the industry won't need all those bodies for trading, flipping, tranching, slicing and dicing. Surviving bankers may actually focus again on financing new industries, good companies,and sound real estate projects which actually create long-term value in the economy instead of stratospheric year-end bonuses.
For real estate it will be back to basics -- more long-term buying and holding and a focus on asset management and leasing. Everyone will be making less -- fewer transactions translate into less fees.
It was only six months ago that everybody coming out of business school wanted to be an investment banker or hedge fund manager. And it was only eight years ago everyone wanted to run a dot.com. This latest episode may be a wake-up call to concentrate our considerable collective national brainpower back to engineering, science and medicine.
More hedge funds we don't need.
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
