"We're trying to help clients understand that it's really about getting back to basics," he tells GlobeSt.com. "By that I mean a number of clients are going to be in a position to either buy or sell assets, and it's very important that buyers and sellers understand what they have."
The fundamentals, says Sinkuler, "have often been masked by complex securities wrappers, and it's important to get beneath those and start to peel them back to understand the cash flows, the underlying assumptions and the markets those assets operate in. Because when you peel it all back, you really get down to the real estate." He adds that transparency is key, "and the more you can do to restore confidence in whatever you're buying or selling, the better off your client's position will be."
Keeping their powder dry, increasing efficiencies and going green are all very much on the minds of real estate owners and investors, Sinkuler says. "Everybody is trying to conserve capital," he says. "Every day we hear more statistics about the credit crisis and its impact on the industry." At the same time, he says, "companies are also taking a step back to identify and take advantage of some of the opportunities that exist."
While they're on the sidelines, says Sinkuler, real estate companies are also examining their own organizations to better prepare themselves for those opportunities. "When things are going gangbusters and you're growing, it tends to mask some of the company's inefficiencies," he says. "So smart companies are looking at their organizations and asking how they can eliminate some of the duplications and inefficiencies, which they may have inherited during the period when growth was strong. As things start to turn around, you can be in a position to hit the ground running."
Other efficiencies come into the conversation, namely sustainable practices to conserve energy. While noting that "green encompasses a number of things," Sinkuler says, that clients at the moment are most concerned about what steps they can take now "and how this will impact their operational costs. But there are other considerations. We've had a number of executives talking about how green impacts productivity and how that can be quantified."
As more research becomes available on the relationship between eco-friendly buildings and gains in the productivity of the people who work in them, "more people will get on board with green," Sinkuler predicts. He adds, "To the extent that you can pass some of those benefits on to your tenants, it will start to differentiate your building and portfolio from the rest of the pack. Going forward, a number of investors will be looking at green, because what's going to happen eventually is that the market will put a value on a portfolio that is green versus one that is not." Along with conducting energy audits on commercial properties, E&Y is also working to increase clients' awareness of the local, state and federal incentives available to encourage the greening of real estate.
Whether the property is green or not, Sinkuler says, it's important to understand where the investment opportunities are. "We're telling our clients to invest with the demographics around the globe," says Sinkuler. "You have the aging of the population, and the amount of urbanization is unbelievable. You have certain countries where the middle class is going to rise, and that is going to create opportunities. If you look at the populations in India and China, those people are going to need places to live, work and shop. Those are going to create opportunities regardless of any type of crisis."
Sinkuler has more than 22 years' industry experience and serves as E&Y's global markets leader for the real estate practice based in New York. According to a release, Sinkuler has written numerous lectures on emerging global real estate trends and has produced various global real estate industry thought leadership reports for E&Y. He will continue to serve key global accounts in his new position.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
