2014 Economic Outlook by Value Hound Contributor, Chris Lee “Life can only be understood backwards; but it must be lived forwards.” This quote from the Danish existentialist philosopher Søren Kierkegaard highlights both the challenges and opportunities facing the real estate industry in 2014. With the impact of the 18-month recession of 2007 – 2009 a fleeting memory but remaining as a lingering nightmare and reminder in the background, the dramatic increase in opportunities during 2013 has created a pivotal moment for real estate firms entering 2014. While the future is unknown, abundant trends and market indicators predict a year of growth opportunities to those with the platform, business model, leadership, talent, capital and resources. Albert Einstein said it best, “I never think about the future, it comes soon enough.” Well, 2014 is here and it is going to be a year of pivotal moments, pivotal decisions and pivotal opportunities that will determine, for many, their success through the balance of the decade. Remember, the future starts today! The absence of leadership at all levels in Washington, D.C. and within many of the country’s largest states has created a hamster wheel of activity but no progress in addressing the fundamental economic challenges facing the U.S. The endless debates, disagreements, denials, deferrals, debt and debacles in 2013 have created diversions and division, but no realistic long-term solutions. Economist Laurence Kotlikoff estimates that unfunded Federal liabilities now exceed $220 trillion. The dramatic failure of the Affordable Care Act rollout, the budget compromise that was more business-as-usual than real reform (i.e., adding $6.3 trillion in more debt over the next 10 years) and an entitlement tsunami that is “always better-to-fix-after-the-next-election” highlight the market challenges facing real estate investors, companies and leaders. These challenges cannot be controlled…but must be met. The infamous definition of insanity is “doing the same thing over and over but expecting different results.” Kicking the can of fiscal responsibility down the road for future generations to resolve sounds a lot like insanity. The more time passes without structural improvements, the more disruptive and impactful the solutions will be. As the CBO recently stated, “…growing Federal debt would increase the probability of a fiscal crisis.” A careful analysis of key indicators and trends reveals that 2014 will be a pivotal year for making those critical decisions necessary to assure success and prosperity in the years ahead. Today the real estate industry is like a fulcrum faced with pivotal decisions on growth strategies, access to capital, succession and leadership transition, brand differentiation, organizational architecture, innovation and inclusionary technology. In 2014, real estate firms will be faced with one and only one critical question: “Do you want to control your destiny, or do you want others to control it?”
Posted on: Thu, 13 Feb 2014 18:13:48 +0000
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