What drives changes in operating expenses (OPEX) for CRE and Multifamily? Nice research from CBRE Econometric Advisors

As every landlord knows, operating expenses (OPEX) are an important element of commercial real estate investment performance. In spite of the important role OPEX plays in investment performance, there is very little research that analyzes the structure of these costs or identifies what drives the differences in these costs across markets. This article aims to share the latest findings on the drivers and structure of OPEX.

… That industrial variable costs have a lower elasticity than those of the other property types accords with what investors in this asset class generally experience: that these properties are usually cheaper to operate. A perhaps more surprising finding is that the elasticity coefficients for office, multifamily, and retail—property types with significantly different operating structures—are fairly similar to one another. We are conducting further research to better understand this finding.

See the whole piece here: What Drives Operating Costs in Commercial Real Estate?

A new (and simple to understand) economic model that actually works- Via Bridgewater Associates

Three related research pieces from the guy about whom former Fed Chairman Paul Volcker said had a degree of detail that is “mind-blowing” and admits to feeling sometimes that “he has a bigger staff, and produces more relevant statistics and analyses, than the Federal Reserve.”- The Economist

A Template for Understanding…

…How the Economic Machine Works and How it is Reflected Now

Ray Dalio  |  October 2008 (Updated March 2012): The economy is like a machine.  At the most fundamental level it is a relatively simple machine, yet it is not well understood.  I wrote this paper to describe how I believe it works.  My description is not the same as conventional economists’ descriptions so you should decide for yourself whether or not what I’m saying makes sense.  I will start with the simple things and build up, so please bear with me.  I believe that you will be able to understand and assess my description if we patiently go through it.


An In-Depth Look at Deleveragings

Ray Dalio  |  February, 2012: The purpose of this paper is to show the compositions of past deleveragings and, through this process, to convey in-depth, how the deleveraging process works.


Why Countries Succeed and Fail Economically

Ray Dalio  |  June, 2011: This study looks at how different countries’ shares of the world economy have changed and why these changes have occurred, with a particular emphasis on the period since 1820. As explained in this study, the rises and declines in countries’ shares of the world economy occur as a result of very long-term cycles that are not apparent to observers who look at economic conditions from a close-up perspective.

What is Money? There’s more to it than meets the eye. From GK Research via David Hay over at Evergreen Capital Mgt.

Great exploration of what money is and what it requires to remain viable. The piece covers such topics as:

Getting Inside the Head of Today’s Online Renter, multifamily report now available.

apartment building investmentFrom my friend Heather over at Behind The Leasing Desk Consulting: “fact: I ♥ Satisfacts! Check out their new report on the mind of the online renter for some great insight into what your potential residents are thinking.”

From Satisfacts: “We asked, and now it’s ready for YOU. Getting Inside the Head of Today’s Online Renter is the most comprehensive analysis ever conducted in the industry on the impact of technology and social media on apartment marketing and operations.” Get the report here


30 story building built in 15 days- amazing video. 5x more energy efficient…

… 20x purer air,  magnitude-9 earthquake resistant and only 1% construction waste. Pretty cool.


Where is your apartment market in the cycle? Latest Multifamily Market Cycle Charts now posted via Glenn Mueller, PhD.

See the details and charts for the other CRE sectors here: