Perspective on Real Estate

May 1, 2002

May 8, 2002

May 16, 2002


Time for a change in leadership style

"The only thing we can be certain of is death, taxes" and uncertainty.

Consider the commercial real estate market. Along with puny corporate profitability and many bankruptcies, there have been many CEO exits, and much doubt continues about the survivability of some other organizations.

I believe we have seen the current end of charisma as the prime ingredient in CEO success or leadership. Voltaire wrote: "What a heavy burden is a name that has too soon become famous." Of course there is a large horde of talented public relations professionals whose only job is to make humans into giants of celebrity.

Today, the fickleness of the press and of Madam Fate examines these giants under a scorching microscope as it searches for mistakes and bad balance sheets and misrepresentation. There are the fallen and the falling. The numbers are surprising and frightening, to see giants self-made into pygmies, matching the falling thuds of their stocks.

So, can a long-term lease be a guaranty anymore? No. Can a famous name be assurance anymore? No. The May 13 Business Week cover story cries "Wall Street: How Corrupt Is It?" The erudite Economist features a cover story titled "Fallen Idols: The Overthrow of Celebrity CEOs." There were 40,099 filings for corporate bankruptcies last year, and I would venture more this year.

Lenders also are using the microscope technique to determine who gets debt or equity. Investors would be wise to do the same. It isn't the 9/11 catastrophe that is the culprit. It is the Enron affair which has produced a true trend, along with WorldCom, and doubts concerning G.E., Tyco, and many other formerly unassailable names, including Wall Street giants like Salmon Smith Barney, Morgan Stanley Dean Witter and Merrill Lynch, whose chairman apologized to clients, stockholders and employees.

The problem is vanity, custom built to enhance and influence stockholder and analysts' opinions. When it began to influence and corrupt auditors, it had gone too far. So many firms were financially decimated by this abscess of morality.

We can poke fun at "corny" words like morality, ethics and integrity, but they form the foundation for the capitalistic and free enterprise system and that's the truth of the matter. Greed cannot destroy the brilliance of free enterprise but it can damage the trust we have in it and that's just about as bad.

Goodkin has been a business ethicist and housing analyst since 1956. He may be reached at sandy.goodkin@sddt.com.


May 1, 2002

May 8, 2002

May 16, 2002