"Education’s purpose is to replace an empty mind with an open one."—Malcolm Forbes, publisher

"Education is both a tool of social justice as well as a fundamental driver of economic development."—Kevin Rudd, Australian prime minister

We read about it in the newspaper. We hear about it on television and by the water cooler at work. Commercial real estate values are falling, and the credit crunch is deflating asset values. Home foreclosures have increased to 1 out of every 466 households, leading to a lack of confidence in the bond markets, which remain down. Stocks and consumer spending are down, and energy costs are up. Losses across the board, little to no lending activity, and decreasing liquidity have all resulted in a disastrous loss of 11.6 million jobs, further cutting the demand for commercial space. Asset values decline as fear and the absence of confidence continue to spiral our economy downward. Where do we find restoration?

A domino effect has taken place within the commercial and industrial real estate industry. Faced with economic hardships, tenants want to renegotiate existing lease contracts due to the devaluation of assets, making it even harder for property managers and owners to retain these tenants. With the cost to attract new tenants being five to six times more than the cost to keep existing ones, building owners and managers are at the mercy of current occupants, knowing that retaining merely 5 percent of them can increase the property manager’s bottom line by 25 to 125 percent.

The silver lining in this black economic cloud is that real estate doesn’t go away. Commercial real estate relies on leverage and value. This "down" economy actually presents many opportunities for property and asset managers, investors, and owners. Investors want to know why they should trust their money in a market that could deplete their wealth. Many managers see themselves as powerless to prevent economic ruin, when all the while they have access to strategies, knowledge, and tools that can preserve wealth and reclaim value, not just in the current economy, but in any economic state. Regaining trust means regaining confidence, and the key lies with advanced education. Economists have been interested in economic growth for centuries, but it was not until the 1960s when the idea of human capital gained traction, allowing economists to makethe direct correlation between education and economic growth.

Education’s effect on the economy can be attributed to many factors, but derives mainly from the creation of new knowledge, known as Schumpeterian growth, and innovation.1

Schumpeterian growth, named after Joseph Schumpeter (1883-1950), is economic growth that contributes to an increase in human capital. The theory states that the more individuals acquire higher levels of education, the more analysts, scientists, technicians, and investors we have to increase the wealth of human knowledge. This leads to new processes and technologies2 and these processes and technologies lead to efficiency in day-to-day operations and overall increased productivity and earning potential—in theory, the keys to avoiding economic ruin.

A study by Dale Jorgenson and Kevin Stiroh (2000) figures the contribution of education to economic growth at 8.7 percent of total growth over the period 1959 to 1998 and 13 percent of growth in output per worker. "Over the last 40 years, output has grown about 3.5 percent a year, and the productivity of labor has grown about 2.4 percent per year. The contribution of education to labor productivity growth is estimated to be between 13 and 30 percent of the total."3

If increased education results in higher levels of productivity and higher levels of human capital, then we can see the positive relationship between increasing education and economic growth. This is affirmed by a 2000 U.S. Congressional Joint Economic Committee study, which states, "By improving the productivity of American workers, education increases the wealth of the United States."4

Education contributes to economic growth by distributing knowledge. Schools provide the means to understand and absorb new information and acquire new skills, while advanced education fosters innovation and growth. Think about the evolution of the computer. Schools teach students how to use the computer. As the level of education increases in computer science, so do technological solutions and innovation. The same applies to our economy. An undergraduate can attain the necessary skills to pursue a career. Higher levels of education make that individual a stronger asset to the industry as a whole. By providing him or her with innovative strategies, a higher level of understanding and the ability to implement advanced processes, education enables society to think more creatively about the management of work and overall problem solving.

In Studies in Human Capital, labor-economist Jacob Mincer states that educated workers have three advantages over less-educated workers: higher wages, greater employment stability, and greater upward mobility in income.5 Advanced education and training provides professionals with experience without the associated loss and risks, giving them the know-how to work more strategically, plan more effectively, and cut costs more efficiently. Employees with higher levels of education are more mobile and adaptable, can work more with less supervision, and can improve the output of work. Accreditations give professionals confidence and motivation while elevating them beyond the competition. In a down economy, we need to increase human capital to rise above. As a nation, we need more leverage behind investors and asset managers in order to build credibility and bring back confidence in our economy, from Wall Street to your street.

Restoring confidence within the commercial real estate industry requires professionals with superior credentials and the demonstrated aptitude to build value back into troubled properties and assets. Lenders and investors are seeking out professionals with the expertise, education, and confidence to step out of the herd. These elite professionals are expert at appropriating resources, marketing effectively, reevaluating the appraisal process, maintaining tenant relations, using operation/finance strategies, and ultimately managing property in such a way to maximize its market value.

One educational provider, Building Owners & Managers Institute (BOMI) International, has seen the various transitional economic periods since its inception in 1970. BOMI equips property and facility professionals for any economic state by adding value to their daily operations, and to the industry as a whole, through professional education. The curriculum of BOMI’s core designation programs consists of skills, strategies, best practices, and information that reflects the experience and expertise needed to deal with challenging and transitional properties, thus increasing the capital per professional. For almost 40 years, BOMI has been the leader in education and training for the property and facilities industries, awarding industry standard designations that are recognized worldwide. 

One BOMI student, Terri Redmond, RPA® , Insignia Commercial Group, explains how BOMI has helped advance her career in property management: "Since earning my RPA® designation, I am better qualified to meet the challenges of the ever-changing real estate management environment because I have a much broader base of information and experience to draw from. "BOMI International presents a tool to regain human capital in the industry, Asset Management 2009. Asset Management 2009 educates professionals how to reposition and restructure commercial properties and assets within an investment portfolio. Participants learn to take advantage of resources and opportunities that companies in the marketplace are missing. By gaining advanced knowledge of acquisition, disposition, and evaluation procedures, attendees will have the power and confidence to fine tune processes and decision making. The curriculum offers professionals the skills to recover, retain, restructure, and essentially resurrect and remarket numerous transitional properties.