Steffen Niu Q&A
FOR: Marianas Business Journal
24 Jan 2012
BY: Stephanie Lundberg
Editor’s Note: Steffen Niu is the president of the Guam Capital Investment Corporation and a certified broker with the National Association of Realtors. He has a bachelor’s degree from University of California-Berkeley and an MBA from San Francisco University. He was 2009 president of the Guam Association of Realtors and is currently the organization’s Federal Political Coordinator Vice Chairman.
In a Jan. 10 interview with the Journal, you mentioned that you had some recent changes in your board of directors, specifically that a younger generation has joined in. Have you seen any changes in direction or purpose with the new board?
Guam Capital Investment Corporation remains family owned and run, however our new board of directors strongly represents the next generation, and inasmuch there is both a fresh and younger outlook on Guam Capital Investment Corporation itself and Guam in general, and in some ways a more modern approach towards its business. This is evidenced in such things as the move to technological solutions such as solar plant(s) and energy saving equipment, as well as some other building modernizations and internal streamlining of business practices. I think this is also a sort of revitalization of our corporation and a time when they are open to new concepts of business and even new lines of business.
You’ve talked about a number of things that have affected Guam businesses in general, such as rising energy prices and the Guam buildup. In your opinion, have there been any other events or trends that have profoundly affected Guam businesses in recent years?
Whatever particular business one is in on Guam, I think we are all basically in the same boat, so to speak. What affects one sector of business will invariably ripple throughout the rest of the economy. While we are predominantly in the commercial real estate sector, major events such as the tsunami and quake disaster in Japan last year hugely impacted tourism on Guam negatively and the entire island economy and real estate in general, including commercial real estate. Similarly, changes that affect real estate have a ripple effect on the rest of the businesses here as well. High costs of doing business on Guam such as incessantly rising power and insurance costs affect us all directly, but in the same way the recently heavily-increased costs in system development fees – where builders are required to spend a much larger amount of money resources to connect to utilities to develop a building or homes – will affect all other island business and homeowners in terms of increased real estate costs, both commercial and residential.
How has GCIC adapted its strategy to meet these challenges?
For our properties, we are working to streamline our costs, and increase [the] efficiency of our own systems – reducing as much as possible the extent of our reliance on utilities and outside services in order to conserve costs. We also are focusing more on development in areas where the additional systems costs are lower. I’m not sure that was the intention of the high development fees, as it will leave the more remote areas of Guam which actually need development still underserved, but that is the reality of the economics.
Have you seen these challenges affect your tenants?
We have definitely seen our tenants increasingly trying to cut their own costs wherever they can. We work as hard as possible to maintain our properties efficiently, and that helps get our tenants a better bang for the buck as well. Certain aspects we cannot change, however, and with the delay of the military buildup, we have seen some of our tenants decide not to wait it out or to come back later when they see more progress.
You’ve frequently said that GCIC hasn’t left its core market of local business in favor of off-island business expected to come with the buildup. How has this mindset been carried out in the way GCIC operates?
After many years of repressed growth in the commercial real estate sector, the anticipation of a military buildup spiked interest and rates in real estate, and some of the first to feel the effect were the commercial properties. With a spike in prices, it’s an easy temptation to forget your bread and butter clients who were with you over many years and in the lean times, and quickly replace them with the new high paying visitors. Although we did need to incorporate some of the market reality into our pricing, we really didn’t abandon our established tenants, and maintained most of our existing customer base from prior to the buildup announcement and filled mostly vacant spaces with the new influx, and actually turned away some leads in the past couple of years.
Can you give us your expert assessment of the state of the commercial real estate market? Do you have any specific forecasts regarding the market that you’d like to share?
I expect it will be a challenging year for real growth in the commercial markets, and a time when clients will be more discerning in the value they get for their money. I don’t anticipate a major downturn, but pretty clearly the spike that was evident since the buildup began will not continue at its past rate. In order to retain or grow their client base, I expect existing properties will need to improve their services and facilities. Along these lines, GCIC is making the investment in improving the tenant experience with aesthetic improvements to its facilities, enhancing the tenant and client experience, as well as making the investment in utility efficiency which will give our tenants more for their money. With our recent receipt of the only Energy Star rated commercial building on Guam last year, I think we are on the right track.
What was involved in earning the Energy Star rating?
The process included a professional engineering assessment of the building’s spaces, its uses, equipment, its population, and a certified analysis of [its] utility consumption. This was then benchmarked by the Energy Star program [which is] run by the Federal EPA, using a minimum of one year’s historical data. This information was submitted to EPA for consideration and the GCIC Building received its notification of [the] Energy Star label qualification in May 2011.
Have you partnered with your tenants to achieve GCIC’s goals for energy efficiency?
So far the majority of our energy savings have been done on the facility side, and we have not yet really worked with individual tenants on how to cut down their individual use or wastage. This is definitely a next step – to really get the tenants to partner with our efforts.
What else do you have planned for the building?
Further enhancements to efficiency and reducing wastage are planned, including efficient and intelligent use pump motors, occupancy sensors for lighting and heating, ventilation, and air conditioning [systems]. We are also currently experimenting with higher efficiency LED lighting fixtures [and] are looking at individually self-powered units, such as solar-charged [parking] lot lighting.
Our engineers stressed from day one that the basic design of the building (basically a cube) is the most efficient shape for space and energy efficiency after a sphere – but only recently have we really begun to appreciate the energy factor of this. The small windows, although we have a lot of them, minimize storm damage, but have also played a big part in reducing energy for air conditioning costs as well. It’s really astounding how thorough planning of the original design helps us to be competitive in new ways today.