Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg Business Week with Carol Messer and Tim
Speaker 2: Stenebeck on Bloomberg Radio. It is Bloomberg Business Week, and
Speaker 2: I don't know if you had a chance to check
Speaker 2: out our weekend show over the long weekend, but Carol,
Speaker 2: we went all in on real estate, from design, resilience
Speaker 2: and sustainability with the CEOs of Gensler, to commercial industrial
Speaker 2: and multi family with the CEO of Crow Holdings, to
Speaker 2: so called alternative real assets such as storage and senior
Speaker 2: and student housing with the CEO of Harrison Street. You
Speaker 2: can still catch our weekend show, by the way, on
Speaker 2: our podcast feed. Yeah.
Speaker 3: Good stuff, right, and there's a lot of questions when
Speaker 3: it comes to real estate. It's a great indicator too
Speaker 3: of what's going on in the overall economy. One thing
Speaker 3: though we didn't really do as deep a dive into,
Speaker 3: and that was Read's real estate investment trucks, so we
Speaker 3: definitely wanted to tap into that. Laural dru Ku is
Speaker 3: head of Global listed real Assets at Morgan Stanley Investment
Speaker 3: Management and she's with us from New York City. Laura,
Speaker 3: good to have you here with us. First let's start
Speaker 3: big and wide. What are you seeing when it comes
Speaker 3: to the environment, And it's hard because not every read
Speaker 3: is the same. So what's kind of a smart narrative
Speaker 3: as you look at the group overall?
Speaker 4: So glad to be here, thanks for having me.
Speaker 5: I do think that the environment right now is very nuanced,
Speaker 5: as you had indicated, and a lot of the top
Speaker 5: down macro is really centered around interest rates, in the
Speaker 5: direction of interest rates, and the markets expectation of the
Speaker 5: direction of interest rates. But when you look at the nuance,
Speaker 5: when you look at the idiosyncratic, there really are some
Speaker 5: very important secular drivers of demand that are propelling growth
Speaker 5: for a lot of these alternative asset classes that you
Speaker 5: were just referencing that are really impactful for the reit sector.
Speaker 2: What are those things?
Speaker 5: So, when you look at from again from more of
Speaker 5: a top down perspective, technology and innovation is a theme
Speaker 5: that is really important in the broader equities market, and
Speaker 5: it is also very important for the real estate market.
Speaker 5: When you look at the data center market, it has
Speaker 5: been a growing piece of the overall remarket for the
Speaker 5: past twenty years, and so when you're thinking about what's
Speaker 5: going on with artificial intelligence today that is very impactful
Speaker 5: for the data center sector. There it's a wildly overlooked
Speaker 5: but important beneficiary of AI and new technologies that have
Speaker 5: been evolving.
Speaker 2: Yeah, one thing that's interesting about this now, or well,
Speaker 2: one thing that's interesting about this now is that, you know,
Speaker 2: four years ago, we wouldn't have been talking about you know,
Speaker 2: NIX in the context of AI. We would have been
Speaker 2: talking about it in terms of cloud storage. So talk
Speaker 2: to me a little bit about how that conversation has shifted.
Speaker 2: And Equinox, of course, is one of your picks ticker
Speaker 2: eqi X.
Speaker 4: Yeah, no, absolutely.
Speaker 5: So when you think about there's been a bunch of
Speaker 5: different what I would call transformational moments in time when
Speaker 5: thinking about computing and data and therefore data centers.
Speaker 4: So first it was just the rise of social.
Speaker 5: Media and how that created so much more data to
Speaker 5: be stored in these data centers around the globe than
Speaker 5: it was the rise of cloud computing and how the
Speaker 5: virtualization of the machine was so important for data centers.
Speaker 4: And now we're seeing AI and the impact that.
Speaker 5: AI is going to have on the space likely is
Speaker 5: going to be a game changer. EQUINEX ticker EQIX. As
Speaker 5: you said, certainly is benefiting from that, but we are
Speaker 5: still in what I consider it to be the infancy
Speaker 5: of demand stemming from artificial intelligence.
Speaker 3: Yeah, it's interesting, right, and I think you know here
Speaker 3: we thought last year was all about the excitement and hype,
Speaker 3: but it is feels like it's pulling or gaining even
Speaker 3: more momentum Laurel this year. Right, It's not just going
Speaker 3: away like we're realizing that there's you know, a lot
Speaker 3: to be learned and understanding in terms of AI impact.
Speaker 3: But it doesn't feel like it's going away here.
Speaker 4: Yeah, no, absolutely.
Speaker 5: And when you think about the impact for data centers,
Speaker 5: the GPU is going to require significantly higher power draw
Speaker 5: than the CPU when regular compute, and so that requires
Speaker 5: two to four times more power and that therefore means
Speaker 5: two to four times more data center that we need
Speaker 5: for the same amount.
Speaker 4: Of actual data.
Speaker 5: And so this is something again that's transforming for the
Speaker 5: space not only because of this incremental demand, but because
Speaker 5: of that incremental power draw that is required.
Speaker 2: Hey, I want to go to DLR Digital Realty ticker
Speaker 2: DLR another one of your picks. This one is a
Speaker 2: pure play data center owner. How does it just differentiate
Speaker 2: from Equinix.
Speaker 5: So Digital Realty ticker DLR really is pure play data
Speaker 5: center owner, operator developer. They have the hyper scale focus,
Speaker 5: meaning that they are really looking to those large footprint tenants.
Speaker 5: They were a huge beneficiary of cloud computing. They will
Speaker 5: be a very big beneficiary of artificial intelligence. You saw
Speaker 5: the company report last week and they actually reported some
Speaker 5: disappointing expectations with regard to earnings growth. But if you
Speaker 5: dig a little deeper and understand the nuance there, it's
Speaker 5: actually because they have been doing a lot with their
Speaker 5: capital stack in order to be able to write size
Speaker 5: their balance sheet in order to be able to meet
Speaker 5: this AI demand and fund new development and therefore be
Speaker 5: able to realize that growth in twenty five and beyond.
Speaker 5: So Digital Realty is a company that has a refreshed
Speaker 5: management team.
Speaker 4: They have a new CEO, a new CFO, they.
Speaker 5: Have a new Chairman of the board who is really
Speaker 5: making some tough decisions with regard to what needs to
Speaker 5: be done.
Speaker 4: As I said, they've right sized their balance sheet.
Speaker 5: They have created new joint venture partnerships that really is
Speaker 5: providing them with ample access to capital to be able
Speaker 5: to develop into the bullseye of AI.
Speaker 4: Demands.
Speaker 2: Hey, I want to broaden out the conversation a little
Speaker 2: bit and talk about one more of your picks. Carol,
Speaker 2: I know you were really interested in this one.
Speaker 5: Well.
Speaker 3: Iron Mountain is an interesting See the trucks everywhere, No,
Speaker 3: we do see, and actually they're not far I believe
Speaker 3: one of their offices, their main offices, not far from
Speaker 3: where I live. So I see their trucks.
Speaker 2: Just struck off your paper and get it shredded there exactly.
Speaker 3: No, I don't, but yeah, but there are people who do.
Speaker 3: I mean, this is you know, from high tech to
Speaker 3: low tech if you will. But right, all of these
Speaker 3: data centers, there's a lot of paper that comes out.
Speaker 3: You got to do something with it. You don't want
Speaker 3: to just leave it laying around.
Speaker 5: So Iron Mountain ticker, I am definitely another interesting one
Speaker 5: when thinking about the storage of data. And as you
Speaker 5: had mentioned, they have been a the primary paper storage
Speaker 5: company across the globe. They are also a new entrant
Speaker 5: into data centers and digital storage. They've really evolved their
Speaker 5: business model to capitalize on their core competency and the
Speaker 5: relationships that they have with all of these businesses and
Speaker 5: enterprises around the globe in order to capture digital storage
Speaker 5: as well. So they've been building data centers for the
Speaker 5: past several years. Right now, it only represents about ten
Speaker 5: percent of their revenue, but it is a growing piece
Speaker 5: of their business, and they've built up this competency, They've
Speaker 5: built up this platform to be able to develop.
Speaker 4: Into this AI demand.
Speaker 5: Interestingly, when you look at it from a valuation perspective,
Speaker 5: this company is trading at about a six to seven
Speaker 5: turn multiple discount versus those pure play data center companies
Speaker 5: that I was just talking about, and over the next
Speaker 5: couple of years they're going to have very similar earnings growth.
Speaker 5: So this is the value play within the data center worlds.
Speaker 2: Hey Lauril, before we let you go thirty seconds on
Speaker 2: the best way investors can have exposure to the aging population,
Speaker 2: those baby boomers who will move into senior living twenty
Speaker 2: seconds here.
Speaker 5: Yeah, So when you think about the aging pop relation,
Speaker 5: the best way to play it is through ticker well
Speaker 5: w E L L.
Speaker 4: Well Tower.
Speaker 5: They have about seventy percent of their earnings coming from
Speaker 5: seniors housing. Seniors housing is going to be a big
Speaker 5: beneficiary of the aging demographic.
Speaker 4: Over the next decade, We're going to have about.
Speaker 5: Eight million more people enter the eighty plus year old
Speaker 5: age cohort versus only about two million incremental people they've
Speaker 5: been added over the past decade.
Speaker 4: So well, power is one that's going to be able
Speaker 4: to benefit from this growing demands.
Speaker 3: Come back soon. This is fun smart Laurel Drquay, she's
Speaker 3: head of Global listed real Assets at Morgan's Stale Investment Management.
Speaker 3: Tim safe to say. We hear it over and over
Speaker 3: again from the leaders of companies. Their most important asset
Speaker 3: that they have are their workers.
Speaker 2: Do you believe that.
Speaker 3: It's like okay, okay, what versus their their relationship with
Speaker 3: the banker.
Speaker 2: Or like, okay, how regularly how important is it that
Speaker 2: Disney has the rights to like all the Marvel stuff and.
Speaker 3: You know that's pretty important, but also employees so important?
Speaker 2: Yeah, okay, I think it's fair.
Speaker 3: We go back and forth.
Speaker 2: I think it's true. I do think it's.
Speaker 3: True until it AI replaces it, until get laid off.
Speaker 3: All right, Well, the relationship employees have with their employees
Speaker 3: has definitely changed a lot in recent years. Our next
Speaker 3: guest argues that the quote normal ways of working are
Speaker 3: not coming back, so we cannot rely on what worked
Speaker 3: back then to work in the future.
Speaker 2: We have with us Tabitha Scott. She's the author of
Speaker 2: a new book. It's out today. It's called Powering Change,
Speaker 2: The Hidden Resource to unleash potential, productivity and profits. She
Speaker 2: joins us from Denver this afternoon. Tabitha, how are you hey,
Speaker 2: I'm great.
Speaker 1: How are you today? Tim and Carroll?
Speaker 2: Yeah, we're doing well. Congratulations on the book. Okay, So
Speaker 2: I want to start big picture. How would you describe
Speaker 2: the current state of the typical American business the ones
Speaker 2: that you work with as a consultant right now, Like,
Speaker 2: how would you describe their workforce and how their employees
Speaker 2: are doing?
Speaker 1: Yeah, I think we have three key challenges in the
Speaker 1: workforce right now. One is the accelerated pace of change.
Speaker 1: You know, during the entire year two thousand, the technological
Speaker 1: change now occurs every thirty seconds, and so we're distracted.
Speaker 1: We can't keep up. We're chasing change. The second thing
Speaker 1: is we're off balance. We're off balance because we feel disconnected.
Speaker 1: There is no new norm. It's more like chaos theory
Speaker 1: or theory instead of linear math. And we're burnout as
Speaker 1: a result. So all of those things tie together, and
Speaker 1: the further we get away from natural systems and science
Speaker 1: and the way the world works, the worse we're going
Speaker 1: to get.
Speaker 3: What do you mean everything changes thirty seconds? Like, I agree,
Speaker 3: things are fast and furious, but thirty seconds it's a
Speaker 3: little extreme, don't you think. I mean, we see the chance.
Speaker 1: True, It's so true if you think about it. We
Speaker 1: have more computing power right now on our cell phones
Speaker 1: than NASA did when it landed a spacecraft on the moon.
Speaker 1: So that's right.
Speaker 3: But we've run into it right and it's become you know,
Speaker 3: we talked earlier about how all of this stuff has
Speaker 3: also helped make us much more productive with and that
Speaker 3: might be a plus in terms of kind of raining
Speaker 3: in some of the inflationary pressure.
Speaker 1: So some of it's good, some of it is absolutely good.
Speaker 1: And the key thing there is to stop chasing change,
Speaker 1: like trying to follow every little rabbit that pops up,
Speaker 1: and instead think about your current spot on the growth
Speaker 1: curve on the growth cycle. Where is your company and
Speaker 1: how do you sync into that and really do the
Speaker 1: things that you need to do to eke everything you
Speaker 1: can out of that phase of the cycle. In the past,
Speaker 1: companies would think about the whole growth cycle. Now you
Speaker 1: just need to think about where are you and which
Speaker 1: thing do you need to deploy right now to get
Speaker 1: the most out of your business.
Speaker 2: Okay, so let's think about it from the perspective of
Speaker 2: folks who don't necessarily run businesses. When I talk to
Speaker 2: folks like you who work with businesses, they're also takeaways
Speaker 2: in what you write and what you do for just
Speaker 2: empowering individuals and helping individuals find more efficient ways of
Speaker 2: doing things. Give us a lesson that you would normally
Speaker 2: give a manager that to somebody who isn't necessarily managing someone.
Speaker 1: Yeah. Absolutely, So the things that energize you, you will
Speaker 1: be more productive, engaged, innovative, And so that goes true
Speaker 1: whether you're talking about yourself or you're talking about the
Speaker 1: team that you're leading. Everybody places somewhere along the growth curve.
Speaker 1: For example, people at the beginning of it love taking risks,
Speaker 1: it's a challenge. People at the top are more like
Speaker 1: Sheldon from Big Bang Theory, don't mess with my stuff
Speaker 1: like they love finding risk and making it more efficient.
Speaker 1: So ninety percent of Purdue engineers they fall into that
Speaker 1: category because they're great at refining and using existing frame
Speaker 1: of references. A lot of HR folks are in that
Speaker 1: category as well, very necessary. And then at the beginning
Speaker 1: you have your elon musks, your people that are always
Speaker 1: creating new ideas like Steve jobs was and everywhere in between.
Speaker 1: If you're in the middle, you have execution. Now, the
Speaker 1: cool thing is you can tie that to cognitive diversity
Speaker 1: and whether it's people or the way machines think. Carol,
Speaker 1: when we came on, you were talking about AI. AI
Speaker 1: is at the tip of the curve. Data management is
Speaker 1: in the middle. It takes inputs, turns it into action,
Speaker 1: and at the top you have things like automation to fine.
Speaker 1: So the secret sauce is figure out a sess where
Speaker 1: you are on that curve, align it to your job,
Speaker 1: and then adapt with every project that comes up. Every
Speaker 1: sprint does a little bit different. You don't need the
Speaker 1: same team every time anymore.
Speaker 4: You know.
Speaker 3: One of the things that I think about when we
Speaker 3: were talking on our planning call early this morning with
Speaker 3: our producer Paul Brennan, is the idea of how you
Speaker 3: take lessons from physics, bioscience and nature and then kind
Speaker 3: of mix that in with organizational research so to kind
Speaker 3: of get to what you put out in this book,
Speaker 3: Powering Change, give me get talk to me a little
Speaker 3: bit about about physics and bioscience. What that teaches us
Speaker 3: in terms of maybe creating a better workforce or a
Speaker 3: better group of employees.
Speaker 1: Yeah, so the growth curve that we were just talking
Speaker 1: about is one example of science or physics. If you
Speaker 1: take it on down the other side of the curve,
Speaker 1: you have a sign wave and once you hop onto
Speaker 1: the next curve, as they teach in all your strategy courses,
Speaker 1: then you couple them together and it looks like a
Speaker 1: DNA he looks over time. So if you boil down everything,
Speaker 1: and I mean everything, humans, animals, plants, and organizations, we're
Speaker 1: all made of energy and data at our core.
Speaker 4: That's it.
Speaker 1: It's that simple. So if you figure out how to
Speaker 1: tap into your energy, if you figure out what jazz
Speaker 1: is you up and then you know how to produce,
Speaker 1: you'll be more innovative and you'll be more engaged. And
Speaker 1: the same is with organizations. If they really understand which
Speaker 1: phase of that life cycle they're in, is it birth, growth, maturity,
Speaker 1: like a cash cow, or decline, then they can understand
Speaker 1: how to plan ahead to the next step as well
Speaker 1: as get as much juice out of what they can
Speaker 1: for the current phase.
Speaker 2: Have you worked with companies that are in decline absolutely?
Speaker 1: Absolutely well. They use things like all of the key
Speaker 1: business models that are out there, like human design or
Speaker 1: total quality management. They all fit on the growth curve somewhere.
Speaker 1: So if this is a decline phase client, then you're
Speaker 1: going to use something like human design or design thinking
Speaker 1: in order to leap onto the next curve, something creative.
Speaker 1: If you're working with a scaling company or a growing organization,
Speaker 1: that's when you're going to use things like lean six
Speaker 1: sigma and you're going to streamline and make it more scalable. Hmm.
Speaker 3: I'm trying to figure out because I feel like, to
Speaker 3: be fair, Tabitha, you know, we have a lot of
Speaker 3: guests on that. I feel like we talk about how
Speaker 3: do you how do you motivate workers? How do you
Speaker 3: do it? And six sigma I think, you know, it
Speaker 3: was certainly a powerful tool of Jack Welt and his disciples.
Speaker 3: I think some might be rethinking some of that, But
Speaker 3: I do wonder in this environment where you have increasingly
Speaker 3: employees who want balance or the flexibility to work from home,
Speaker 3: you know that doesn't necessarily always coincide with an employees
Speaker 3: or employer's goals, like how do you? I don't know,
Speaker 3: how do you? What's the right conversation around that?
Speaker 1: Yeah, there's a number of ways that you can look
Speaker 1: at that. Knowing that the core of that person is energy.
Speaker 1: What is the thing that energizes them and how can
Speaker 1: they do more of it? Maybe they're not able to
Speaker 1: work at home every day, but can you give them
Speaker 1: one day a week. Maybe they're not able to stay
Speaker 1: in an office of whole day, So maybe you gamify
Speaker 1: it by saying, Okay, at lunch, you get to go
Speaker 1: outside and go for a walk. Whatever it is that
Speaker 1: person enjoys, and you can find it for yourself. If
Speaker 1: you love mentoring, try to do more of that. If
Speaker 1: you love dark chocolate, you know, if you get all
Speaker 1: your reports done, have some dark chocolate. It sounds silly,
Speaker 1: but as long as you have something that brings your
Speaker 1: vibe up, because we're made of energy, you'll be more
Speaker 1: productive and more engaged.
Speaker 3: You got my attention when you say chocolate, Tabitha, I
Speaker 3: really appreciate your time. Tabitha Scott Scott, excuse me, Tabitha Scott.
Speaker 3: She's the author of a new book. It's out today,
Speaker 3: Powering Change the hidden resource to unleash potential, productivity and profits.
Speaker 3: Treading us from Denver