Monday, October 27, 2008

Miami Beach

The South Beach section of Miami Beach has gotten a lot of attention as one of the most trendy beach and nitelife places in the world. The wonderful art deco architecture that has been preserved due to the foresight of the local authorities is the backdrop as you walk down Ocean Beach Drive after dark (ok, there are a lot of beautiful people spilling out of the restaurants and bars along this street too; it only adds to the experience). The photo on the left is the hotel next door to mine taken from my room. It's on Collins Ave. that there are so many of the classic hotels which have been preserved and upgraded.

I attended ULI's Fall Conference in Miami Beach this past week. There were 5,000 attendees across the full spectrum of disiplines involving real estate development (although very few investors).

Paul Volcker, former head of the Federal Reserve gave a terrific speech. Here are some takeaways:

1. There’s no doubt we’re in a recession, not just in the U.S.-it’ll be rather long before we get back to robust growth.
2. We have a crisis in our financial system-but, doesn’t ‘system’ imply some order?
3. We’re seeing and going to see government intervention beyond our imagination.
4. I’ve never seen anything or as complex as this situation.
5. We had a fancy financial system with ingenious ways of supporting capital needs with money coming from abroad.
6. Confidence and trust are the key issues
7. Even with all that the government is doing, people are still not confident
8. We’ve produced too few civil engineers and too many financial engineers

From Sam Zell’s ULI keynote about Latin America:
A. Transparency in Mexico for the first time is very important to new investment.
B. There is no greater issue in real estate than the issue of demand and the developed world has little in the way of new demand.
C. The developed world adjusted to the lack of demand by overleveraging.
D. Latin America, relatively speaking, will outperform the developed world.
E. This is the time that tries mens’ souls. This is the time that you find out if you have balls.
F. Brazil and Mexico are the only two places in Latin/South America where scale is achievable. If your goal is to build a world-class business you have to look to scalability.

My favorite ULI panel was the "Forecast Fight" moderated by NCREIF head, Doug Poutasse and including Bret Wilkerson of PPR, Jon Southard of Torto Wheaton, Ken Rosen of Rosen Consulting and Sam Chandan of REIS.
1. It's all about the economy and credit markets; it's not about real estate.
2. Prediction: deep recession lasting 4-6 quarters; key will be the behavior and sentiment of consumers.
3 Cap rates are a bad measure of what is going on.
4. The three things wrong with retail today are: supply, demand and pricing :-)
5. 2008 is the first time in 15 years that the use of retail 'coupons' is up.
6. The shift in the global path of goods is impacting industrial real estate and ports.

Although I feel that we've had enough speakers and panelists talk about what caused the problems this panel did provide forecasts on rent, vacancy and absorption in the four major property types (U.S. only). However, in response to my question, "What is the sentiment of European institutional investors re: the U.S.?" the consensus was that the train had already left the station, values are a mystery and debt is rare and pricey and when you combine that with the fact that the Euro doesn't go as far as it did just a few months ago, there was no real encouragement that European investors would be taking significant positions in the U.S. right now.

Hopefully, going forward, panelists will talk about what they're planning to do, what are their fears, their expectations, etc. It's up to panel moderators and conference organizers to push panelists away from the drivel and into the dynamic kind of talk that they would have with a friend in a one-to-one conversation. After all, the panel to an audience has a one-to-one relationship as well, doesn't it?

My parents were staunch supporters of JFK and so I grew up in that kind of environment. On election night 1960, I stayed up as late as I was allowed but the final results didn't come in until the middle of the night. I woke up to find that a small sign I had made on a shirt cardboard saying, "Kennedy for President" was changed to "Kennedy is President." I was excited and happy. This time around even with what has gone on and what the polls say (who do they ask anyway?) I feel that it won't take until the middle of the night next week for us to learn who the next President of the United States will be. It will be another of those rare, world-changing events that have occured in our lifetimes (The Beatles, Video Games, The Internet, Sushi, Space Travel, Gay Marriages, X-treme Sports, the Phillies winning a World Series, Wireless, Handheld Computers, GPS......) that generations from now people will still be talking about. Every generation lives through these type things but I think we have had our fair share of biggies. On Tuesday night, I will be toasting to a brighter tomorrow for the United States and the world. There is much work to be done and we must start now. And as Johann Wolfgang Von Goethe (1749-1832) stated in one of my favorite quotes, "Whatever you dream you can do, or believe you can, begin it. Boldness has genius, power and magic in it." BTW, this quote is for us as individuals as well as for our world leaders.

Where I'll be:

Nov. 3-7: New York
Nov. 12-13: New York to moderate a panel at the PERE Forum (there's a special "FOS" (Friends of Steve) discount available. Please contact me for details (
Nov. 14-16: Ormond Beach, FL with my brother Jay to visit our Dad.
Nov. 18-21: The Netherlands
Nov. 19: Amsterdam for INREV's Investor Platform and Committee Meetings.
Nov. 26-12/1: Montreal
Dec. 1-5: New York
Dec. 8-12: London and to moderate a panel at the Reuters Real Estate Global Property Outlook 2009 on the 9th (Invitation only).
Dec. 15-19: New York
Dec. 22-Jan. 2, 2009: Montreal
Feb. 19-20, 2009: Chapel Hill, NC to attend the Kenan-Flagler Center for Real Estate Development’s Annual Conference and Real Estate Challenge Case Competition.

Thanks for reading my blog.
Many of you know that my life is built on people, on community, on collaboration and on sharing. This platform gives us all a chance to connect and reconnect. I am grateful for your support, suggestions and contributions. Thanks a lot.

Note: These are my personal views and not that of my employer.

No comments:

Blog Archive