This week I sat in a meeting room in North Palm Beach, Florida with some of the industry's best research and Ph.D minds. The event was the annual meeting of The Hoyt Fellows and The Maury Seldin Advanced Studies Institute. The wonderful thing about this group is that egos are, pretty much, checked at the door. There are short presentations on timely topics impacting the global commercial real estate industry and there is as lively a discussion as anywhere I've ever been. Some of you have heard me say, "You know what happens when two real estate people get together, right? They're talking or waiting to talk" (Btw, it's not just real estate). And this group is no exception as everyone has something to say about the topic of the moment. But that's the beauty of it and, in this group, it manages to work. Plus, I heard the word 'spec' development uttered for the first time in quite a while referring to new construction industrial buildings being built in the LA market.
Here are a few of my takeaways from the discussions:
- It's possible that increasing cash flow, expected from core assets, will be offset by increasing cap rates.
- One thing that's debated is the question of investing in a core property vs. a core market
- Apartments: lowest cap rates in the U.S. are in the San Jose, CA market.
- Retailers are simply chasing population growth. Here's where they want to be: Raleigh, Oklahoma City, Denver, Portland (OR), Jacksonville, Sacramento, Tampa and Phoenix.
- Opportunistic plays may surface in some unexpected places: Atlanta, Dallas/Fort Worth, Indianapolis, Inland Empire, Jacksonville, Las Vegas, Memphis, Phoenix, Portland (OR).
- The Federal Reserve Bank of New York is developing a tool that will analyze every commercial real estate loan made by banks and have the ability to predict the probability of default.
- The opportunities today: Debt, Distress, Development
- In the next 10 years, of the 10-15 million new households in the U.S.
- recent legal immigrants will account for 1/3
- 3/4 will be minority headed
Things Beyond Business:
-Ron Donahue has a passion for pinball machines. So much so that he has converted his garage into a virtual arcade (see photo). He is the Chairman of Hoyt Advisory Services and invited us over the last night. It was very cool. While I was never big into pinball games Ron does have Skee Ball, which my friends and I used to play at Fairyland Amusement Park on Queens Boulevard in Rego Park, NY. He also had two very old baseball machines. I hadn't had my hands on these type things in a really, really long time. Standing there took me back to my days growing up and thinking about the friends with whom I shared those innocent days.
|Where the Pinball Wizard Hangs Out|
-Rick Wincott is a bass guitar player. He also is also Senior Executive VP at Altus Group. In his house, he has a room that houses everything you need for a band to walk in, flip on the switches and rock out. He's got more than 50 guitars and countless, classic amplifiers, etc. He's invited me over when I'll be in Houston in the fall.
Thanks to everybody who attended my 'launch party' in San Francisco. We had a really nice group, about 25 people, and everybody was engaged with everyone. A couple of folks totally surprised me by showing up which was very special. It also is no longer a surprise to me about how small the world is and I'm not just talking about our industry. We'll do another one of these get-togethers in Chicago one of these days.
I received a number of emails about the mother's day piece I published last week. Thanks, especially those of you who shared your own stories with me.
- Bob White, President of RCA (Real Capital Analytics) who has been named to the Board of Directors of PREA (Pension Real Estate Association)
- Justin Laub who is joining Churchill Capital.
Providing deeper transparency into the commercial real estate transaction world, RCA and Moody's have announced the launch of the Moody's/RCA Commercial Property Price Indices (CPPI). These will used advanced repeat-regression analytics to measure price changes in U.S. commercial real estate on five major property types (apartment, retail, industrial, central business district office and suburban office).
On the road...
May 21: San Francisco to work with a new client.
May 22-25: Napa, CA to mow the lawn and rake leaves.
May 29-June 8: New York to work with a new client on improving presentation skills and to attend (a) IMN's U.S. Opportunity & Private Fund Investing Forum where I'll be moderating a panel on GP Mergers on May 30 & 31 and (b) ULI's Real Estate Capital Markets Conference where I'll be moderating a panel on Launching & Managing a New Real Estate Fund.
June 25-29: New York to work with a new client on developing a process to raise institutional real estate capital.
Sept. 10-12: Paris to attend the GRI
Oct. 14-16: Houston to provide a class on Improving Presentation Skills to one a new client.
Nov.8-9: New York to attend the PERE Summit 2012