Phoenix–“It’s about growth,” PNC Real Estate Executive Vice President Marc McAndrew claimed during the opening keynote speech at the Urban Land Institute’s spring meeting. “Adaptation. The future and opportunities.”
McAndrew’s opening remarks came amongst an atmosphere of change and growth at ULI’s spring meeting. With the U.S. economy–and indeed, the world–beginning to see a slight thaw in the recession, there was a palpable if tenuous sense of hope expressed by panelists as well as moderator Jeremy Newsum, chairman of ULI.
“The bust? That was our fault,” Newsum said. “Real estate professionals should take charge.”
The panel, “Creating Our Own Destinies: The Future of Real Estate in Light of Our Past”, tackled some blunt questions surrounding control, community and the moribund CMBS market. Some panelists smirked when Newsum asked if they had clear-cut control of their companies.
“Any time I think I’m in charge at home, my three kids quickly remind me I’m not in charge of anything,” Vornado Realty Trust President & CEO Michael Fascitelli remarked, adding that the situation is similar in the professional realm. “We have multiple constitutents … and we have employees that we have to worry about. We have communities that we have to be sensitive to and that we have to be responsible to. … We have to balance a lot of different needs.”
Martin “Hap” Stein, chairman & CEO of Regency Centers Corp., concurred.
“I’d like to think I am [in control], but the fact is that every CEO has multiple groups to which they must respond,” he said. “Certainly [in the case of ] of our financial relationships. … If you perform, that’s the highest level of control that you can have. You do the right things and execute well-conceived strategies, and you’re going to have maximum control you can in this world.”
Stein added that taking care of tenants and providing an investment space that allows a long-term competitive advantage makes for happy co-investment partners as well as shareholders – two contingencies to which he must answer.
National Association of Realtors Chief Economist Lawrence Yun had a different take.
“In terms of who is in control going forward, I think it is ultimately the consumers,” he said. “It’s really about government and policy intervention. … The CMBS market is completely dead and has refused to recover even with the recovery in the financial industry.”
Yun asserted that the pendulum has swung too far for the CMBS market to recover quite yet. He was pessimistic about when that recovery will begin to take place. “CMBS is completely not recovering,” he said.
Robert Lowe, chairman & CEO of Lowe Enterprises Real Estate Group, believes the pendulum is swinging back to basics, “but I’m not sure the system has changed,” he said.
Communities, and particularly landlord-tenant relationships, fell under discussion.
Fascitelli takes a harder-line look at the subject. “Our job is to try to get the fair rent,” he said. “We’re not running a happiness poll for our tenants. We’re trying to maximize (results).”
He added that associations are particularly important when it comes to tenants. “Even though we like a tenant mix … it’s the people associated with the tenants that we bring to them. And that’s the biggest connection for the customers. If you ask people who owns a shopping center, 90 percent would know the answer to that question. They would know if it was a Whole Foods.”
User experience–information that comes from knowing one’s community–was deemed a major factor.
“You can’t design a property without knowing everything the user would want,” Newsum said.
“You shouldn’t design a property without knowing that,” Lowe encountered to laughter from the audience.
Stein emphasized a long-term look at how a property will perform within a given community. “We ask ourselves the question: Are we comfortable owning that for the next 10 years?” he said. “If you do really good real estate, you’ll be fine.”