I had the pleasure of attending the RECG 10th Annual Commercial Real Estate Forecast Conference in Chicago this week – starting off my Tuesday morning with a fireside chat between Debra Cafaro and Sam Zell. . Well over 1000 commercial real estate practitioners, lenders, developers and others were standing room only at the event. Here’s some of the “live” recap from Debra and Sam’s chat:
8:06 am Good Morning ! Things are getting started shortly.
8:15 am Over 1000 people registered for this 10Th annual Commercial Real Estate Conference. Organizers say it’s pre-recession levels. Perhaps a good sign.
8:19 am Sam Zell and Debra Cafaro starting their fireside chat.
8:21 am Zell: “Come clean by the end of ’13″
8:23 am Zell: “very little likelihood we’ll see new supply in the next 24-36 months”
8:25 am Cafaro: “In a market with mixed messages – How do you decide to move forward as an investor, etc?” Zell: “Right now, the opportunities are linear. Always transactions, always opportunity, unique situations” “Pick your spots, have a lot of patience.”
8:29 am Cafaro: ” Retail thoughts?” Zell: “Retail, more than any other form of real estate has a very serious obsolesence (sp?) factor” “Disposable income has modified, hard to see growth in retail”
8:32 am Cafaro: “We’re seeing you invest in partnership in 200 S Wacker, relatively small – why?” Zell: ” It was very cheap, and made sense. That was the only office building that made sense”
8:36 am Zell: (on office) “We’re in a major downsizing. There are many multi-national corporations in the US that have more employees overseas than previous. And there has been no employee growth so…no growth”
8:38 am Zell: (on hotel) “Hotel business has been largely over-supplied. Tourism is attractive, dollar is relatively cheap, hotel business in 24/7 cities could benefit from no new supply”
8:40 am Cafaro: “Multifamily – you love apartments, can you talk about EQR and the multifamily sector?” Zell: “Have to add in single family market here…I think, American people have adjusted their love affair with single family house. This dramatic mental change has lead to highest occupancy rates, somewhat unlimited demand….Multifamily business is, at this moment, best part of real estate industry – and will probably stay this way”
8:48 am Cafaro: “International – you’ve invested all over the world. Let’s stay away from Europe for a second and talk about the Brazils, the Mongolias,….” Zell: “Simple answer. Demand.”
8:50 am Zell ” Beauty of our international focus is where is the demand today and where will it be tomorrow. Mongolia – enormous resources and geographically closer to China…and their economy is growing at rate of 20%”
8:52 am Cafaro: “Let’s talk about our European leaders….and real estate” Zell: “Why would anyone in their right mind invested in Europe? There is zero or negative growth”
8:54 am Cafaro: “You feel very strongly about the political environment” Zell: “We cannot grow unless people are confident. Destabilization of American economy is very dangerous. We are the most predictable country in the world”
8:58 am Zell: “US cannot grow until there has been a replenishment of confidence. This can only happen with the right leadership”
8:59 am Cafaro: “What would you be leading with to get the economy and real estate market back?” Zell: “I would stop all new regulations. We can’t handle what we have already”
9:04 am Cafaro: “You have truly been an amazing visionary in a way that has benefited all of us. What do you want your legacy to be? Zell: “I have always been a man of my word. Clarity, principled, somebody who was given the opportunity.
9:07 am Zell: ” I want people to think I thought about things, reflected on them, and had a global view. And that I followed the 11th commandment: Thou shall not take oneself seriously.”
9:08 am Cafaro “Thank you Sam”