By Paul Rosta, Senior Editor<\/p>\n
Two of commercial real estate\u2019s leading provocateurs kicked off the Urban Land Institute\u2019s spring conference Wednesday with frank, witty and frequently caustic perspectives on the state of the industry and of the nation.<\/p>\n
Sam Zell, chairman of Equity Group Investments, and economist Peter Linneman, a professor of real estate finance at the University of Pennsylvania, teamed up for an informal conversation heard by more than 1,000 real estate professionals at the Hynes Convention Center in Boston. Referring to his nickname of \u201cthe Grave Dancer,\u201d the famously irascible Zell professed to see few opportunities for upside. First, Zell mentioned hotels, a property type for which, he noted, \u201cyou mark to market every night.\u201d The second category he referred to as \u201call this crap that\u2019s in all these little banks all over the country.\u201d<\/p>\n
Speaking more broadly, Zell added, \u201cOur focus has always been taking on very hairy projects. The hairy projects ain\u2019t happening.\u201d Instead, Zell views emerging markets as the primary source of promise. As an example he gave Brazil, where Equity Investments ranks as the largest real estate-related investor as well as its largest owner of shopping centers.\u00a0 Sales for the firm\u2019s shopping center portfolio increased 12 percent year over year in 2009\u2014an indicator primarily of market expansion, he said. Still, he acknowledged that emerging markets often require a tradeoff between opportunity and transparency, or, as he put it, \u201cthe rule of law.\u201dAsked by Linneman about investment prospects in Western Europe, Zell described it as an attractive tourist destination but a poor choice for growth-focused real estate investment. \u201cI don\u2019t see any future for it, other than as Disneyland,\u201d he quipped.<\/p>\n
Commenting on the prospects for the U.S. economy, Linneman found some cause for optimism in faster-than-expected employment gains. \u201cIf jobs rebound,\u201d he explained, new households \u201care going to form pretty fast.\u201d He also offered a relatively positive outlook on the multi-family market, citing the availability of 10-year financing from Fannie Mae and Freddie Mac. Regarding the dire financial straits of the nation\u2019s governments, however, Linneman was far more pessimistic: \u201cI don\u2019t see a way out of the (federal) budget deficit. \u2026 California is hopeless.\u201d<\/p>\n
Zell and Linnemann both had harsh words about the Obama Administration\u2019s financial and economic policies;\u00a0 tongue only half in cheek, Linneman expressed \u201cremorse\u201d over casting his presidential ballots first for George W. Bush and then for Obama.\u00a0 For the first time ever, Zell contended, the Obama Administration policies are creating a business climate in which there appear to be no rules. Moreover, Zell said that he sees unsettling parallels between the declining Roman Empire and the United States today:\u00a0 excessive consumption of water and fuel at home, overextension of the military abroad.<\/p>\n
In conclusion, Linneman asked Zell whether he still regards himself as an optimist about the country\u2019s future.\u00a0 Zell could offer only a qualified \u201cyes\u201d in response: \u201cI continue to be an optimist about the U.S., if for no other reason than I think we\u2019re going to alter the current political situation.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Sam Zell and Peter Linneman kicked off the Urban Land Institute\u2019s spring conference Wednesday with frank, witty and frequently caustic perspectives on the state of the industry and of the nation.<\/p>\n","protected":false},"author":445,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21825,21783,21742],"tags":[],"class_list":["post-1004019357","post","type-post","status-publish","format-standard","hentry","category-finance","category-investment","category-latest"],"acf":[],"yoast_head":"\n