Record turnout for Saul Ewing’s 6th Annual Real Estate Conference
More than 200 professionals in the real estate space heard from leading national and regional dealmakers including mortgage lenders, underwriters, P3 experts and developers at the firm’s 6th Annual Real Estate Conference in Baltimore.
Opportunities in the retail sector are rebounding seven years after the start of The Great Recession. The transformative approach of “place-making,” which promotes the design and planning of public spaces to maximize shared value to all users, is revitalizing dormant properties in urban sectors, and Public-Private Partnerships (P3s) are being increasingly used to accelerate development across the country.
These are among the trends that are defining the real estate market’s comeback after being hit hard in 2007 by The Great Recession. Attendees heard from leaders in several segments of the real estate industry about new approaches and perspectives shaping the marketplace in 2014 and beyond.
“Judging by the size of this crowd, it is an indication that the real estate world is getting healthier and deal flow is increasing,” said David Bramble, Managing Partner of MCB Real Estate LLC., based in Baltimore.
The millennial population, defined as the population reaching adulthood by 2000, desires “work-live-play” areas, according to Paul L. Schulman, President and COO of US Office Operations for publicly traded Brookfield Property, Inc. in New York City. “They want to live and work in the same neighborhoods,” Schulman said. “They want the infrastructure and the amenities.” He gave one example of a work space in New York City that eschewed a traditional stairway for a rock climbing wall.
Keynote Speaker Deborah Ratner Salzberg, President of Forest City Washington, Inc., agreed.
She shared her company’s experience with “place-making,” which Forest City views as a tool to achieve transformative change in urban real estate. “People are moving back to downtowns.” Forest City has been involved with two significant place-making urban redevelopments – the Navy Yard in Washington, D.C. and the 5M project in San Francisco. Stressing that “connectivity is crucial,” Forest City is currently involved in efforts to revitalize the East Baltimore neighborhood that surrounds The Johns Hopkins Hospital. Andrew B. Frank, Special Advisor for Economic Development to the President for The Johns Hopkins University, said student focus groups reveal what they want in their university environment: “A Shake Shack,” he said. “It amplifies that we need vibrant retail around campus. Retail is what we are looking for.”
The conference, which drew a record turnout, highlighted new opportunities in the market, public-private partnerships and infrastructure development, and where to find equity and debt in today’s market.
Bramble of MCB Real Estate moderated the “Dealmakers Panel,” which consisted of four speakers who discussed the challenges faced by office, industrial, retail and higher education development projects. One trend all panelists are seeing is a changing dynamic in office space. While the panelists conceded that historically low interest rates will inevitably climb, none of them foresaw a significant climb in interest rates. “I do not believe interest rates will increase rapidly said Tom Simmons, President of Mid-Atlantic Shopping Center Region for Kimco Realty Corp. in New Hyde Park, New York.
Factors fueling P3 development projects are declining tax revenues and dilapidated properties and facilities, said Manuel H. Lazerov, Co-Founder and Managing Member of American Infrastructure Investors, LLC. Lazerov moderated the second session, “Public-Private Partnerships and Infrastructure Development.” Panelists examined the growing use of creative public-private partnerships to expedite facilitate commercial development. Participants agreed P3s frequently result in accelerated project delivery.
Gwendolyn Tillotson, Deputy Director of Economic Development for Houston, said Houston is experiencing a phenomenal real estate market as a result of its alignment with the energy sector. To keep up, the City has embraced P3s. “We cannot accommodate the growth happening right now,” she said. The city cannot fund the infrastructure necessary for all of the needed commercial and residential development. Kevin J. Thibault, Vice President for State Transportation Programs for PARSONS in Tallahassee, Florida, said the private real estate market is willing to fund infrastructure to get its projects off the ground. “The private real estate market is controlling its destiny,” he said, citing an example of a private developer partnering with public entities to create a high-speed passenger rail from Miami to Orlando.
Joseph E. Foss, Managing Director of SC&H Transition Advisors and former COO of the Baltimore Orioles, moderated the third panel, “Finding Equity and Debt in Today’s Evolving Marketplace.” Panelist James Grant, Managing Director for Commercial Loan Origination for Aegon USA Realty Advisors, based in Baltimore, said his company is having no trouble finding projects to fund. “Demand is virtually unlimited,” Grant said. “It’s a good time to be a lender. It’s a good time to be a borrower.”
Again, demographics are driving development and where the money is best invested. Panelists said there is healthy liquidity in the current market, but the challenge is finding good quality projects to finance. Many investments are going to repurpose neglected and aging properties and to fund new markets such as large, affordable rental units for active and healthy Baby Boomers ages 60 to 80.
“I think that everyone who attended the Saul Ewing Real Estate Conference took note of the fact that the tone of the conference was extremely positive and that all of the speakers had a distinctly optimistic view about the current condition of the real estate industry,” said Real Estate Partner Howard R. Majev, who is the driving force behind the annual event. “This augers well for meaningful real estate growth over the next few years and marks a real change from the more difficult times experienced by the industry in more recent years.”