I attended the upstart-media BisNow “Boston Real Estate Summit” on 9/27, with about 400 other real estate professionals in Boston. At the Hyatt Regency – in what once was the heart of the “Combat Zone” along Washington St in downtown Boston – three panels of real estate luminaries delivered their perspectives and prognostications on the coming year in the commercial real estate world. I took pages of notes and learned a lot. I took a few pictures but they aren’t uploading for some reason. Below is a pic from BisNow – thanks to them – just so you get a sense for the event.
Ahead of the meeting I chatted with a dozen new contacts – reflecting on the state of the market but also my particular agenda. I asked about green real estate – were the construction guys I met doing anything, were the brokers ever asked about energy efficiency, did an asset manager ever screen for high-performance space? The answer is: nah, not really. So, I continue to be ahead of the market!
I feel good about some of the comments made by the speakers regarding energy efficiency, LEED and demographics.
- For the Current State of the Market: Equity Office Properties’s Andrew Maher, AvalonBay’s Michael Roberts, Springer Architect’s Marcus Springer, and Brookfield’s Duncan McCuaig
These gents were in general optimistic about the coming year. When asked the question: “Okay, tell us what today is on a scale of 1-10 and what it will be in 12 months” the responses were mostly going from 7 to 9, though one fella, Michael Roberts (the multifamily developer) was thinking things were 9 already and would “level off” to 8. Maybe that was an interpretation of activity level, not overall market conditions. He also had great things to say about building product that will respond to the Gen Y (under-32) who are totally enviro. “Look at college campuses these days – they are totally green.” His implication was that these people are driving his market and will soon be driving the rest of real estate demand as they begin to buy and take responsibilities in corporations. Here he is in a photo from BisNow:
- Looking at the relations of the capital markets to the opportunities in the Boston region: BlackRock’s Shelton Getter, New Boston Fund’s Jim Kelleher, and AEW’s Marc Davidson
These guys were very informative. I tweeted a few things through the event – you can look through the Green2ROI feed to see some of that. One concept I appreciated was shifting from pure growth to “defensible cash flow” which was new to me. They were also bullish on multifamily. Which means it is going to turn into a bubble if it hasn’t already. I’ll say now that the continuing stagnation of the economy and lethargy in jobs recovery will mean people gradually give up on the “having their own place” and continue to double-up, to find savings in that one major expense of where to lay your head at night. First house demand shrinks, then apartment demand shrinks. Just a wager. Of course, the best product always catches the market, even as demand shrinks.
- For prespectives on the national real estate situation: Intercontinental’s Peter Palandjian, Wells REIT II Nelson Mills, and Normandy’s Jeff Gronning
I really enjoyed Atlanta-based Neson Mills’ “I’ll start” attitude. Just jumped right in. Some nuggets from these finance wizards: (and by this time, two hours into the program, the crowd had dwindled to the real real estate nerds like me) the money’s got to go somewhere. People are taking flight to safety. Liquidity is important – thus the REITs continue to perform (if they chose underlying assets wisely). Focus on quality. However, fund-raising is very challenging as people are scared and uncertain of macro-economic things all the way to Greece. Jeff noted there is a strong correlation between asset quality and location, thus their focus on major core markets. Boston is good in that projects are constrained by regulations, but that means higher quality product overall. So they like the Boston market.
All in all, a good program. Thanks to BisNow for putting it on!