 |
 |
 |
|
|
|
|
|
|
Publications: |
Feature Articles |
National ULI Convention Suggests That Southern California Offers Optimism Despite Shaky EconomyNovember 10, 2002The San Diego Union-TribuneBy Roger M. Showley November 10, 2002 LAS VEGAS -- The 5,000 delegates to the Urban Land Institute's convention here last weekend had to revel in the glitter and glamour outside on the Strip because inside the Venetian Hotel meeting halls, the mood was leaning toward glum and grim. The most that can be said for real estate, said analysts in the industry, is that it is the "best of the worst" investments available for individuals and institutions. A potential war with Iraq leaves investors uncertain and that bodes ill for future planning, several told the convention of the Washington, D.C.-based development industry and planning agency think tank. San Diego's ULI chapter was represented by city planning director Gail Goldberg, San Diego City Councilwoman Toni Atkins and numerous planners, bankers, builders and industry consultants. Prospects for San Diego were considered better than those facing most metropolitan areas, based on charts flashed on multiple projection screens that indicated where industrial, retail, office and residential trends are headed. Housing prices are soaring almost everywhere, the experts said, and especially in San Diego and Boston, according to Stuart Varney, a London-educated economist and CNN business correspondent. "Asset values may come down a little, but we won't have the busting of a bubble," he said. Nationally, said Michael Pralle, president and CEO of GE Capital Real Estate, consumer spending relies heavily on extra household income gathered from multiple home refinancings. "And I don't know if that's sustainable," Pralle said. Much of the future of real estate and the general economy hang on the question of whether the United States is headed for a "double-dip" recession or continued slow growth. There was no consensus on the answer or on what the Federal Reserve could do, beyond cuts already made in the interest rate, to stimulate the economy. Looking up Stan Ross, a real estate veteran with the Ernst & Young accounting firm in Los Angeles, offered one of the few upbeat views. "I'm bullish on the future of the country and real estate," he said. He called federal fiscal policy "a mess" because of the return of budget deficits. But the spending splurge offers many opportunities, he said, including government agency construction projects, railroad and education investment and big-ticket local projects, such as arenas, stadiums and libraries. Kenneth Rosen, a University of California Berkeley real estate professor and economist, said there is a 60 percent chance of a second recession, following the present anemic recovery from the brief 2000-2001 downturn. "We have the very significant possibility of going into a full-blown recession," he said. The United States, he said, is operating on a "dual economy," one fueled by a "very strong" single-family home-building and reselling boom, and the other suffering from stagnation and declines in high-tech industries and mounting deficits in 37 states. "Consumer confidence is below 9/11 levels," he said, referring to the sudden drop measured by the Conference Board late last month. With volatility likely to continue in the stock market and war with Iraq a strong possibility, he said, the public's positive feelings about the future are being "undermined." As an example of the positive-negative spin on the future, he pointed to California, where job growth is strong in San Diego and weak in the San Francisco Bay area. In housing, Rosen noted the rise nationally in apartment vacancies and decline in investment returns, partly because home buying remains so robust. He half-seriously recommended the building industry encourage divorces, on the decline lately, because they result in new households and apartment customers. No return Susan Hudson-Wilson, founder and CEO of Property and Portfolio Research in Boston, did not predict a return to recession. But she said consumers are shaking up the retail business by going for high-end and bargain buying, while abandoning mainstream department store shopping. "They're shopping at Saks and Target, not at Macy's," Hudson-Wilson said. Geoffrey Dohrmann, chairman and CEO of Institutional Real Estate in Walnut Creek, said investors consider buildings and land "the least bad asset" to buy. But Thomas Justin, executive vice president of the Weitzman Group in New York, said this trend has resulted in "too much money chasing too little good product today." Meanwhile, Justin said, some institutional investors are selling real estate assets because they are the only source of revenue available to shore up other parts of their sagging portfolios. Futurist and popular-culture commentator Faith Popcorn recommended the developer crowd conduct more research on the nation's mood. The opening question at bars, on street corners and in retail malls, she said, should be, "Are you happy?" Stephen A. Wynn, the Las Vegas megahotel developer, would have no problem answering yes. He bragged to the convention's final breakfast session that he had secured financing for his next big project, $2.4 billion, 2,700-room La Reve hotel-casino, the groundbreaking for which coincidentally occurred the day before he spoke. And across the street from Wynn's construction site, as Wynn was speaking, Fashion Show mall was showing off its $1 billion, million-square-foot expansion to the public for the first time. La reve is French for dream, and Wynn's fellow developers could only wish for happy dreams as they look to an uncertain 2003. Excerpt copyright 2002 San Diego Union-Tribune | |
|
|