The Urban Land Institute's Fall Meeting last week in Washington D.C. was a compelling show to attend. I went to a ton of sessions during the show spanning a wide range of topics. I shared some of my thoughts on the blog last week in addition to providing Twitter updates and a couple long stories posted over at our main site.
Something that struck me throughout the conference was the refreshing amount of honesty coming from the podiums. There was no fluff and no attempt to cheerlead. There was a frank assessment of the commercial real estate industry's missteps and a palpable sense that people are trying to grapple with the challenges that remain.
I can't tell you how many times I've heard at one time or another from folks in commercial real estate that by not emphasizing positive news or talking up the industry, that Retail Traffic somehow has done a disservice. I've never quite understood that argument. It's always seemed to me like saying that if we don't talk about what's happening, then it doesn't exist.
That is incredibly dangerous. Without an honest assessment of the true market conditions, investors are likely to make bad decisions. And looking the other way in the face of irrational exuberance is exactly one of the things that caused this Great Recession to be so painful. Things were out of control for so long that when it all imploded it created massive carnage that we're still sifting through.
I was struck most of all by the remarks of ULI Chairman Jeremy Newsum. Newsum said that the commercial real estate industry needs to own up to the fact that it contributed to the problem and was not an innocent bystander that got swept into the tsunami by the banks. Most pointedly, Newsum bemoaned the fact that the industry let investment funds come in and dictate the agenda. Control of the industry slipped from the hands of experienced owners and operators to financial engineers looking for instant returns juiced by massive amounts of debt. "Real estate is not primarily about money, and we should not have allowed real estate to become just another playground for financial engineers," he said.
Newsum added that developers and owners also need to keep in mind that they have a responsibility to surrounding communities. They have a mandate that goes beyond turning profits and extends to creating spaces where all people live, work and play. You can find more of his thoughts encapsulated here in a statement issued in conjunction with the show.
In addition, you had Vornado CEO Mike Fascitelli admitting in one session that his company was too conservative when it could have struck and made some investments that would have generated huge returns.
And the honesty extended beyond the commercial real estate content. Sheila Bair questioned whether lenders really learned the lessons of the last cycle about being too loose with their terms. Political pundit Larry Sabato offered a frank assessment of the upcoming elections and former Fed Vice Chairman Donald Kohn was equally straightforward in analyzing why the economy took the turns it did and where things are headed. I posted a lot of their comments at our Twitter feed.
So in the end, I gained a lot of insight into the current state of the industry and the challenges that remain. I just wish this honesty wasn't such an exception. It would make things a whole lot easier if people said what they thought rather than said what they thought you wanted to hear. It would be better to be honest about the challenges that face us than pretend they don't exist. We can't talk the problems away. They have to be dealt with.