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Highlights of the Urban Land Institute’s 2011 Fall Meeting & Urban Land Expo

The Urban Land Institute (ULI) celebrated its 75th anniversary with more than 5,900 attendees at the annual fall conference held in Los Angeles, California, from October 25-28th. Attendees were treated to engaging interviews and discussions with luminaries in various industries, including Dr. Robert Gates, Donald Bren, David Bonderman, Eli Broad, Michael Milken, and Tim Leiweke. Below are some highlights from the conference TMG would like to share with our readers:

Future of Housing Market Dependent on Job Creation

The outlook for the housing market was at the forefront of conference attendees’ minds. Currently, the market has gone from one of ownership to a rental market. Historically, new homes have comprised 16-17% of the real estate market, whereas it is now around 7%. Panelists noted that, in addition to allowing better access to capital markets, the government has a substantial role in helping to improve the housing market through job creation. People typically don’t buy homes if they lack certainty in employment. Another method suggested to help heal the housing market is the introduction of a program for companies to buy the distressed properties currently sitting idle in the market and turning them into rentals. The challenge would be to find companies who can handle the volume and manage and operate it efficiently.

Master-Planned Communities: Donald Bren

Attendees of the conference were treated to an interview with Donald Bren, Chairman of the Irvine Company, which owns 93,000 acres of land in Irvine, California that stands as a an example of a successfully-developed master-planned community.  Mr. Bren emphasized the importance of a good location to the success of his company. Other factors he said assisted in the success of his company included: having a board that has been careful to avoid making short-term decisions; having the ability to carefully research, plan, create, and develop their ideas; having the luxury of being a private company that did not have to pay quarterly dividends and was able to reinvest their cash into their asset portfolio and project infrastructure; and having mortgage-free financing on the purchased land. When asked if a similar development could be replicated in the future, Mr. Bren expressed doubt primarily because of stifling government regulations and surmounting legal hurdles.

Hotel Performance Strong for 2011 Q4

Experts and leaders in the hotel industry gathered together in a panel discussion to discuss the outlook for hotels. Michael Barnello, President and CEO of LaSalle Hotel Properties, predicted strong performance in the fourth quarter of 2011, especially since corporations are sitting on significant sums of cash and have not changed their travel policies. Hotel companies, like Hilton Worldwide, have found better value in developing existing properties, rather than developing new hotels. With the changes in the market, hoteliers may pay a premium for the former option, but the trade-off is the ability to develop the property more quickly without encountering the usual 2- to 3-year development cycle. There was consensus among the panelists when asked whether there was opportunity for multi-family housing in hotels: not likely. Matthew Sparks, Senior Vice President of Luxury and Corporate Development for Hilton Worldwide, said the development of luxury hotel and residences was complex and the residential market seemed to be years away, even on the luxury side. Steve Haggerty, Global Head of Real Estate Development for Hyatt Hotels Corporation, said developing corporate housing is not as easy as it seems and their time is better spent focusing on underserved markets.

Contributed by:

Mimi Tsai

Feasibility Analyst

The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

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