Monday, February 1, 2010

Report from University of San Diego's Real Estate Conference

Friday, January 29th from 7:30 AM to Noon, the Burnham-Moores Center for Real Estate at the University of San Diego held their 14th Annual Real Estate Conference.  There appeared to be 650 to 700 people in attendance.  This was a wonderful event and a very impressive audience (a Who'sWho of the San Diego and California real estate industry).

FIN 180 and FIN 183 students, we will discuss some of the information presented and discussed at this conference, but let me post a few points, before I forget, from the keynote speaker, Sam Zell.

*Rules of the game are changing day by day in Washington, DC.  Investors do not like this type of playing field and this is not good for US investment.
*He sees little to no commercial development over the next 5-years (I quote Mr. Zell: "developers should go to medical school").
*No new commercial development is good for existing commercial property owners (basic supply and demand).
*The coming commercial downturn is overblown and will be "benign" compared to the residential market mess.  Cap rates will not skyrocket.  Remember the relationship between cap rates and property values from FIN 181?
*62% homeownership rate in the US is appropriate.  We got as high as 69% homeownership a couple years ago and we are currently at 64%.  Almost there.
*Mr. Zell is also an advocate of a strong US dollar.  Keeping the US dollar as the World's reserve currency is critical.

Sam Zell is chairman of Equity Group Investments LLC, a private Chicago-based investment firm he founded over 40 years ago.  He also serves as chairman of Tribune Company, a media conglomerate owning the Chicago Tribune and the Los Angeles Times.

Special thanks to USD faculty member, Vivek Sah, for inviting me to the conference.

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