J. Paul Beitler of Douglas Elliman-Beitler, Inc. told 300 real estate professionals Tuesday that 2001 is the year to "buy something and leverage the daylights out of it. I don't care if it's a three-flat, buy it and leverage the heck out of it now."
But while low interest rates and the availability of capital make Beitler bullish on the local real estate market, Karen Case, group senior vice president for LaSalle Bank's commercial lending department, related increasing underwriting concerns lenders are facing. And economist Robert Genetski recommended the stock market for 2001, despite the harsh descent of the Nasdaq and once glamorous tech stocks. "I'm fascinated there's very little public interest in real estate," said Terry Savage, a personal finance columnist and author who moderated the ULI panel. "You folks are seen as stodgy."
"I feel like the Maytag repairman," said Beitler, whose firm's developments include the nascent Dearborn Center. "Everybody in the economy has been talking about the boom years that we've had, but everybody in commercial real estate has been waiting for it to come." Which is unsettling for developers such as Beitler, who once entertained the idea of reclaiming for Chicago the title of home to the tallest building in the world, is they must guess what the economy will be doing at least two years after announcing plans for a project.
Making matters worse, Beitler said, is hearing talk of recession. Genetski forecasts a downturn through the first half of 2001, but expects the economy to pick up in the second half. "When I look at the economic landscape today, this year will be a mirror image of last year," Genetski said. "By that I mean, this year we started weak but I think we'll end the year strong. Last year, we started very strong and ended the year weak. This year, the Fed is concerned about a weak economy. Last year, it was just the opposite." Genetski also sees the Fed's tighter monetary policies last year contributing to the stock market's fall; likewise, he sees easing policies driving prices up.
"The economic weakness should not be a serious setback," Genetski said. "The outlook for the real estate industry remains good, and will be getting better."
But the more bullish Beitler wasn't entirely rosy. He ticked off a long list of heavyweight local companies that have moved their headquarters from Downtown, Ameritech, Amoco and Kemper Insurance among them. "Chicago, in a sense, has been robbed," Beitler said. "There's been a fantastic growth in the city, but it overshadows the companies that have left." However, many of the departures have not been out of the region. For instance, Ameritech relocated to a sprawling campus in northwest suburban Hoffman Estates while Kemper moved to north suburban Long Grove.
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