Larry A. Silverstein, president and CEO of Silverstein Properties Inc., joined fellow panelists Michael D. Fascitelli, president of Vornado Realty Trust; William L. Mack, founder and managing partner of Apollo Real Estate Advisors; Stephen M. Ross, chairman and CEO of the Related Cos.; and Casey R. Wold, COO and chief investment office for Trizec Properties Inc. The group, led by moderator Dean D. Kenneth Patton, director of the NYU Real Estate Institute, spoke to the nearly packed luncheon for the 35th Annual Conference on Capital Markets and Pension Fund Investment in Real Estate.
The theme of this year's event was Strategies and Opportunities in the Age of Credibility and Transparency, and panelists did their share of opining on the subject--going as far to say the uncertainty surrounding Wall St. is one of the primary factors plaguing the real estate industry. "There is a necessity to return confidence back to the system," said Wold.
"Wall Street gets a lot of bad press," Fascitelli added, "but there are a lot of good people down there. We need balance and we need to restore confidence or we're going to have a serious problem in the market for years to come." He went on to say that the health of the stock market has historically been a key driver that sets the pace for almost every facet of real estate market.
Mack noted that the widespread feelings of economic doubt will likely continue "until we have convinced people to stop sitting back, and get them to start spending capital and start spending on people."
Coincidently, the NYU event occurred only hours before the Senate voted to pass the highly-talked-about terrorism insurance legislation, which all panelists agreed was a vital element spurring new development.
"Lately developers have almost had to pay a ransom to get insurance to build buildings," said Ross. "There is supposedly $15 billion of programs on hold because they couldn't get terrorism insurance. Personally, I'm glad to know that there are $15 billion of projects that are feasible right now. I hope they all get built."
Silverstein, who holds the master lease on the World Trade Center site, was referred to by panelists as the unofficial expert on the topic of terrorism legislation. "Because of Sept. 11," Silverstein said, "we found that: A) insurance companies didn't want to talk to us; B) When they did talk to us, they didn't want to quote us a price; and when they finally did quote us a price, we found out that C) It was 500% more than what we were paying. So if we were paying $250,000 for insurance, it went up to $1.5 million. The advent of government intervention in terms of terrorism insurance is extremely important."
While Fascitelli noted the skyrocketing insurance prices were not limited to those dealing with terrorism, Mack quickly differed. "It's not uncommon now to see rates increase 50% to 70% for property insurance," he explained. "And it's not uncommon to see rates go up three times. However, we were enjoying very good rates up until [Sept. 11]."
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