Waiting Game

At the conclusion of yesterday’s Emerging Trends presentation at the Urban Land Institute Fall Meeting in Miami Beach, Barclay Bank’s Schecky Schechner polled the crowd of about 2000 real estate types for their sense of when the industry could expect to see a start to recovery. A few hands raised for 2009, not many more for 2010, and most of the audience signaled 2011. I guess that means Steve Blank (ULI senior fellow) and I made a convincing presentation of the report, which forecasts a lurching recovery after 2010 without much of a rebound. Actually, attendees at ULI seemed stoically realistic about a substantial downturn. If there were any doubts before the September cataclysm in the credit markets, they have disappeared now that a deep recession seems to be taking hold. Everyone seems to accept commercial real estate markets can’t escape a beating–significant value declines, negative investment returns, and a development standstill. Attendence was stronger than expected–over 6,000 spread around South Beach and Collins Avenue hotels. Instead of trying to do deals, people were shoring up relationships and looking for capital. Cab drivers were relieved that a big convention was finally improving their business, if only temporarily. One hack told me he was living off strong Cuban coffee during the week so he could work around the clock to ferry people around and make lucrative airport runs. I was glad he had just had a cup before my early a.m. ride with him. Stillborn hotel condo projects dot the beachfront along Collins testament to financing drying up and prospective buyers disappearing. Cranes nevertheless work overhead at several hotel expansions planned in better days–the Miami market always comes back, but maybe not in time for current owners and developers. Ultimately, there are enough people in the world willing to pay for a view overlooking the Atlantic shoreline. And people who can make deals in the bottoming will score substantial gains over the course of the recovery… That goes too for the many sidelined players husbanding cash and waiting for the overall commercial market correction to take place…  2009 will be a waiting game and probably 2010 too. But there’s always 2011.