Tales From The Front Line | May 18, 2020
Tales From The Front Line | May 18, 2020
2020 ULI Spring Meeting Recap: What One of Our Kahan Fellows Has to Say
Each year, ULI Chicago’s Jeffrey Kahan Fellowship recipients attend the ULI Fall and Spring Meetings, gaining valuable insights from the senior CRE players who convene semi-annually to attend their US Product Council meetings. Our 2019-20 Kahan Fellows, Megan Clower, Associate, Pearlmark and Dawveed Scully, Senior Urban Designer, SOM, recently attended the 2020 ULI Spring Meeting virtually and participated in the Industrial and Office Park Development Council (IOPC) meeting.
Here’s what Megan had to say about her experience:
This year’s ULI Spring Meeting was unique, as it took place via Zoom for obvious reasons. With all of the chaos and changes resulting from COVID-19, it was great to have a chance to hear from people from across the country and the industry on their experiences during this crisis.
I had the opportunity to once again guest on the Industrial and Office Park Development Council (IOPC) – Blue Flight. It was a great chance to listen to a wide variety of panelists and reconnect with people I’d met at the ULI Fall Meeting in Washington D.C.
Our first panel was around office space. In particular, there was discussion around whether this would drive up demand for office space as companies moved away from high density or drive down demand for office space as more companies moved towards permanent work-from-home solutions for employees. The general consensus seemed to be that over time, things tend to return to the mean. For example, one panelist mentioned the belief after the 1999 San Francisco earthquake and September 11 terrorist attacks that office users wouldn’t want to locate in San Francisco or in high rises, neither of which eventually came to pass.
A later panel was based around industrial, a very relevant property type given the lockdown orders in place. One of the points of emphasis was on diversification in supply chains, and the risks of having all materials coming from one country. In particular, with many pharmaceuticals being manufactured in China, the results have been devastating. Some panelists believed that companies would seek diversification for their own good, others thought government would incentivize or legislate for companies to do so, but the consensus was that the end result would be less of a dependence on single countries.
We wrapped up the video conference with a discussion on capital flows. Overall, there seems to be less panic, anxiety, and anger among investors during this crisis, as compared to the Great Financial Crisis. The primary focus so far seems to be a desire for transparency instead of overwhelming redemption requests. In addition, REIT’s appear to have overcorrected in their value reduction for multifamily, office, and industrial properties. While retail and hospitality is expected to continue to struggle, the other asset types are expected to rebound after this crisis and capital is very interested in taking advantage of this mis-pricing. Capital inflows remain better than expected, with large amounts of dry powder looking for distressed opportunities.
Overall, while I was very much looking forward to the chance to travel to Toronto and meet in person with the council, the Zoom call was one of the more engaging conference-type events I’ve participated in since this situation started.
Here’s what Dawveed had to say about his experience:
The Kahan fellowship has been a one of a kind opportunity to learn, experience and build relationships within ULI. Being able to engage in the fall and spring meetings, as well as the product council experience are unique and something I look forward to participating in as I develop further as a professional.
I participated in the ULI Fall meeting in person and while I and my other fellow were excited to do the same in Toronto, our product council was shifted to a digital meeting via zoom due to COVID-19. While I would have loved to visit Toronto and have another chance to interact with the group in person this time is a really unique opportunity to see how professionals react to the changing conditions of the pandemic. Especially as this council, IOPC-Blue, focuses on Industrial and Office markets there was a very interesting series of conversations held on how those industries were handling the impacts of the pandemic.
The conversation largely focused on the economic impacts of COVID-19 starting with the office and industrial markets and as with most things nowadays the work from home and stay at home orders have impacted the market significantly. The office sector was interesting to hear the various perspectives on what is currently happening nationally. Current existing tenants seemed to be stable but the group did not see any opportunities for new office development in the near future. Rental rates and location preferences may shift to brace for this economic downturn. The industrial sector was seen as one of the few stable and growing sectors in some ways due to the need for logistics facilities that have enabled us to more seamlessly work from home. Co-working is something I was really interested in hearing the council’s perspective on there were a lot of interesting opinions on how that will change in the future and if that model can prosper in the current environment.
It has been one of the best experiences I have had as a professional and I look forward to staying active with ULI and making an impact locally, nationally and internationally.