2015 marked another record year for the UNC Kenan-Flagler Real Estate Conference, with over 430 industry professionals from 185 companies in attendance. This record turnout accentuates the appropriateness of this year’s discussion topic: Cyclicality. The conference emphasized what current trends and market conditions may be telling us about the real estate industry relative to historical ups and downs.
Facilitating this discussion was an all-star lineup of speakers and panelists. Jodie McLean, president and chief information officer of EDENS, provided a jump start to the event with a heartfelt history of her career with the firm. She explained how adhering to four key principles – working with good people, diversification, discipline and purpose – allowed her to successfully navigate the financial crisis with relative stability.
Chief among these principles was Jodie’s commitment to purpose, which for her was to create a true experience for visitors to her properties. This sense of duty to meet the needs of the end user and benefit the community has proven successful for EDENS and continues to gain recognition as an important aspect of all types of real estate – office buildings are adapting to new styles of work, industrial buildings are being reshaped to fit the needs of commerce across the country and apartment buildings are focusing on health, walkability and community.
Mekael Teshome, an economist with The PNC Financial Services Group, shared a largely positive economic outlook which was well received. He reported that economic growth prospects look good for the next several years and though he expects quantitative tapering in the near future, Mekael believes it should be a mild pullback and have a benign effect on the industry. Perhaps most interesting from a societal standpoint is that he expects more young home buyers to enter the market as they make their long overdue departure from the nest.
John Falco, principal at Kingsley Associates, underscored the importance of quality property management. He revealed data showing that other than rental rates, property management was the number one factor that influenced tenants’ decision to renew their lease. Again, we see how a focus on the end user pays real dividends in good times and in bad.
A panel of industry leaders provided a round-robin ending to the day. Peter Dannemiller, managing director of Hodges Ward Elliott, presented some interesting facts showing hotels nearing record high occupancy, RevPar and ADR. Additionally, he noted that inflation adjusted transaction volumes are returning to pre-crisis levels. Wes Fuller, executive director of Greystar, said that multifamily is performing at a very healthy clip on a national basis, but he expects a return to more normal levels as home ownership is likely to increase. Mary Ludgin, managing director and head of global research at Heitman, further reported on the overall health of the economy but also echoed an uncertainty of how much longer this will be the case. Lastly, Robert Turner, executive vice president and partner at The Brookdale Group, made the argument that office fundamentals have been lagging and should continue to improve in the near term.
As a post-financial crisis MBA candidate concentrating in real estate, the topic of industry cycles hit close to home and proved to be a thought-provoking exclamation point to my time at UNC Kenan-Flagler. More than a lecture, the Real Estate Conference provided an excellent opportunity for generations of leaders – past, present and future – to gather together and share their thoughts. My key takeaway from these interactions is this: It is only by carefully examining our past and taking the time to learn from previous generations’ successes and failures that we can hope to weather the inevitable storms and build a truly great future.
For biographies, presentations and further information, please visit the UNC Kenan-Flagler Real Estate Conference website.
By John Dameron (MBA ’15), outgoing president – MBA Real Estate Club