I’ve been attending the Urban Land Institute Fall (ULI.org) meeting since the mid 80s. ULI is the research and education organization that serves the real estate industry.  Each annual gathering is a fascinating opportunity to take the pulse of what’s really happening in the broad world of development. My expectation going into this year’s event was decidedly downbeat given the carnage that is touching every facet of real estate.

To the surprise of everyone (especially the organizing committee), the turnout far exceeded expectations.  Past meetings have never surpassed 7,000 and ULI was prepared to claim success with half of that number. 6,000 of ULI’s 33,000 members defied the questionable economy and were on hand at the Moscone Convention Center in San Francisco. As one speaker suggested, “If you are here, you are successful,” a clear reference to the high price of attendance.

The meeting was three and one half days of educational programs, keynote addresses, mobile workshops, tours, social and networking events and an expo hall filled with over 60 exhibitors. ULI structures its educational content and special interest focus by land uses or building types (retail, commercial, residential, industrial, urban development etc.). It organizes its educational sessions accordingly, and most presentations are set up as panel discussions with 4 or 5 speakers focused on a specific property class or a special issue of interest to the overall audience. This provides a variety of perspectives on each subject, meaning that at the meetings end one has heard a tremendous number of points of view.

The property specific sessions generally offered a mix of triage actions that can be taken to weather current conditions coupled with prognoses for the future. The messages were very consistent. This is the worst economy in all of our lifetimes and, while we are in the initial throes of recovery, it will be long and slow. As for opportunity, now is the time for the real estate industry to be shopping for deals (most asset classes can be bought for 60% of replacement costs) and for buying properties but not constructing new buildings,  providing one has a source for capital. 

Bill Emmott, former editor of The Economist, provided a global perspective of the economy, explaining the reasons why we will recover and how the recovery will look in different parts of the world. He believes the United States is likely to experience a U shape recovery whereas India and China’s will be V shaped and Great Britain’s will resemble an L. The recovery will not be led by consumers but by the public sector. Private debt will decrease while public debt increases, taxes will rise and environmentalism will be crucial. Psychology is a significant factor in the pace of the recovery. His greatest reason for optimism in the US –the flexibility of the economy.

Other economists noted that there are still 100 million people employed, and that the U.S. has a 14 trillion dollar economy. All agreed that globalization is fundamental to all economic activity. 3 to 4 years to full employment was the consensus.

Other significant themes of the conference:

Changing Paradigm – there was general agreement that once this recovery is over things will never be the same. Values and behavior will change. Priorities for how we live and how we think about resources, both personal and the planet’s will all be different. From the size of our homes, the way we access our jobs, the way we use the land and the mandate to be better stewards of the planet will all result in different patterns for development and building and will challenge the design and building communities to lead the way.

Sustainability and Environmentalism – these ULI meetings are a giant barometer of change. The Fall Meeting in Las Vegas two years ago was the point in time when the real estate community had their environmental epiphany. It was the hot topic. Al Gore had just released his book and movie and after years of dancing around the edges of the movement ULI got green religion. This year many sessions focused on the environment with topics such as, “The Green Quotient in Institutional Investment”, “Impact of Green Regulation on the Real Estate Community”, “Green Tools for Government” and “Green Retrofit – the Wave of the Future”. Green is clearly in and attracted the appropriate attention.

Availability (lack) of Capital – as the life blood of the development community, access to capital determines whether projects will or won’t happen. There is no denying that capital is mostly nonexistent and will stay that way for a long time.

Changing Demographics – shifting demographic makeup was another key topic of the meeting. The aging population (5.6 people turning 65 every minute), women have just become the majority in the workplace, Hispanics as the only demographic group growing in size all portend continuing shift in behaviors.

Taking the industry’s pulse each year is instructive. I find real estate professionals to be consummate optimists (is there a choice)?  While hardly euphoric, the mood was decidedly upbeat. Emmott’s use of the term, “Paranoid Optimism” was a very apt description of this year’s demeanor. This group knows all about cycles and has great patience if not staying power. I continue to ask the question, “How many recessions does one get in a professional career?” This one marks the GNU Group’s fifth and we seem to be weathering it just fine.