Real Estate Impact Conference Highlights Key Trends Shaping U.S. and Global Markets

February 13, 2018

Richard Westlund

Tax reform, online retailing, smart homes, and shifts in consumer demand are changing U.S. and global real estate markets, according to participants at the University of Miami Real Estate Impact Conference hosted by the School of Architecture, Miami Business School and the School of Law on February 9 at the Four Seasons Hotel.

“When you look at the connections between retail centers, logistics and online sales, every piece of that market is seeing rapid disruption,” said Benjamin Conwell,  Senior Managing Director and National Practice Leader eCommerce and Electronic Fulfillment Group, Americas, Cushman & Wakefield. “Today, the store is never closed, and retailers are scrambling to offer consumers a fresh and engaging experience.”

Hundreds of University of Miami students and alumni, along with   commercial real estate and finance professionals from across the country, gained insights into the rapidly evolving hospitality, retail, office, industrial, and residential markets from leaders like Barry Sternlicht, chairman and CEO, Starwood Capital Group, and Arne Sorenson, president and CEO, Marriott International.

“This conference is a great example of how we generate a productive dialogue in our community,” said University of Miami President Julio Frenk. “We are breaking the silos to bring students and faculty from these three schools together, and we are proud of our growing number of programs in real estate.” 

In introducing panelists for one of the three conference sessions, John Quelch, dean of Miami Business School, said he was “awestruck” by the caliber of the participants.  “This is one of the most important real estate conferences in the country,” he said. “It puts the University of Miami firmly on the national and global map as one of the top schools in real estate.”

After thanking the conference sponsors, including Douglas Elliman Real Estate, Kislak and The Witkoff Group, Andrea Heuson, professor of finance and director of Miami Business School real estate programs, said the conference was also designed to create networking opportunities for UM students – whose attendance was sponsored by Swire – and their colleagues. “Being able to learn network with your friends on a Friday afternoon in Miami – it doesn’t get any better than this!” she said.

Insights from Starwood

In a keynote conversation with Cathy Marcus, global chief operating officer, PGIM Real Estate, Sternlicht discussed how Starwood Capital Group has prospered in strong and weak economic environments. “We take a very disciplined approach to lending, and we look at any asset class, anywhere in the world,” Sternlicht said. “As a result, we’ve had no losses in the past nine years.  On the equity side, we like multifamily rentals and have a large number of assets in Florida.”

Asked about trends in the hospitality market, Sternlicht said he likes properties in the luxury and the value segments, but not the middle market. “You have to be a brand, rather than a commodity,” he said. “You have to connect emotionally with your guests, just as you do in retailing.”

While AirBNB will make inroads on hotel occupancy levels, its business model won’t disrupt the industry, Sternlicht added.  “I think we will live side by side,” he said, noting that many travelers like the social experience of being in a hotel or resort, rather than staying in a single-family home.

From a broader perspective, Sternlicht said U.S. tax reform will provide a short-term windfall for the real estate industry due to lower corporate rates and deductions for pass-through entities. But he warned that the tax cuts have the potential to overheat the economy, leading to higher inflation.

Marriott’s Perspective

in the second conference keynote, Steven Witkoff, founder, The Witkoff Group, engaged Sorenson in a dialogue about Marriott’s global success, including the 2016 acquisition of Starwood Hotels and Resorts Worldwide. “After a year and a half, things are going great, but there is a lot of work ahead of us,” Sorenson said, noting that one of the goals for 2018 is to merge the two companies’ rewards programs.

While the U.S. is still Marriott’s largest market, China is growing quickly, Sorenson said. Currently, Marriott has opened about 300 luxury hotels and has another 300 under construction.

Looking ahead, Sorenson said global urbanization is creating new opportunities for mixed-use projects with hospitality and residential components. “Being able to offer a unit with hotel services can increase the value of both uses, provided the development is large enough to support the hospitality side,” he said.   Another trend to watch is the use of modular technology to accelerate the construction and reduce the cost of new lower-end properties.

"The Future is Now"

Technology is also impacting real estate markets, said Onay Payne, equity owner and managing director of Clarion Partners.  She moderated a panel discussion, “The Future Is Now,” with Conwell; Joseph Brancato, managing principal, Gensler; Juan Nuñez, president, Florida Region, Whole Foods Market; and Fred Rothman, president, East Region, Lennar Corporation.

“Architects and designers have new tools like virtual reality, augmented reality and 3D printing to bring information to clients early in the process and to collaborate on projects around the world,” said Brancato.

Nuñez said the merger between ecommerce and grocery retailing will lead to redesign of the stores and parking areas for convenient “pick-up” areas. “We will be able to have more retail and less backroom space with faster deliveries,” he said. “The arrival of the driverless car will also reduce the need for traditional parking.”

On the residential side, the “smart home” segment will finally take off, according to Rothman. “Today, every new product has a device that can be picked up by some application,” he said. “In turn, those devices give you access to retail shopping and entertainment, so ultimately your home may be worth more as a retail center than as bricks and mortar.”

At the end of the discussion, the moderator and panelists offered their advice to students. “Don’t be afraid to fail,” said Payne. “Just figure out how to get back on your feet.”

Real Estate Impact Conference 2018 Session 2

Real Estate Impact Conference 2018 Session 3

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