Thought Leaders Shared Predictions during Symposium Hosted by the BOMA Foundation and Georgetown University
WASHINGTON, DC – November 17, 2010 – (RealEstateRama) — Commercial real estate visionaries from both academia and industry painted a fairly optimistic picture of what the industry will look like in the next ten years during 2020: A Vision for Commercial Real Estate, a thought leader symposium presented by the Building Owners and Managers Association (BOMA) Foundation and the Georgetown University School of Continuing Studies and its Masters of Professional Studies in Real Estate Program held last Tuesday in Washington, D.C. Their predictions point to a future in which property management is increasingly important, buildings are carbon neutral and shifting demographics create a greater demand for real estate.“Our inaugural Thought Leader Symposium was an inspiring glimpse of what our industry will look like a decade from now,” commented BOMA Foundation Chair Marilyn Wilbarger, director of property management, City of Key West, Fla. “Attendees heard from the best and brightest minds in real estate, finance and sustainability and walked away with a better idea of how to prepare for future success.”
The State of Commercial Real Estate
BOMA International President Henry Chamberlain, APR, CAE, and Lowe Enterprises, Inc. Senior Vice President Katya Naman, CCIM, discussed current industry conditions and stated that while the market has bottomed out, real recovery may not be felt until 2013. Chamberlain explained that the industry has entered an “era of less,” characterized by smaller profit margins, less space per worker and a flight to high-performance buildings in 24-hour coastal cities. Naman agreed, adding that any new development in the next year will be infill in urban areas. Both emphasized the importance of asset value enhancement, and in turn the demand for skilled property managers.
Real Estate Finance in the Year 2020
A lively panel of real estate finance veterans discussed the future of commercial real estate finance, starting with a look at the current market, in which asset values are down 40 percent from peak valuations and lending is difficult to obtain. Kathleen Day of the Center for Responsible Lending and author of S&L Hell noted that foreclosures in the residential real estate market are at the root of the problem and criticized banks and the government for not doing more to resolve the crisis.
“Re-equitizing assets is the order of the day,” stated Michael Grupe, executive vice president of research and investor outreach, National Association of Real Estate Investment Trusts. He added that public financing will likely replace some lending activity previously handled by CMBS markets and commercial banks.
Freddie Mac Vice President and Chief Economist Frank Nothaft said that 12 to 15 million new households will be created over the next decade, citing immigration and a rise in the birth rate as drivers. Even if trends like telecommuting and decreases in space per worker persist, there will still be a great demand for more space.
Stephen Conley, executive managing partner, Holliday Fenoglio Fowler, expounded on the need for commercial real estate investors to take a long-term outlook, noting that in Europe, investors are content with lower returns because of their protracted view. Whereas deals may have yielded 15 to 20 percent returns in the peak years of the last decade, they are more likely to yield seven to nine percent going forward.
Environmental and Energy Issues in the Year 2020
The future of sustainability is now, remarked Anik Jhaveri, AIA, LEED AP, principal, HDR Architecture, Inc. He commented that the development cycle for a building is typically at least eight years, meaning the new buildings of 2020 are being designed now. He likened sustainability to the Americans with Disabilities Act (ADA), explaining that accessibility features quickly went from being optional to required. He added that net-zero buildings are the next step in sustainability, followed by “restorative buildings,” buildings that give back to the energy grid.
David Borchardt, chief sustainability officer, The Tower Companies, pointed out that the real challenge of the next decade will be retrofitting the existing building stock. “Eighty-five percent of buildings that will exist in 2020 are already built,” he explained. He also underscored the need for lease changes that allow landlords to benefit from green retrofits.
Dan Sze, deputy director for state energy programs, Energy Efficiency and Renewable Energy, U.S. Department of Energy, and Craig Schultz, president, Energy Buying Strategies, Inc., discussed the commodity markets and distributive energy. Schultz said growth will happen in natural gas and renewables. He also spoke about the “community renewables” trend, where communities band together to remove structural barriers to utilizing renewable energy.
Chuck Schilke, associate dean of Georgetown University’s Master’s Program in Real Estate, closed the program, noting that 2020 will look better on all accounts than 2010.
About the BOMA International Foundation
The Building Owners and Managers Association (BOMA) Foundation is an independent, tax-exempt organization (501(c) 3) whose mission is to serve the commercial real estate industry by fostering a future vision, forward thinking research, innovative thought and global best practices. The Foundation is dedicated to sponsoring and encouraging innovative research and educational activities that advance the commercial real estate industry and profession. In addition, the Foundation initiates programs that seek to enhance the public appreciation of real estate and its significance in society. The Foundation is affiliated with the Building Owners and Managers Association International, the nation’s oldest and largest commercial real estate organization. On the Web at www.boma.org/About/BOMAFoundation/Pages/
About the Georgetown University School of Continuing Studies
The Georgetown University School of Continuing Studies offers master’s programs, professional certificates, and a bachelor’s, master’s, and doctoral degree in Liberal Studies. These programs offer an applied learning experience enabling professional and personal advancement. Improve yourself and positively impact the world, all while creating a network of valuable relationships. For more information, please visit scs.georgetown.edu, Twitter and Facebook.
About the Georgetown University Master of Professional Studies in Real Estate
The Master of Professional Studies in Real Estate degree program at Georgetown is a fully-accredited comprehensive graduate real estate program in Washington, D.C., which teaches practical real estate skills at the highest academic level in a supportive social environment. All courses are taught by top real estate professionals from major real estate organizations who know their fields in depth, are strong communicators and genuinely care about students. In classes averaging 20 students, students take five foundational real estate courses in ethics, law, finance, markets and accounting; four upper level track courses in a choice of tracks in Real Estate Development, Real Estate Finance, Construction Management and International Real Estate; followed by one capstone senior thesis course. The program emphasizes private sector real estate while also taking full advantage of the Washington location to emphasize public sector real estate, environmental and energy aspects and corporate real estate. On the Web at http://scs.georgetown.edu/departments/13/real-estate.