By Holly Dutton
Some of the industry’s most powerful players are predicting difficulties ahead as the nation continues to recover from the recession.
That was the consensus at the Eisner Amper Real Estate Private Equity Summit panel “Bring Me Sunshine: A Forecast in Equity.ˮ
Moderator Kenneth Weissenberg of EisnerAmper was joined by Dean Adler, CEO of Lubert-Adler, Jeffrey Horwitz, partner at Proskauer, David Lichtenstein, chairman of The Lightstone Group, William Kahane, CEO of RCS Capital and Joe Sitt, CEO of Thor Equities.
“Everybody basically encouraged that there are some potential difficulties ahead,ˮ said Weissenberg of the panel. He added that they expect increased interest rates by 2016.
In terms of economic recovery, the panel agreed that the country is in the “late inningsˮ but there’s still a ways to go.
“We’re about 60 to 70 percent of the way there,ˮ said Weissenberg. “While the economy is continuing to grow and show signs of life, the jobs aren’t there yet. Until they are, there won’t be consumer confidence to be spending.ˮ
The outlook for retail was mixed, with some sectors expected to do extremely well while others expected to do very poorly.
“People should be careful what type of retail they’re investing in,ˮ said Weissenberg.
Trends in tech advances are changing way people use real estate, with online retailers like Amazon offering same-day delivery or Bed, Bath and Beyond needing only a fourth of the space it would usually need by using new technology.
New technology was a big part of the discussion, with how it is impacting the marketplace and changing the way people do business.
“There will be need for office space as a result of the new technology,ˮ said Weissenberg. “Factories are becoming more automated, and there may be an increase in demand for industrial space, not necessarily and increase in employment though as tech replaces labor.ˮ
Potential investments could even mean buying land “somewhere in the boondocksˮ for relatively cheap to use as parking lots for futuristic cars. “In the next several years, people will be able to tap into computers and have their cars come pick them up,ˮ said Weissenberg. “That kind of technology is just around the corner.ˮ
He cited a new Tesla model that does “90 percent of the driving.ˮ
However, Weissenberg said panelists cautioned watching the timing of investing and making sure you’re “not too far ahead of the curve.ˮ
The trend of urbanization is being seeing in key areas like New York City, Washington D.C., Boston, San Francisco, Los Angeles and Chicago, where large influxes of college graduates are moving. “Fewer grads are going back to where they came from,ˮ said Weissenberg. “It’’s creating an increase in demand for housing, but affordable housing for working-class and entry-level workers is hard to come by. There’s a tremendous need for that.ˮ