Chapter Corner
Aloha Chapter:
New Members were introduced and initiated on March 7, 2008
Aloha Chapter officers Ann Bouslog and Sandford Murata welcome
Hawaii Island Mayor Harry Kim as its luncheon speaker on March 7th.
Aloha Chapter initiates 7 members at its March 7 meeting:
Jeff Prostor, LeeAnn Crabbe, John DeFries, Jim Greenwell, Bob Bruhl, Oz Stender, Steve Metter.
Baltimore Chapter:
We are looking forward to the Chapter’s report on the March 19th presentation by Larry White, COO
Streuver Bros. Eccles and Rouse on the massive Mixed use Project, Harbor Point, on the former Allied Chemical Site. This should be an exceptionally interesting discussion. The Rouse company was the foremost firm in developing retail entertainment and to do so on such a challenging site in this economy should provide an opportunity to hear interesting ideas of how to cope with multiple major hurdles!
Ackneil M Muldrow, II
Baltimore Chapter Past President
Ely Chapter:
ELY PRESIDENT ACCEPTS NEW POSITION
Brad White, President of the LAI Ely Chapter, will join Habitat Co. on April 7 as senior vice-president of acquisitions and development. Habitat manages a portfolio of 17,500 apartments and condominiums. Mr. White currently is vice president at Related Midwest LLC. He joined Related Midwest in 2001 and has been responsible for the acquisition, financing and development of affordable housing projects in the Chicago area including Roosevelt Square, a mixed-income public housing development .
Prior to joining Related Midwest, Mr. White worked as a real estate consultant at Project Management Advisors, Inc. and at Shlaes & Co. He provided development consulting, market research, planning and economic development services to a broad array of public and private clients.
Mr. White has served as President of the civic group, Landmarks Preservation Council of Illinois (now Landmarks Illinois) and has volunteered with the Illinois Housing Council and Friends of the Chicago River.
For more information please go to: http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=28487. The Chapter wishes him well in these new endeavors! How about the chapter doing a press release for local papers featuring Mr. White’s role with LAI?
ELY MEETING PRESENTATION DISCUSSES NATIONAL AND LOCAL TRENDS
At Ely Chapter's February meeting, Mary Ludgin gave a presentation on "U.S. Commercial Real Estate at an Inflection Point". She discussed market fundamentals, national capital market trends, as well as national and international perceptions of Chicago. Her presentation covered the apartment, industrial, office and retail sectors in Chicago and in numerous major cities.
Ms. Ludgin is Managing Director of Heitman's U.S. Private Equity Group and is also the firms's Director of Investment Research. She is a member of Heitman's Board of Managers, its Investment Committee and Portfolio Committee. Ms. Ludgin has been a member of the Ely Chapter since 1988. She graciously allowed the presentation to be posted on LAI's web site. While it can not replicate her engaging speaking style, it includes information which will interest all LAI members. Please click on:
http://www.lai.org/go/chapters/templates/elydocs/overview2008.pdf
Laurie Marston, Ely Chapter Scribe
ED. note: Please note that both the Baltimore and Ely chapters focuses on positive developments. Despite the gloom and doom, there are deals happenning out there!
George Washington Chapter:
The Chapter’s new board, headed by President Louis J. Slade, took office in January. Our luncheon program that month showcased new developments underway and planned for the Anacostia River waterfront, Washington, DC’s “other river,” perhaps its most active current development area.
In February, the featured luncheon speaker was past LAIGW President Steve Fuller, who gave a real estate forecast for the Washington area noting that as the region has increased its private sector, non-federal government share of the economy, it is no longer as insulated from economic downturns as it once was. He also pointed out that Federal outsourcing related to the buildup of the war in Iraq has slowed with consequences for local office real estate, as well. In March, chapter member and current President of the American Institute of Architects, Marshall Purnell, will give an overview of a highlight of the Anacostia waterfront, the new baseball stadium for the Washington Nationals. His firm has been instrumental in the design. In April, the chapter expects to get a preview of the newest iconic building on the Mall, the Newseum, a mixed used residential and commercial/interactive museum complex located next to the Canadian Embassy. The chapter is also exploring creating a scholarship for Johns Hopkins University's real estate program in memory of past LAIGW President and LAI East Region Vice President Lew Bolan who recently assed away.
London Chapter:
2008 and On - A Septuagenarian's View of the Future
The current market seems particularly ambivalent. When the mists clear a little, what will influence the new surroundings? No doubt there will be many things, but four issues strike me.
The Banks, Again!
It seems to be the fate of the banks to repeat, in enduring cycles, the same basic errors. Each time the recipe is temptingly different, thus leading them on, but their hopes are dashed. One might argue that it will be the same next time around; i.e. nothing will have changed. However, it seems that much of the re-financing of stricken banks may come from sources of a fundamentally different nature -- particularly, sovereign funds. Whilst having little knowledge of them, it seems likely that they will prove to have rather different priorities from traditional bankers when the good times return. What constraints will they then impose? How will this alter the lender/borrower relationship?
Debt, Redefined?
The second issue concerns the fall-out from the clever (?) packaging of debt. Putting to one side the folly of much of the underlying debt, we have all been damaged by the richly rewarded sleight-of-hand employed in selling it on. Will this experience affect attitudes towards all forms of 'derivative'? Being old, I have an innate distaste for gambling (? la Société Générale) by so-called investors. I see the benefits in transparent, self correcting arbitrage mechanisms, but I see no investment merit in taking huge bets on short term movements in market prices. That is for gamblers, and Joe Public will not thank the managers of his funds for gambling with them. Where is the right boundary? When the lawsuits start, how will recent events affect views of that boundary?
Whither REITs?
Thirdly, how will retail property funds respond to their recent agonies? The REIT movement was successfully hijacked by the property companies, but will ingenuity use that structure to devise market-price driven rather than valuation-driven retail funds?
Energy: How Much? How Far?
Finally, what will be the effects of rising energy prices? As economies start to recover their steam, steam will be increasingly expensive. Throughout my career, we have built buildings in locations and in a manner that pre-supposed cheap energy. What will be the pains in rectifying that? Angus McIntosh produced an excellent paper arguing, in précis, for the greater damage to value that will be endured by secondary property compared with prime: the latter has a higher proportion of site value, and site value will not be affected by more expensive energy. Whilst I see the validity of the latter argument, is it wholly true? Many sites of high value are very dependent upon energy for reaching them; remove the affordability of car travel, and how would some wonderful retail, office and industrial parks fare? It is easy to be Malthusian about energy, but I foresee that some profound adjustments are inevitable, and those changes may be closer than we think.
Michael Mallinson, LAI London Chapter Scribe
Outlook for Global Property -- 2008 A Good Country for Old Men
Investment Property Forum/Society of Property Researchers' Event
March 2008
Well, it looks like the UK is the place to be for investment in terms of relative return and better risk profile. However, the skill is getting it right in terms of stock selection. It is here where experience does matter. The UK is now a good country for old men.
What kept people awake at night was the debt situation with the banks and were there any other surprises out there that would undermine the system.
U.S.
The consumer needs to get its balance sheet in order so it will not be driving the US economy forward. Corporate profits are still healthy at around 13% in 2007. This means money to invest in equipment and people, but business are currently in the wait and see mode.
Property yields have finally decided to move out - eg suburban offices at 7.0% (40bps out), CBD prime offices at 5.75% (25 bps out), retail at 7.1% and industrial at 7.25%. Will yields go back to circa 9%, the long term average? No, this is not thought likely.
The long term office vacancy rate is 15% and current vacancy rates in the major cities are getting near to that level now. Office rental growth for 2008 is likely to be in the range of 0% pa to 1% pa, a big difference from 2007 of 12% pa to 20% pa (average to prime range).
The construction cycle has started but the credit/liquidity crunch should stop it. Office and apartments are seen as income plays. Total return for 2008 is forecast to be 0% pa.
KS: Well, the concern here is - - will business help the US economy get better in 2009?? The consumer is burnt out. There is still the issue as to why the US property market did not feel the downdraft as early as the UK. There is much chatter about talking oneself into recession and the market down, but could this be denial? The chat is that 2008 property returns will not be negative and things will bounce back in 2009. Sounds all a bit familiar, so could the US be following the UK in the vain hope that this will happen?
Europe
It was felt that Europe and Asia had decoupled from the US on the economic front. The rise in the cost of debt should see a stop in development.
The UK is expected to see minus 1% pa total return in 2008. Europe total return is expected to be 2% pa for 2008. Yields have moved out in Europe. Office rental growth is expected to be 3.5% pa in 2008 and retail rental growth at 2.4% pa.
Investment deals in Europe had fallen by 30% in 2007 from the previous year.
KS: It is a brave move to feel that Europe and Asia had decoupled from the US. In looking at slowing economic growth and the maturing state of some of Western Europe's economies, immigration could be the saviour.
Also, investment activity could be tight as at the moment, there does not appear to be many forced sellers which would quicken the pace. Europe is a bit like molasses where the market is sticky and there is a lack of impetus.
Asia
Total returns for Asia for 2008 are likely in the order of 12% pa to 13% pa. There is huge economic growth potential in this region which has little real estate to support this activity. This is the important fundamental which underpins the investment activity.
China exports circa 20% to the US, so a slowdown in the US will have an impact, but it will not be too severe. Japan needs to restructure its economy.
There are risks down the line in 2009 and 2010 in the Asian markets as waves of supply complete, particularly in China and Singapore. Asia has less debt, so it not under the same pressures as the West to concentrate minds in this direction. The Asian property markets have low correlations with the UK market regarding property performance.
In looking at investment, the second and third tier cities in China are a focus for growing interest. The demographics for India are compelling.
The initial potential for investment is in the retail and hospitality sectors across Asia. Some Asian markets do have REITS which have been losing value. Could this be an indicator of future falls to come in the direct market?
With an office yield of 6.0% for Shanghai which, along with Hong Kong has twice the volatility of the City of London offices, is this really where one would want to be now? 2008 can be seen as possibly too late to enter these markets now. Leases are short - 2 to 3 years. It was felt that offices were past their peak.
KS: Asia is felt to be the hot spot, but it would appear that now is not the time due to the high level of development and its completion date. One needs to do research and spend the time and resources to understand these markets. The REIT factor could be a good indicator for future pricing in the direct market. So do your homework now, to enable you to be ready when the timing is better.
Commentary by Karen Sieracki of Kaspar Associates Ltd. (President, London Chapter, Lambda Alpha International)
Orange County Chapter:
The Orange County LAI Chapter continues to work on strengthening our membership. We have been designing a survey to be sent electronically to all of our members to get additional input on how we can improve our Chapter for our constituency. The following is a sample of some of the questions we will be surveying our membership with to receive their important and valuable input to continue to improve our chapter:
1) Has Lambda Alpha International measured up to your original expectations?
2) If not, then why did Lambda Alpha International fall short of your expectations?
3) What percent of our 2007 meetings did you attend?
4) What suggestions do you have to improve the Chapter’s contribution to your professional success?
5) What types of future programs would you be most likely to attend?
6) Which of your business contacts would be good speakers or resources for future programs?
7) Do you support holding some meetings each year at alternative venues? Do you have any
 recommendations for new members?
8) What other things should we do to make our Chapter more attractive to you?
The Orange County Chapter also continues to invite speakers who have provided insight into the “sub prime unraveling” of our economy. Last month, esteemed Board of Director member, Dr. Michael LaCour-Little, Real Estate professor at Cal State Fullerton, provided in depth insight and analysis with new data on the percentage changes in housing prices and showed a potential slowing of the negative downturn we have been seeing for many months.
Steve Figgins- Orange County Chapter President
Sacramento Chapter:
It was reported that the California Legislature is considering bills to help developers through these tough times. The following are some of the ideas under consideration:
Automatic 2-Year Extension for Tentative Maps Proposed. Tentative subdivision maps, and the valuable entitlements associated with them, typically have a 2 to 3 year life. Those entitlements are lost if a final map is not obtained before the tentative map expires. Recognizing that land development has stalled due to "prevailing adverse economic conditions in the construction industry," California lawmakers are considering a bill that would automatically extend all unexpired tentative and vesting tentative maps by 2-years. (SB 1185.) The proposed 2-year extension would be in addition to any other extensions available under local ordinances or the California Subdivision Map Act. If passed, the bill would take effect immediately. As passage of the bill is uncertain, subdividers should take all appropriate action necessary to preserve their entitlements in the event the bill is delayed or does not become law.
Deferred Development Fee Legislation Proposed. Development impact fees are typically collected when building permits are issued. These fees can be very expensive and difficult to deliver in current market conditions. AB 2604 offers some relief. If passed, the bill would allow residential developers to defer payment of fees used to finance public infrastructure until issuance of a certificate of occupancy or even the close of escrow on units, when cash is more readily available. As proposed, the bill would sunset January 1, 2014. We look forward to updates on these proposals.
Ed. Note: Are any other states contemplating similar actions? Please let LAI know! LAI@LAI.org
San DiegoChapter:
San Diego Land Use Economics Society Honors Sanford Goodkin
Installation of Officers and Members of the Class of 2008
The San Diego Chapter of Lambda Alpha International (LAI) proudly announces the following officers and new members will be installed, Tuesday, February 26 at the Grand Del Mar Resort.
Mark Steele, President; Mike Madigan, Vice President; Janice Weinrick, Past President; David Poole,
Treasurer; Stephen Silverman, Secretary and James Dawe, EVP. 2008 Board of Directors are Patricia Butler,
Sherman Harmer, Marie Burke Lia, Paul Marra, Mike Stepner and Alison Whitelaw.
New members to be inducted into the LAI San Diego Class of 2008 are:
Laurie Black, San Diego Port District Director
Paul Borden, Home Federal Corporation, President
Gina Champion-Cain, American National Investments, President
William Dumka, Black Mountain Ranch, LLC, Senior Vice President
Gary Halbert, City of Santee, Deputy City Manager
Ted Kimball, Kimball Tirey and St. John, Founder
Molly Lipsher, Economic Research Associates, Senior Associate
Theresa McAteer, McAteer and McAteer, Principal, Owner
Norm Miller, Burnham Moores Center Real Estate Institute, Professor of Real Estate
Robert Mosher, Robert Mosher FAIA Architect
James Reynolds, Oliver McMillan, Senior Vice President/Principal
James Schmid, Chelsea Investment Corporation, President/CEO
Barry Schultz, San Diego Capital Collaborative, CEO
Richard Snyder, RA Snyder Management, CEO
Tom Sudberry, Sudberry Properties, Inc, CEO
James Turner, Tanner Hecht Architecture, President
The highlight of the event will be the presentation of the prestigious Crystal Globe Award to Sanford Goodkin. Goodkin is a founding member of many land use organizations in San Diego, including LAI San Diego and the Urban Land Institute San Diego/Tijuana Chapter. He has been an advisor to the University of San Diego’s Burnham Moores Real Estate Institute and other land use institutes. LAI’s award will be presented to Goodkin in recognition of his achievement of excellence and providing extraordinary leadership in public and private community building, for mentoring future generations and the promotion of civic involvement in our community.
LAISD@sbcglobal.net
Announcements
Administration Matters!
Attention all Chapter Presidents: Please send in your chapter reports; the deadline date is Monday April 7th. Terry Stevenson
Save the Date ! ! !
Phoenix, AZ, Spring Land Economics Weekend
April 30 - May 4, 2008
Hotel Valley Ho
6850 East Main Street
Scottsdale, AZ 85251
www.HotelValleyHo.com
Reservations
Rates: *$199.00 + taxes Single/Double
480-248-2000
Registration Form and Agenda coming soon!
Toronto, Canada, Fall Land Economics Weekend
October 24 - 26, 2008
Park Hyatt Toronto
4 Avenus Road
Toronto, Ontario M5R 2E6 CANADA
http://www.parkhyatttoronto.com/
Reservations
Rates: $259.00 CAN Net, + taxes Single/Double
1-416-925-1234 or 1-800-233-1234
Registration Form and Agenda coming soon!
New Members
Aloha Chapter
Robert (Bob) Q. Bruhl, D.R. Horton – Schuler Division
LeeAnn E.P. Crabbe, Queen Liliuokalani Trust
John DeFries, Hokuli’a
Everett Dowling, Dowling Company, Inc.
Jonathan (Jon) S. Durrett, Stubenberg & Durrett LLP
James S. Greenwell, Lanihau Properties LLC and Palani Ranch Co. Inc.
Keith Kato, Hawaii Island Community Development Corporation
Stephen (Steve) B. Metter, MW Group, Ltd.
Jeffrey J. Prostor, Hawaii Business Group, Brookfield Homes
Oswald (Oz) Stender, Office of Hawaiian Affairs
Baltimore Chapter
Abigail Byers Ferretti, Bay Area Economics
Boston Chapter
John C. Cissel II, Cornerstone Advisory Services, LLC
Minnesota Chapter
Mike Christenson, City of Minneapolis, Community Planning and Economic Development
Gary Dreher, TOLD Development Company
John Hamilton, UrbanWorks Architecture, LLC
Greg Hollenkamp, KKE Architects
Linda Mack, Free-lance Journalist
Jefferson Patterson, Corporate Solutions, Colliers Turley Martin Tucker
Sara Peterson, Dorsey & Whitney LLP
Brian Swanson, University of Minnesota
Scott Tankenoff, Hillcrest Development
Herb Tousley, Griffin Companies
Stephen Yoch, Felhaber, Larson, Fenlon & Vogt, P.A.
Orange County Chapter
Julie McAvoy, Urban Realty Group
Ottawa Chapter
Janet Bradley, Borden Ladner Gervais, LLP
Ursula K. Melinz, Soloway Wright LLP
Ann Tremblay, Ottawa MacDonald-Cartier International Airport Authority
Vancouver Chapter
William R. Donald, Keystone Environmental Ltd.
Rob Fitzgerald, Vancouver Fraser Port Authority
Ronda Howard, City of Vancouver
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