Crain's Business Detroit outlines trends discussed in UM/ULI Real Estate Forum

The downward spiraling economy was a key issue in the 23rd Annual University of Michigan/Urban Land Institute Real Estate Forum. Crain’s Detroit Business wrote an Nov. 11, 2009 article detailing the trends discussed at the two-day event.

Taubman College is a partner in this event, and offers a real estate certificate for those interested in land development.

The full article can be found here.

Information about the UM/ULI forum can be found at

Lack of investment capital a theme of UM and Urban Land Institute Real Estate Forum
By Daniel Duggan

The ability to find money for real estate investments and development was the underlying theme during the first day of a two-day real estate conference held in Ann Arbor.

Most speakers noted the importance of finding capital and the crippling impact that a lack of lending is having in the area.

“I’ve done more business in work-outs with my clients this year than I did in production of loans, and I can’t remember that ever being the case,” said Dennis Bernard, president, Southfield-based Bernard Financial Group.

He pointed out that the 24 commercial loan originators in an organization of companies he belongs to has completed $16.3 billion in loans two years ago. This year it has been $5 billion, nationally.

The 22nd annual University of Michigan and Urban Land Institute Real Estate Forum was held in Ann Arbor this year. The focus is preparing for the new realities of real estate.

There were, however, some bright spots highlighted by speakers.

Susan Harvey, senior vice president of the Detroit office of Ashley Capital L.L.C., reported more interest in her firm’s portfolio of large industrial properties.

“In the last four months, we have had more interest in our properties than we had in the 14 preceding months, and we are doing deals.”

Other speakers noted that there has been an increase in interest of expansion by companies and an uptick in tours of existing office and industrial space.

Bad news, however, was easier to find.

During the conference, the Washington D.C.-based Urban Land Institute presented its emerging trends report, with very little favorable news either for Detroit or the rest of the country.

The report indicated a 40 percent to 50 percent drop in real estate values from the high levels of 2007.

More defaults are expected as office, industrial and retail real estate sectors suffer across the country, said Chuck DiRocco, with PriceWaterhouseCoopers L.L.P., which co-authored the study with ULI.

Money for real estate projects is expected to come from non-traditional sources such as private equity and through public offerings by real estate investment trusts, he said.

“Though we are predicting an uptick in profitability next year,” he said. “Though it can’t be much worse than it has been.”

In terms of individual markets to watch, he said, “there are none.”

“We are not bullish about any part of the country,” DiRocco said.

The ranking of cities by investment potential, though, put San Francisco at the top and Detroit at the bottom of the list of 50 cities.

“We’ve been in this for a long time, so it’s not like the Detroit started rising up to be with the rest of the country, the rest of the country has joined Detroit,” said William Watch, president of First Commercial Realty & Development Co. Inc.

Though, being at the bottom presents a chance for real estate firms to build their relationships for the long term said Steven Chaben, senior vice president and managing director of the Detroit and Grand Rapids offices of Marcus & Millichap.

“If you don’t believe there are opportunities here, you should leave,” he said. “And if you haven’t left, I’m guessing you believe. The opportunities will represent the greatest buy-side opportunities we’ve seen in a generation.

“A turnaround here will be the best upside story in the United States, only because there is so far to go.”