“We were incredibly privileged to hear from such a talented and accomplished group of commercial real estate investors,” said McIntire Finance Professor and Center Director George Overstreet, noting the broad range of public and private firms represented by the panelists. “Not only did they offer a fascinating look at a number of successful approaches to an industry characterized by high levels of risk and heterogeneity, but they also provided a remarkably clear picture of how those approaches operate within a larger global, financial, and regulatory context. Even more importantly, they demonstrated that personal integrity is essential to successful careers in commercial real estate.”
Event panelists included Ramon Breeden Jr. (McIntire '56), President and CEO, The Breeden Company; Rob Harper (McIntire '00), Senior Managing Director and Head of Europe, Blackstone Real Estate Debt Strategies; Scott Kelley (McIntire '83), Founder and CEO, Aetos Capital Real Estate; George Maloomian (McIntire '74), President, Cambridge Properties Inc.; Karen McJunkin (McIntire '84), Regional Partner and Vice President, Elm Street Development; Chris Nassetta (McIntire '84), President and CEO, Hilton Worldwide; Tim Naughton (A&S '83), Chairman, CEO, and President, AvalonBay Communities; Thomas O’Hern (Parent ’17), Senior Executive Vice President and CFO, Macerich; Anne Raymond (Parent ’12), Managing Director, Crow Holdings; Owen Thomas (Engineering '83), CEO and Director, Boston Properties; Shawn Todd (Parent ’12, ’15), CEO, Todd Interests; Bruce Wardinski (McIntire '82), President and CEO, Playa Hotels & Resorts; Earl Webb (McIntire ’78), President, U.S. Operations, Avison Young; and Robert White (McIntire '87), Founder and President, Real Capital Analytics.
The event’s three panels were adeptly moderated by Tracey Brownfield (McIntire '79), Co-Founder and Principal - Development, Land Veritas; Don King (McIntire '62), Former Vice Chairman and Global Head of Real Estate, Deutsche Asset Management; and Robert White.
Big PictureThe Forum began with the comments of panelists Nassetta, Naughton, O’Hern, Thomas, and Webb, all of whom represent publicly held firms.
Asked by moderator White for their thoughts on the status of the industry’s recovery from the 2008 financial collapse, the panelists were overwhelmingly bullish—but pointed out that recovery varies significantly depending on geography and sector, and is subject to changes in federal monetary policy and tax law. Boston Properties’ Thomas, whose expertise lies in the ownership, management, and development of first-class, metropolitan-area U.S. office properties, pointed out that technology-based markets such as San Francisco and Boston have proven extremely strong, while other large markets—notably Washington, D.C.—have remained stagnant. Saying that it was “hard to generalize,” Thomas characterized the recovery as “multi-speed.”
Commenting on the momentum of recovery within the apartment development and construction industry, AvalonBay Communities’ Naughton said the sector was in fact “well beyond recovery,” and that he anticipated a period of growth similar to that of the 1990s—and “maybe even better.” Likewise, Avison Young’s Webb pointed out that a revolution in the shipping and warehousing of goods, led by companies such as Amazon, has injected new life into the industrial real estate sector. After a long lag, he said, the sector is “back in a healthy spot.”
Still, he and his fellow panelists said, the question of a broad, prolonged recovery in commercial real estate defies a simple answer. “It really depends on where you are, and what you’re investing in,” Webb said.
Different StrokesBreeden, Maloomian, McJunkin, Raymond, and Todd—all leaders of highly successful privately held commercial real estate firms—brought a different set of perspectives to the event during the second panel, offering insight into the keenly felt challenges and rewards of operating in the absence of shareholder-related pressures, as well as the remarkable expertise they have developed in niche markets and sectors.
Addressing the question of why he chose to make a career in retail-related real estate, Cambridge Properties’ Maloomian said he was “passionate” about the sector, maintaining an abiding fascination in its requisite market research and relishing the processes of creating value and overcoming the challenges associated with its highly cyclical nature. “I like the deal making, and I like the planning,” Maloomian said. “I’ve found that if you follow your heart—and deal with honesty and integrity—profits will come.”
Indeed, the panelists said, the secret to their success lay in learning how to mitigate risk by developing deep expertise in the particular niche, geographic market, or set of core competencies that they found most interesting and rewarding. “You can’t control market risk,” said Elm Street Development’s McJunkin. But, she went on, it is possible to mitigate some of the risk associated with imperfect information. “At Elm Street, we decided early on that each partner was going to focus on one geographical area [within the Baltimore/Washington region], and we were going to know that area absolutely inside and out,” she explained.
Breeden—whose company ranks as a leading developer of multifamily, commercial, and single family projects on the East Coast—pointed out another key factor in his success. “My father told me I needed to be able to control my own destiny,” he told the audience. “My McIntire education gave me the skills and the confidence to do that.”
Wisdom of ExperienceThe event’s third panel—featuring Harper, Kelley, Nassetta, Wardinski, and White—focused largely on what it takes to succeed in real estate.
Advocating hands-on experience of the sort that fosters deep understanding of an industry, the panelists advised would-be real estate investors to find a career path—whether corporate or entrepreneurial—that sparks their passion and matches their values. “Working is hard,” Nassetta said. “You really have to find an organization whose culture and people are right for you—otherwise you’ll hate it.”
The panelists also advised students to seek out international experience, stressing not only the increasingly global nature of business, but also the critical importance of understanding cultural nuances. “You have to have a global mentality, even if you never plan to leave the U.S.,” White said. Indeed, he pointed out, “Real estate fundamentals are the same everywhere—it’s culture that’s the key factor.”
For all the conference’s talk of globalization, constant change, and market uncertainty, though, the panelists’ advice was of the time-honored variety: “Work hard, be unfailingly honest, and—when you’re starting out—be willing to do whatever people ask you to do,” Wardinski said.
Added Kelley, “Do something you really enjoy, take some risks, and don’t be afraid to fail.”
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