(The following is an expanded transcription – edited only for clarity and grammar – of the 2007 Real Estate Roundtable printed in our December 2007 issue.)

Maddux Business Report
Real Estate Roundtable
December 2007
Moderated by Bob Andelman

Let’s talk commercial real estate.

This roundtable is an anticipated annual feature in this magazine, a chance to talk about all things real estate. It’s an obvious read for those in the field. But for those not, the savvy executive or business owner has come to know that trends in real estate often are reliable predictors and/or reflections of the general business climate.

This year we brought together six folks from the commercial side, representing a cross-section of professions and locations. We met at The Centre Club in the Westshore Wyndham Hotel in Tampa for two hours of provocative conversation and debate.

The panelists:

Moderator of the panel is Bob Andelman, a regular contributor to this magazine, author of nine books and originator of the Mr. Media website.

MADDUX BUSINESS REPORT: Ron, tell us a little bit about how the past year affected you and in your role with the real estate.

RON WEAVER: It’s been much better than we expected, worse in regard to residential, of course, than probably anyone would have expected two or three years ago. There are troubles with respect to most every kind of residential product, with the possible exception of apartments, which are enjoying a little bit of rebound from people being unable to afford a house, a yard, a mortgage, its increasing rate. But retail, we see as strong, but not likely to last strong for another 18 months. We’ll have to pay the price of less housetops. Maybe not that much, when you get right down to it, because the dynamic of retail doesn’t necessarily follow the slowdown in housetops.

And thirdly, offices enjoyed a pleasant rebound, which industrial has been strong, so we’ve seen a pretty good year, better than we thought we would.

RAY SANDELLI: I’ll answer that in the context of how we currently see the commercial markets. I think the positive aspect right now is that, fundamentally, the markets are sound in terms of supply, demand and value. That’s why I probably don’t have some of the angst that perhaps others may be experiencing.

It’s when we get away from the fundamentals that we see serious consequences of our actions. Go back to the days of the “new economy,” when they were trying to change the very basic economics of a business model. I remember when they said Warren Buffett just didn’t get “it”. Of course, the new economy ultimately crashed and burned and Mr. Buffett’s fundamental and studied approach continues to drive ever increasing, sound returns.

In the capital markets right now the focus is, “Do we understand the true market fundamentals? How do we underwrite with sound data and prudent assumptions? How do we assess and manage risk?” Sustainable value is built on a foundation of solid fundamentals and an educated approach in decisions going forward.

We’ve had so much new housing built in the last couple of years and so many people have come into the area, I question this theory that retail’s going to slow down because housing structures have slowed down. It seems like we’ve had so many new people come in and build the base of previous demand for retail. Should we really be expecting retail or retail construction to slow down?

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