Worried that the apparent dysfunction in Washington, D.C. will slow the pace of commercial real estate sales, leases and new construction across the country, even if you’re a broker far from the center of federal government, say working a market like Columbus, Omaha or Indianapolis?
One person who should know has some advice: Don’t worry. The commercial real estate market is strong enough to survive the struggles facing the federal government today.
That’s one of the key thoughts from George Mitchell, a former U.S. Senator who served 15 years in Washington, D.C. and partner and chairman emeritus of law firm DLA Piper. Mitchell’s remarks were one of the highlights of DLA Piper’s Global Real Estate Summit, held yesterday at the Four Seasons Hotel in Chicago.
The event, which attracts real estate professionals from across the globe, was held in conjunction with the release of the latest State of the Market Real Estate Survey released by the law firm. That survey, sent to high-level executives with some of the biggest commercial real estate firms across the country, mimicked a bit what Mitchell said during yesterday’s event. Respondents said that they were largely optimistic that the commercial real estate market would remain a strong one during the next 12 months.
And nothing Mitchell said during yesterday’s summit contradicted that.
Mitchell did say that he understood why some commercial real estate pros might be nervous about the news they read coming out of D.C. It does seem that the federal government is unable to get anything done these days, and that members of Congress spend most of their time fighting with the other party.
But Mitchell predicted better times ahead.
“While we’re having tremendous internal difficulties, including political dysfunciton, we’ll get through it,” Mitchell said.
Mitchell said that the country’s economy, which really is the key, remains strong. And that is more important than the current infighting in the White House and Congress, he said.
“We’re the fastest growing of developed countries,” Mitchell said, pointing to one of the key reasons why the nation’s commercial real estate market remains so strong.
Mitchell said that the government does have to make changes if the country and its commercial real estate market will continue to thrive. The main change? The government needs to embrace science and technology to boost the entire country.
“The answer is not to build walls or deny science,” Mitchell said. “We have to harness technology and use it to our benefit,” he said.
Other highlights from the event? There were plenty of thoughts on the state of the retail market. The consensus was mostly positive: Yes, many retailers are struggling, and many will disappear. But those retailers that innovate, that focus on creating experiences to draw customers into their businesses, will continue to grow, even with the threat of online shopping hanging over them.
But Lee Neibart, chairman of Ares Management, was frank when he described the challenges that retailers will continue to face as consumer demands change.
“The retailing business is very hard,” Neibart said. “More failures are inevitable.”
Jeff Blau, chief executive officer of Related Companies, had an optimistic take on the state of retail.
“It’s not dead. It’s not going away,” Blau said. “It is changing for the better.”