Some Shop Talk at the ULI Meet

Politicians, planners and architects are not really the prime shapers of our cityscapes and landscapes, though they usually are the most prominent and publicized players in the process.

It is the increasingly ubiquitous private developer who more often than not actually sets the pace of projects, makes the critical decisions as to their tone and style, and greases the skids so they can be built.

Developers make things happen. It is they who hire the architects and, in a fashion, the politicians--the latter through the traditionally generous contributions to election campaigns. As for the planners, alas, they tend to do what politicians tell them to do.

Therefore, to get a hint of the future of our built environment one turns to developers, for the deals they are making today are usually the basis of the architectural contracts of next year, the proposed projects of the year after, and the subsequent planning reports, political charades, citizen protests, ribbon-cutting ceremonies and design disasters and/or awards of the next decade.

It was with this in mind that I attended last weekend’s conference in Chicago of the Urban Land Institute (ULI), a developer-dominated national organization of about 10,500 members with a reputation of being a relatively enlightened clearing house of real estate trends.

Put another way, if the development community could be pictured as a herd of grunting builders, investors, realtors, public officials and wheeler--dealers stampeding this way and that, followed in the dust by a supporting cast of yelping attorneys, accountants, architects, planners, hustlers and sycophants, a ULI conference is a neutral watering hole, a place to catch one’s breath and have a drink.

While the formal program of speeches, seminars and workshops at the group’s conferences are on occasion interesting, rarely does anyone make any public statement of any consequence. The real purpose of such conferences is for networking, deal making, backbiting and gossip.

The conference in Chicago celebrating ULI’s 50th anniversary was no exception. The formal program consisted, in part, of ULI President William Caldwell declaring that the future lies ahead, and former Federal Reserve Board Chairman Arthur Burns adding that the nation’s economy lies asleep.

Also at the conference attended by 2,300 persons a gaggle of venerable developers remembered the past; other developers and their consultants reviewed with hindsight select projects; and, as usual, urbanist Anthony Downs good-humoredly chided lending institutions and their regulators.

Because of the weak economy and the impending tax changes affecting real estate investments, of particular interest this year was the respected annual report of emerging trends by the Chicago-based Real Estate Research Corp.

It was delivered with verve by Leanne Lachman, who revealed, among other things, that the greatest real estate development potential for 1987 would be single-family homes. Also strong would be something she called “exotics”: parking garages, specialty retail, mobile homes and retirement housing, and “premier properties,” such as office and industrial projects in prime locations with good leasing prospects and institutional support.

Lachman added in so many words that in the opinion of the nation’s leading real estate investors, lenders and developers, it will be a tough year for other office projects, for retail, condominium and apartment proposals, and worse for hotel development. The prediction was that office and hotel starts would drop by at least 50%.

“There will be the odd project here and there, but you are going to see very few cranes looming on the horizons of our cities and suburbs for the foreseeable future,” declared George Puskar, president of Equitable Real Estate, which manages $23 billion in real estate assets.

Added Phillip Stukin of Lowe Associates in Los Angeles, “Everything is on hold, at least until the development community sees what the absorption rate is of present projects and the consequences of the tax bill.”

What this means is that tough times are ahead for the design community, which for the last decade has been thriving on office towers, shopping centers and apartment and condominium complexes. Firms most likely will be scratching harder than ever for public and institutional projects, such as hospitals, museums, prisons and schools, and the rare private jobs.

But one did not need to hear Lachman’s predictions or to read the report she wrote with Richard Kateley to get the drift of where development is heading.

At receptions, cocktail parties and dinners and in the hallways outside the conference sessions, the informal talk was not, as in the past, of new projects being packaged and new markets being tapped.

Instead, the talk, after the usual pleasantries and back slapping, was of the reshuffling of corporations and the restructuring of financing to bail out troubled projects, or to allow developers and investors to bail out of the projects. “The lemons are being squeezed,” commented a veteran developer.

Of course, no one would openly admit to the crisis. It was always someone else’s project that was in trouble, and theirs was just “doing fine,” “everything is on schedule,” “we just signed up a big tenant, and will announce it in a few days” or “why are you bothering me?”

(The latter, by the way, was the comment of Harold Jensen, of Metropolitan Structures, a principal in the team developing California Plaza, when asked that in lieu of real estate trends, what were the prospects for the planned hotel and apartment projects for Bunker Hill?)

Then you heard elsewhere, not about California Plaza, and never for attribution, that the person who just told you everything was negotiating with a “vulture” investment firm to sell a project at 60 cents on the actual construction dollar.

“And with 31 million square feet of vacant space in Silicon Valley, he’ll be lucky to get it,” observed a vulture from New York.

“By the way,” he added, “I see you are from L. A. How are things out on Wilshire Boulevard and in the Valley? Ripe enough for some pickings?”

No, this was not one of the best or happiest ULI gatherings. But it was informative.

Among the more pleasant if self-consciously strained ULI events is its awards program. Winning the small scale rehabilitation award this year was downtown Costa Mesa. The redevelopment project there was cited as “a notable example of urban revitalization.”

In particular, the citation stated, “the development of the Pacific Savings Plaza and Costa Mesa Courtyards and the rehabilitation of Newport Boulevard have brought about a classic renewal of a city that had lost its luster and individuality.”