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November 20, 2008

Hats off to our friends at sponsor Grunley Construction who were just selected by the Embassy of Brazil to renovate its chancery on Mass Ave, the landmark all-dark-glass modern building from 1971 you see every time you drive by the VP’s house. The $4.6 million project will take 10 months. Congrats!


Okay, with the Dow still sinking, the "dawn" in our headline might seem a bit premature, but that is in fact what some of our expert panelists predicted this morning at our Bisnow Schmooze & Breakfast—with the caveat, of course, that you’ll have to wait at least 18 to 24 months.


We had a packed house at BLT, and it’s amazing to see all the great fruit, bagels, and chocolate muffins they put down for us in the place kobe beef usually goes.  Thanks to great sponsors Katten Muchin Rosenman law firm, Group Goetz Architects, and Forrester Construction for helping us on such a wonderful event. Katten has one of the biggest and most respected real estate practices in the US; GGA has an amazing 12-year contract with GSA to modernize the Commerce Department; and Forrester has just bagged two big new engagements. So thanks to our sponsors for setting such a positive example in these difficult times!   

Condo Authority

Carlyle Group’s head of real estate acquisitions, Hayden Jones (here with Perkins + Will’s Lynn Osborne), predicted that two years from now (when we hold our reunion breakfast), “your house will be worth more than it is now.” Why? He says the homebuilders have been dismantled so the supply will tighten and, with tons more renters now, demand will rise; he believes housing will lead us out of recession just like it led us in. He said this period is an opportunity for truly best in class to differentiate themselves as others struggle. He told us he’s been spending his time buying distressed debt in projects they have equity in, and he pointed out there are some great opportunities around: Miami has 12 years of condo oversupply; Irvine has lots of vacant space where most of the nation’s failed subprime lenders used to be; and Wall Street bonuses will no longer be driving NY (or Nantucket) prices.  


ING’s Marc DeLuca said the DC market remains a special case with a “low beta”—never too high, never too low, unlike New York, which skyrocketed but is now in worse shape.  He’s thankful for the Feds, and thinks that Obama will be good for the economy: Sure, taxes may rise, but increases in spending will push cash into DC. He says firms like his may see potential new advisory work from TARP, evaluating pools of distressed debt and proposing solutions. He thinks the region’s pipeline of “bad bets” will take at least 18 months to clear, but that fortunately nearly half the employment here is from the “defensive” sectors (like public administration, healthcare, education, and professional and technical services) which survive relatively well in troubled times.


Panelist Bruce Lane of Meridian Group (they own Bethesda Metro Center and the Hyatt Regency there, among many regional assets) said that, as a merchant banker, they’ve always bought, fixed up, then sold projects, and that as a result of refinancing their portfolio in ‘06-07 are sitting on a lot of cash. But he’s waiting for the market to drop further. He believes the CMBS market will be quite a while coming back; notes insurance companies are finding higher returns in corporate bonds than real estate; and recalls that the real estate recession of the early 90s took until at least until 1994 to come back. He said he thinks there’s something to the theory that a recovery should take as long as the boom (five years).


Kattten’s Rori Malech, TPSi’s Claude Thomas, Katten’s Wendy Fields, Reznick’s Jeanne Parker, Katten’s Jennifer Davila, GGA’s Lewis Goetz.  Katten has as clients both the Carlyle Group and the Meridian Group.  Wendy just spoke on exit strategies for joint ventures at the Law Seminars International conference.  Rori just came back from NYC where she saw 24 Hour Plays (written, and performed in 24 hours) starring Cynthia Nixon and David Cross. And Lewis is just back from being a juror for the Cincinnati Design Awards.  


Grubb & Ellis’ Amanda Breziner and Marcus Morrison, Reznick’s Stacie Benes, and American Painting and Janitorial Company’s Bill Holmes, who just got some kind of big deal at Reagan National.


Our friends from Forrester: Frank Pinto, Rob Catron, Ed Smith, Asif Virani, and Jon Cadle. Forrester just picked up the re-positioning of both 815 Connecticut Ave and Building 200 at the Navy Yard (for $72 million!), not to mention the $50M job it’s doing for DC DOES on Benning Road, four new DC libraries, a $32 million renovation on Jury’s Hotel at DuPont Circle. What recession, folks?

Total Engineering
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