Willy Walker: CRE Community Has Role To Play In Making Society Better
Willy Walker was in truth-telling mode at the Walker & Dunlop summer conference in Sun Valley, Idaho.
“I’m going to talk about politics this morning,” the CEO warned the audience in his keynote remarks that were recorded and broadcast on this week’s Walker Webcast. “And I can guarantee you I'm gonna piss someone off on the left and the right. Forgive me, but it's got to be said.”
Walker said his audience of investors and clients needed to wake up to certain realities.
“As I’ve talked to many of you about what's going on and what you're doing with your investments right now, I feel like a lot of you are taking a long winter’s nap,” Walker told the crowd. “There sort of seems to be this, ‘I'm gonna pull back right now. Not sure what the future has [in store] with rising rates but it’s hard to make deals work.’”
Walker said this head-in-the-sand attitude ignores the fact that, in several important regards, the nation is in better shape than it was during the height of the pandemic. Social unrest has cooled and for every troubling economic indicator, there is another to suggest things are improving for business.
Walker shared a slide that illustrated a dramatic drop in recent months in the price of commodities, including diesel, lumber and natural gas. And yet, many in CRE continue to behave as if conditions are much worse, he said. This attitude makes them apt to miss opportunities.
“I was in Houston two weeks ago, meeting with a developer who said, ‘We can't put a shovel in the ground right now because construction costs are too high,’” Walker said. “I said, ‘Huh,’ and I started to talk about this slide. Two days later, another builder that we met with said, ‘We're looking at exactly this [same data]. And we're getting some conviction in the markets.’”
Still, Walker acknowledged there is good reason to feel sour about what he called the “three-headed monster” America faces at this moment: rising inflation and interest rates, the war in Ukraine and a “massive” political divide between Americans.
“It is very difficult right now to look beyond this three-headed monster and look into what's actually going on in the world around us,” he said.
Walker said the monster prevents people from seeing what is positive in the country — such as those falling commodity prices — and creates a sense of helplessness about some very serious problems, whether they are in CRE or the political realm. He lamented an environment where public figures seem more interested in scoring political points than in actually improving conditions in the country.
But he said the CRE world has its share of problems, too, such as the difficulties renters face in becoming homeowners or the inability of Class-B and C office properties to appeal to more investors. Walker said this is creating a “tale of two worlds” in which some asset classes — and groups of people — are doing quite well while others languish.
He said both issues could be solved if people put aside entrenched political views and actually tried to fix problems.
“There's got to be opportunity in the markets for assets like a Class-C office building to be repurposed to multifamily,” Walker said. “But as many people in this room know, it's exceedingly hard to make the numbers work. And the hardest part of it is the regulatory hurdles. If we can get local officials to allow for that to happen, it could dramatically change the landscape of many urban centers in America, but it's a heavy lift.”
Walker called on his audience to try to restore “balance” in the conversation — even if it means admitting that the other person just might be right.
“Every person in this room [needs to try to find a] balance between 'Am I making investments or am I pulling back? Am I making a difference in this world and helping to make the politics better? Or, am I actually feeding the beast and making them worse?’” Walker said. “It's my hope that all of you will go back and think about that balancing act and how you can make a difference in our communities.”
The next Walker Webcast will be about "The New World of Work" on Aug. 10 with author and entrepreneur Keith Ferrazzi. Click here for more.
This article was produced in collaboration between Studio B and Walker & Dunlop. Bisnow news staff was not involved in the production of this content.
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