Global Cities: The Developer’s Perspective by Rob Speyer

to introduce this morning's keynote speaker please welcome you allies chief executive officer Patrick Phillips good morning everybody thank you for joining us at the at the morning general session all of you know I think by now that we have introduced a new meeting format for the Fall Meeting and we're very interested in hearing from you with respect to how it met your needs the rain notwithstanding but we've altered the schedule today as you may know is deal day today emphasizes the practice of real estate and urban development showcasing deals and projects and product innovations from around the world we are very fortunate this morning to help us set the stage for this is Rob Speier rob is has served a number of roles with us over the last year or so as we've been planning the meeting he's been the co-chair of the of the conference the the co-chair of the steering committee he serves of course as president and co-ceo of Tishman Speyer rob has an amazing array of other activities he serves as the chairman of the advisory board the mayor's fund to advance New York City the chairman of the Real Estate Board of New York the board of directors of the real estate roundtable the International Advisory Council of the US Chamber of Commerce serves on the Advisory Council of food on University's School of Management in Shanghai and on a number of other philanthropic boards it's been a great friend to Uli along with his company certainly with his father Jerry Speier we really appreciate the the friendship and support we've had from Rob and Jerry in their company over many years please join me in welcoming Rob spire Thank You Patrick for that kind introduction and good morning to all of you please stand up I'm serious all 6,000 of you please stand up turn to your neighbor introduce yourself and tell them where you come from okay great now please sit down boy it is hard to get a bunch of chatty real estate people to sit down but let's take our seats most of you came from far away you probably had to go through that near strip search with the TSA you had to give them that $4 dollar bottle of water that you just bought so you could get through the metal detector you made your way through JFK Airport and to the city it wasn't cheap it wasn't easy and you could have viewed the whole conference on YouTube so why'd you come here community real community not a virtual community real networking with real people that have real faces not a social network it's the same reason why people have been coming to cities since ancient Damascus it's how Aristotle met Alexander how Lenin met McCartney and how Steve Jobs met Bill Gates I have some news for you two and a half billion people are following in your footsteps two and a half billion people are going to move to cities between now and 2050 it's the largest migration in human history it represents the biggest development opportunity in the history of the planet and how we respond to this challenge is going to define the future of our world I want to give some personal thoughts today about what I see is the key ingredients in terms of 21 first century cities I think they're going to be younger I think they're going to be greener more dense more accessible more diverse and they're going to be teeming with energy and fun but first I want to dispense with what I see is the number one myth about cities this idea that somehow the Internet is going to reduce their importance I don't think anything could be further from the truth people have been talking about how technology was going to make cities irrelevant since the automobile was invented and after the car it was the telephone and after the telephone the television and after the television the fax machine teleconferencing and now it's the Internet but what I'm seeing in major cities across the world is that the Internet is actually making them stronger and more critical to the future than ever my favorite example is in San Francisco we all know that many of the world's most important tech companies were founded and are headquartered in Silicon Valley but an interesting phenomenon has taken hold over the last five years those young engineers and young computer programmers who drive the growth of those companies they don't want to live in Mountain View and they don't want to live in Sunnyvale and they sure we don't want to take the Google bus to work they want to live in San Francisco and they want a walk and bike ride to work in San Francisco and they've gave these tech companies a simple ultimatum you either open offices in San Francisco or we're gonna go to work somewhere else what does this mean well tech companies have absorbed literally millions of square feet in San Francisco over the last few years to capture this millennial talent base it has made San Francisco the hottest real estate market in the country and one of the hottest in the world but we're not just seeing this trend in San Francisco it's happening in other cities we're seeing it in Munich we're seeing it in London and we're seeing it right here in New York City many predicted after the Great Recession that the decline of Wall Street would somehow lead to the decline of New York City yes financial services companies have contracted and they've moved many jobs out of New York but the tech companies have come and have replaced them as the most important driver of this market why for the same reason that they're opening up in San Francisco for those Millennials for that most talented group of young people that are drawn to cities in greater number than ever before the multifamily sector has been the fastest recovering since the recession if you look at the multifamily construction starts over the last five years across the country half of them are in only ten cities and this is driven wholly by the demand coming from Millennials they want to live in cities that's not going to change so the question is what are we going to do as an industry to capture this demand I would argue we need to radically change our mindset and our sense of our own descriptions we can't just be focused on the bricks and the mortar we need to be more than architects and engineers we need to be sociologists people are using our space in a fundamentally different way than ever before and because of that we need to build and operate our buildings differently we see this playing out in a profound way in the office sector the interior wall has become the dinosaur of the office building and one day soon it may well be extinct people are working more closely together than ever before the numbers tell this story eloquently 25 years ago the average employee occupied about 300 square feet today that number ranges between a hundred and 150 depending on the industry it's easy to focus on the financial implications but I think a exclusive focus on dollars and cents misses a much more important point and it's a sociological point people like working next to each other they want to collaborate they want to work in teams it is a profound cultural shift the corner office with the big windows may have been the status symbol of our fathers generation but it's not going to be the status symbol of our children's I think the office of today and tomorrow is going to look more like Starbucks than a typical office space from 20 years ago now all of this leads me to ask a new question are our buildings happy now that may seem like a pretty flaky question for a real estate developer to be asking but I think it's a critical one and I was reminded of this a couple of weeks ago when I was in Germany and I was visiting a building that we were thinking of buying in a major German city it was a beautiful piece of architecture 100% rented to credit tenants but when you talk to the employees who worked in the building you got a different story they didn't like it there were no amenities no where to shop nowhere to eat no gym and no collaborative space in short this was an unhappy building and because of that I would bet that in five or ten years it's not going to be a hundred percent rented unless the landlord takes a fundamentally different approach to his customer I can trust that building with Rockefeller Center now we at Tishman Speyer are very lucky to be the current owners but we can't take any credit for the brilliance of the original vision that was all the Rockefeller family in the depths of the Great Depression they bet their whole family fortune that they could create a new kind of real estate and why is it that 80 years later Rockefeller Center is still the case study and the point of comparison for mixed-use development all over the world it's not the Art Deco architecture though that is gorgeous and it's not the artwork that's embedded in the Indiana limestone it's not Atlas and it's not prometheus it's community it's the public meeting the private people come there to ice-skate they come there to ballroom dance to see the Christmas tree we have office retail restaurants entertainment and it's all sitting right on top one of New York's most important subway stations Rockefeller Center is a happy building when I look across the 21st century cities one common theme is a focus on sustainability I think all of us in our real estate industry can be very proud of the role that we've played in promoting sustainability over the last 10 and 15 years but I think we're missing something our focus has been on what's happening in the four walls of our buildings on getting LEED certified but buildings don't exist in a vacuum and the behavior and the lifestyles of the people that live and work in our buildings that's what's really going to determine the future of the environment I want to offer two examples this morning two homes and I want you to tell me which one is more green the first is in the desert of Arizona it's a new home featured in Domino magazine it's got solar panels on the roof low flush toilets all the bells and whistles of the contemporary green home the next example is right here in New York City it's a walk-up also known as a tenement on the Lower East Side I'll tell you a family secret when my grandfather my great great grandfather Julius Tishman started out in the real estate business in 1897 his first project was building a building just like this the building pretty much looks and runs just the way it did when Julius built it it's not LEED certified and it likely never will be so which home is more green now let's focus on the people that live in them in that tenement on the third floor is Wally walk-up Wally walk-up gets up in the morning he walks to the corner buys a cup of coffee drops off his dry-cleaning walks a couple of more blocks to the subway takes the subway home on the weekends he walks to the movies maybe he takes the subway back up to Broadway to catch a show a car is totally irrelevant to his lifestyle when you think about it who knew the Julius Tishman back in 1897 was Green when Green was just a color so let's go back to Arizona Carrie cactus gets up in the morning she gets into her Dodge Durango she sits on the highway for an hour in traffic trying to get to work and when works done she gets back in her Durango she goes to the shopping center parks alongside hundreds of other cars to go get dinner on the weekend she spends half the day in her Durango even when she wants to go buy a cup of coffee can you think of a better definition of carbon heavy than a hundred thirty pound woman driving a two-ton machine to buy a 10 ounce cup of coffee the real difference between Wally and Carrie is that Carrie is always trying to get there Wally is already here and he's not alone 30% of the people in America who take trains or buses to work they live right here in New York City so if you want to see the sustainable city of the future guess what you're here why is this important let's go back to those two and a half billion people moving to cities 90% of them are in Asia and Africa and the urban planners and the developers in countries like Nigeria and India they're deciding their future and how they're gonna respond to that wave of people and as they do that they are watching us closely now I'll give you one note of optimism about the environment and it comes from a strange place for optimism about the environment and that's China China may be too dependent on coal and some days in Beijing the pollution readings are down right scary but the Chinese government is laser-like focused despite all these legacy environmental issues they want to pioneer new techniques and new technologies for sustainability I would tell you I go to China six eight times a year been doing that for many years I've had scores of meetings with government officials and I can't think of a single meeting where the subject of sustainability hasn't come up I would bet that we will learn as much from them in the future about sustainability as they learn from us now sustainability may be a theme that runs across 21st century cities but what really will define these cities is how different and distinguished they are from one another in the audience today is AG glazier it is a distinguished Harvard professor and urbanist and a newly appointed board member here at Uli Edie has a great phrase the world may be flat but it's not uniform the world may be flat but it's not uniform if there's one lesson that Tishman Speyer is learned in our 30 years of pioneering the globalization of the real estate industry it's exactly that we have gone global by going local if you go to our offices in Brazil every single person is fluent in Portuguese it's the same theme in China in India in France across our global footprint this focus on being local allows us to avoid mistakes and correct the mistakes quickly that we don't avoid I'm going to give you a couple of examples ranging from vas-tu to the rising sun we entered India in 2006 and our first project was a building in a city called Hyderabad in southern India it's one of the technology hubs of the country we brought in Pei Cobb Freed one of the world's great architecture firms and the idea was to produce a modern office building with perfectly efficient floors that would appeal to multinational companies who couldn't find quality space and a reliable landlord in order to make the floor most efficient we took a bunch of the core elements Staircase conduit bathrooms and we put them in the northeast corner of the building it looked great on paper but for the Indian principal vas-tu now when we entered India we didn't know Vasu from Diwali from chicken tandoori but we quickly learned that Vasu is the Indian equivalent of feng-shui how to use space to promote good luck and prosperity and the number one lesson of Vasu is that good luck is found in the northeastern direction so you could not have found a worse place to put your opaque core elements well we discovered this before we started construction we switch the plans around and the project went on to be a great success I want to give you another example also with a very happy outcome one that doesn't involve Tishman Speyer from Shanghai 15 years ago a Japanese developer was chosen to build the tallest skyscraper in the world and at the top of the building he created negative space in the shape of a circle in order to relieve some of the stress from wind he created a different kind of stress when the mayor of Shanghai saw the plans with that circle because the mayor thought that circle was the developer trying to foist the Rising Sun of China above the shanghai skyline any of us who understand the historical relationship between China and Japan can understand why that didn't go over well the developer switched the circle to a rectangle the building went on to be an enormous commercial success but most importantly it is a point of pride for everybody who in Shanghai they think of it as their building and it has become one of the icons of contemporary China in irony is that we've seen more than a dozen Chinese developers undertake plans over the last couple of years to go global a Tishman Speyer were lucky to be partnered with the biggest of them all China Vaughn key together we are developing the largest residential project in the history of San Francisco I'll never forget meeting the founder and chairman Wang showed now Lanza is one of the most famous and respected businessmen in all of China he has like seven million followers on Twitter I think I have 27 but when I first met Wang sure he said to me we want to create a big business in the United States but first we have to learn and we want companies like yours to teach us to teach us about your customs and your business practices because that's the only way we're gonna succeed chairman Wang may not have known the nuances of every Metro market in the US but he sure grasped the essence of global business and my guess is that China vodka and their peers are going to see great success as they roll out in the US Europe and Beyond you may be able to tell that I'm an optimist when it comes to the future of cities but let's be clear all is not perfect we have a burgeoning crisis happening in front of us you have never had a bigger disparity between the rich and the poor in major cities cities are becoming too unaffordable for too many now I don't see this as a political comment or an ideological comment I think it is an existential matter for the survival of cities people have been coming here since the beginning of cities to pursue a dream of upward mobility for themselves and for their children and I think if we cut that dream off we are cutting ourselves off you heard on Tuesday from New York's Mayor Bill DeBlasio mayor de Blasio may be the most progressive mayor in all of America but I'll tell you something about him that may surprise you he's also Pro real estate development he's unveiled a plan to create 200,000 units of affordable housing here in New York over the next 10 years nothing anywhere near this scale has ever been proposed let alone achieved and mayor de Blasio knows in order to accomplish even a fraction of his goal he's going to need to partner with all of us in the real estate industry it's an enormous opportunity and I think it's also a chance to create a model that could be replicated by progressive mayors and real estate developers in other big cities politics can make strange bedfellows that's also the case when it comes to the issue of RAM marking now lamb marking is a great thing and all of us who have grown up in New York we look upon the destruction of the old Penn State as an urban tragedy thank God for Jackie Onassis and others who rescued Grand Central Terminal and Radio City Music Hall when they were close to suffering a similar fate but even good things can go overboard and I believe we've reached that point here in New York if you look at the island of Manhattan where we all are 25% of Manhattan is now considered an historical district 1/4 of this island is restricted from new development and renovation of existing buildings clearly that's not good for all of us in the real estate business it's also not good for the average New Yorker if you look across those historical districts guess how many units of affordable housing have been created in the last ten years five not five buildings five units in ten years it's not sustainable now the City of London came to a similar realization when they decided to radically change their approach to allowing density 25 years ago it would have been inconceivable for the Gherkin the cheesegrater the walkie-talkie or the shard let alone all of them to be built but a new leadership group took over the city of London and they had a different idea of how to do things they understood that the best way to preserve London's history and its Majesty was to integrate the old with the new that this would provide not just preservation but also an economic engine that could leave that city into the future I think there are a lot of lessons to learn from the courage of the London city planners so cities are not just surviving cities are thriving and today I've touched on some of what I see as the key ingredients in that battle but there's one missing ingredient it's the human element that takes all this theory and makes it something real that ingredient is you it's your vision your creativity your expertise your capital its groups like Uli providing fault leadership convening conferences like this promoting best practices across the globe remember that magic number two and a half billion two and a half billion people relentlessly coming to cities it's an enormous challenge and it's a fantastic opportunity so I close with a simple question are you ready thank you you

Channel: Urban Land Institute

Views: 14,341

Keywords: ULI, land use, real estate, cities

Id: LdF15zfsl_E

Length: 33min 27sec (2007 seconds)

Published: Mon Oct 27 2014