Webcast transcript
Willy Walker: Welcome everyone to another Walker Webcast. This is my last live webcast of 2022. And before I dive into an intro to my two guests and our discussion on both the economy and the Great Age Reboot and its implications on the commercial real estate industry and our economy – just a couple quick notes.
The first is that over six million people have now watched the Walker Webcast. It is a true honor that I've been able to get the guests, such as Al and Peter, to join me every week over the last two and a half years, since the beginning of the pandemic, to talk about everything from commercial real estate to the broader markets to athletics to leadership to civil rights, etc.
The second thing is that I don't do this alone. Every week Susan Weber leads us in, but she leads a team that puts together everything from the social media push outs before we do it, to the follow up, all the posting to YouTube, as well as our podcast that gets put out there every week. And so, to that team and to Susan, thank you all for all of your great work.
I had three of my colleagues on the Walker Webcast two weeks ago for a view of where we are in the economic cycle and what's happening with interest rates and what's happening with cap rates, etc. and that webcast with Ivy Zelman, Aaron Appel and Kris Mikkelsen has now been watched by almost 150,000 people on replay on YouTube, and that's not counting the podcast views. That displaced the number one previous webcast, which was a discussion that I'd had with Peter, which had 110,000 views on it. And so, Peter, I have to say I'm sorry that you and I have been knocked off the top spot, but I'm still on the top spot, and you've been knocked off by my colleagues, Aaron and Kris, and Ivy, I’m so sorry about that. But it is just a real joy to have Peter join me once again. I was able to see him live for a Bisnow conference in Philadelphia about three weeks ago. It was super fun for the two of us to get together in person and have a live discussion in front of a really great audience at the Bisnow Philadelphia conference. And Al, it's always great to see you. And let me dive in with this as a starter.
Al, you were born in 1927. You are now tipping the scales at 95 years old. This conversation is on longevity. This conversation is on the changing demographics of the world we live in. Why did you sign on to write this book, The Great Age Reboot with Mike Roizen and Peter Linneman in and out of all the research and all the findings, what's the most compelling to you as it relates to either the health implications or the economic implications of the Great Age Reboot?
Albert Ratner: So, I got to know Michael Roizen about ten years ago, we started playing ping pong together. And he's now 72-73. I'm 94. I'll be 95 in a week, and I consistently beat him, which is important. But he was doing a bunch of broadcasts and what was that thing with research? And I said to Michael, it seems like so much is going on that there seems to be some great change taking place in the country. And he then turned to me and said, “And you're describing what's going on in the inner city, and what you're telling me is nothing we're doing is right. But there's a right way to do things. Is there some connection between longevity and some of the social problems we're having?” So, we decided we'd write a book. We started writing a book by Michael, who knows every research in the country. We got partway through it when I turned to him and said, “This is going to change every demographic we have.” Let's call Peter and ask Peter to join us. So, Peter joined us and we're the three that did the book.
The first thing is it all hinges on the science. If the science doesn't happen, which we believe it will, these changes don't take place. The takeaways that we have basically say that within the next decade, the decade we live in will, the longevity will increase by 30 years. It normally increases by two and a half years, every decade. This decade will be 30. And it comes about by 14 different scientific things that we pointed out. But there are a lot more than the 14. And the takeaways are it is the greatest disruptor we've ever seen because it extends the number of years that you can do what you do. The chip is the last great disruptor 70 years ago, and we needed this disruptor. So, the first thing is it's a great disruptor because of what happened with the genome, we now determine how long we live. It was thought our genes determine it. We now know that we can affect 80% of deaths by the things that we do. That we’re our own engineer and it's all in our hands. That's the side of the effect.
The financial effect was when we were about to publish the book, we took a look at the projections of the Congressional Budget Office and what we discovered if you go through them, what they say is we're going into a free fall and it's the lack of births in the country. It's births minus deaths plus immigration. So, the births have gone to hell. The projection of the Budget Office is that our GDP over the next 30 years is going to be one and a half percent. And that our country is going to close down. We don't believe that. But what we do believe is if we understand the opportunity in longevity, we can have an economic and a life that we never dreamed of.
Willy Walker: So, Peter, going to those numbers that Al just points out. So, the Census Bureau right now believes that the U.S. population in 2050 will be 390 million people, up from the 333 million today. If you take Al's numbers, you all are projecting that the U.S. population will be 451 million by 2050. A significant 61 million additional U.S. residents over the Census Bureau projections. What's that mean from an economic standpoint?
Dr. Peter Linneman: By the way, just before you get there – it took three others Willy, to surpass my one.
Willy Walker: Yeah. I see, I knew you were going to go back with the numbers. I love it. That's great. I want to be very clear. everyone here that you and Al are not competitive people because you immediately hark back to being now in second place. And Al wanted to make sure that we all knew that he still beats Mike in ping pong. So, I set the record clear, we're good there. Three beat one. I got it. Go ahead.
Dr. Peter Linneman: You got it. So, it has dramatic implications. Albert and I have known one another since I think 1989 or ‘90. And when he called me, I think in 2018 about this, everybody tells us we can’t afford it. And when they described it to me, which is not like people live longer, it's not like they're going to live the last day of their life an extra 20 years. It's not like you're sitting on your deathbed an additional 20 years. You're sitting two more in your twenties, two more in your thirties, two more in your forties, two more in your fifties, etc. That's how you get the extra years. And yeah, you'll still be on your deathbed at some age, right? Well once, once you grasp that, it's not just longer, it's longer and much more vital, much healthier. Of course, we can afford it. All we have is human capital. And so, what they mean is a tremendous amount more resources.
So, we go through in the book some numbers that are pretty obvious. I'll give you a couple of examples. If people live, let's say, 20 years longer, healthy and vibrant and active. Well, first of all, some of them are going to want to work because it's kind of interesting. Some of them will have to work because they're going to live a lot more years. Well, if they work even just five more years, the typical person they work about 40 years. Well, if you start working five or ten more years, that's an enormous increase in your lifetime productivity. 10% to 20% increase in everybody's lifetime productivity. And it's better than it sounds, because when were the least productive years of your life, socially and economically? Unless you're an athlete, it's when you were young. Those were your least productive adult years. We are talking about people having more productive years all through their life. So, of course, the resources we have. I'll take Albert, I'll take Warren Buffett. I'll take other examples like that, what if they didn't have that longevity? Now, imagine, everybody has the kind of longevity in their own career, their own life, and their own social life and in their own economic life. So, if they're a store clerk or whatever they are, they get more years of productivity like Albert has had over his years since he was 65. Of course, we can afford it.
Willy Walker: So, Peter, one of the things that David Sinclair at Harvard has estimated is that every additional year of life expectancy added in the United States adds $38 trillion to GDP. But there are a couple of things that are somewhat worrisome. The first that I would point out is that most people still do retire at 65 or 67. And right now we have Social Security kicking in at 67 years old. Projections are that the Social Security trust fund is already going into more withdrawals than additions this year, and that if we keep going at this rate, the Social Security trust fund will be defunded by 2035. And so back to the kind of can we afford it question, if we can't figure out Social Security, I believe that the average couple in America relies on Social Security for 50% of their income, and the average single senior relies on Social Security for 70% of their income. So, I understand your point about someone like Al continuing to work well past 65 years old, but what about the average American who's relying upon Social Security?
Dr. Peter Linneman: So, one of the things is that people adjust to the reality of life. My cohort, my baby boomer cohort, I see some people retiring at 63 and I say, why? And they go, well, it just seems like I should. Well, that's a terrible reason. That's a really terrible reason to retire. “It seems like I should.” It's almost like everybody else. Remember when you were a kid? Everybody else is jumping off the cliff. I guess I should, too. So, I think you're on to something, Willy, in the saying. This is why Albert's phrase, it's a great disrupter. It's got to disrupt, individuals and society mainly. It's not what everybody is doing. It's not that it seems like I should. Albert, I think you would agree. There are some people who are retiring at 63 today who in three years or five years or seven years are going to regret it. They're going to regret it socially. They're going to regret it economically. They're going to regret it in a lot of ways. And you're right, Willy. Put it this way, if longevity increases very fast, faster than trend, it's unlikely that the society will evolve quite as quickly. Right, social norms. And there will be a bit of a dislocation. The good news is if we can get healthier. We reduce our medical outlays, and that gets us some cushion to make these transitions. So, for example, if we were able to reduce lifestyle illnesses, not deaths, just illnesses, diabetes, blood pressure, etc., we could reduce those by half by genetic engineering, medical advances, and self-engineering. That's 7% of GDP we would free up. So, yes, I suspect you're right, society evolves more slowly than medicine, but we will have cushion to cover the gap.
Willy Walker: Al, you lost your grandparents and your uncle quite young the year that you were mitzvahed. And from having heard you talk about it, you didn't think you were going to live a long life now that you were 94, about to turn to 95. I also recall hearing that you didn't eat that well as a kid. And yet here you are at 94 to 95 years old. What do you think that's given you the opportunity to live such a long and vibrant life?
Albert Ratner: Well, the first thing that happened to me was that my grandparents came here in 1920 with my father, and my grandmother loved me. She gave me more chicken fat, more schmaltz, more corned beef than any human being could take. She gave it to me because she loved me and I loved it, but it didn't love me. So here I am, 95. I have 18 stents and I'm still here. So, the first thing is you can't convince me I'm 95 because I don't feel 95. I don't know what it's like to be 95. But what happened was when I met Michael and started talking to him. Before we did the book, we talked about a bunch of things like eating during daylight. So, I eat during daylight. So, I started to take better care of myself. But this is what I believe, what keeps me alive is my passion and my posse. The medicine will catch up with that. But my whole life I've been blessed with wonderful, wonderful friends, and I've always had a purpose. My purpose is to see that we repair the world. And if you have a purpose and you have a bunch of friends to join with you, then somebody else will keep track of how long you live. I have never measured how long I live. You live every day like it's your last day. But the biggest thing is why are we living and what's our purpose? And it's kind of what's wrong with the country. We lost our way a little bit. This is the way to get us back.
I'd make a comment. The population, in fifty, is now down to 367 million people. It keeps decreasing every year. The reason it goes up is our death rate because of science, goes down from 93 to 23, per thousand, and that differential among the 87 million additional people that will have over what they say as a booming economy.
Willy Walker: So, Al, talk for a moment about this. You're a real estate guy. You've been an incredibly successful real estate investor. You still live in the homes you lived in when you were 70 years old. You still live essentially the same life that you lived when you were 70 years old. So, where's the opportunity? I get that this year, for instance, P&G will sell more adult diapers than it will sell kid diapers. But I don't think many people on this webcast are going to go into the diaper manufacturing business. They're trying to figure out from a real estate standpoint, how do you play to these demographic trends? There have been a lot of people who tried to get ahead of the seniors' housing needs, and in some instances it's materialized. In other instances, it hasn't. And we can dive in deeper on that. But as a real estate person, sit there and say, okay, what has happened for my additional 25 years of living well beyond what actuarially you should have lived to? Where's the opportunity to get dollars?
Albert Ratner: Well, I have to start out by saying that the difference between what I'm capable of doing at 95 with what I was capable of doing at 70 is enormous. I know more people, I have more contacts, so I'm so much better at what I'm doing than when I was 70 years old. That's the first thing. The second thing is, if you look at the statistics, this is what it says going ahead from 2000 to 2050, it's 50 years. We've gone through 22 of those 50 years already. Where do we end up in 2050 and work backwards? So, this is what we learn. What we believe is that in that 50-year period of time now it's a 30-year period of time, there will be an increase of only 5% in people 40 years old and younger. Think of what that means, the schools and the colleges. There will be an increase in people that are age 79 years to 40, 25%. And an increase of 550% of people, 80 and older. The difference is that they’re not what we think our 80-year-olds today. They're 80-year-olds and 90-year-olds functioning. So, here's what we say. We look at the long run, housing is going to be fine because you have more people living, but it's going to be different. Housing can end up like B and B. I live in 8,000 square feet half the time. Somebody can live in the other half the time. So, what I believe is that you have to start at where we're going to be and work yourself backwards. Here is what we believe – there will be trillions of dollars made through longevity. We're trying to figure out what it'll be and how it will be. So, each of you have to do the same thing. If this is what you believe. Play it back.
The final thing I'll tell you, I was giving a speech with a bunch of real estate brokers, and I said I was supposed to die when I was 55 years old. I keep getting phone calls for people who want to sell my unit. And I tell them they have a long time to wait because I'm not going anywhere. Now just think of that. Everybody we believe, almost all of the people that are living in 50 are living today. They're already here. They're not going to be born, we’re going to have 33 million more people born. So, the people are here. Well, if everybody on this phone lives longer and lives in their home, where do you get the movement? Where do you get the transaction from people churning because they're new, people coming in. So, it's to be figured out. And this is the challenge for all of us.
Willy Walker: Peter, to Al’s point in 2007 in multifamily housing in the United States, in the 34 and under demographic, they accounted for 38% of rental housing in the United States. To Al’s point, it's projected that by the time we get to 2035, which isn't that far away, that cohort falls from 38% down to 27%. The middle from 38 to 60 stays relatively static at about 44% of renters in rental housing. And the big increase is in the 60 plus, which goes from 18% of rental housing occupancy in 2007 to 31% by 2035. So, what do owner operators need to do as it relates to the shifting demographics in rental housing in America?
Dr. Peter Linneman: So, with regard to rental housing, they're going to have to understand that they may want to have more items they've kept in their life. Right? They're going to want visiting space for relatives. Right? So that maybe you have available space that you can rent out or use out for guests, children, grandchildren that are visiting. They're going to have to figure out what services. They're less likely to want to be playing beach volleyball, let's say, at the apartment complex, as the demographics you're describing are more likely to want to have social gatherings, whether it's bridge or whatever it is. And I think Albert's right, you have to figure it out.
I'll take another industry, Willy. And I know some of your people are in that business. Albert's been in that business – retail. Retail shopping is about satisfying the needs of customers. We are in the early phase of the largest, healthiest, wealthiest group of people in history, and they're not who the industry has typically focused on. Right? The industry in the 50s and 60s focused on, Donna Reed. Right? The mother who was home while the father worked. They then went to the two-worker house. They went then to satisfy the needs of the young. You're now on the edge of the disposable income in society and it's going to end up in the hands of people 55 and over, and that's going to be a whole different pattern that has to be figured out.
So, to take one more sector Willy related is senior housing. You know the math was always gee, around 78 or so people start moving into senior housing. Well, that's already drifting up to 80. And by the way, that could easily drift to 90 or 95 over the next 20 years. That has dramatic implications on that sector. But then they're living somewhere to Albert's point. They're living in single family homes or living in condos or living in rental. So traditional rental, traditional single family looks good. And senior, not nearly as good as people who have been saying the baby boomers are aging. If the baby boomers chronologically aging, but not sociologically or medically aging is going to be a longer time.
Albert Ratner: So, there's one point I would make is if I were betting on what I would do, I would bet that in the future. It's going to be much less living space and much more common area. So, people, instead of living in 8000 square feet, will live in 2000 square feet, and they'll have dining rooms, and they will have gyms, and they'll have a place for their kids to come to. We have such a waste in all this space that we're living with and the way it gets used, that's going to become much more economic and it's going to be much better because we'll have the services of our doctor. We'll have everything we need in which places where we live.
Willy Walker: So I want to push for a moment on the assumption that people live longer and healthier lives because the science clearly and Al you talked about this at the top – is there's a bet that we know the genome, that we're having advancements that are truly eye popping and eye spinning and allowing us to extend life. And yet, at the same time, 10% of the US population was obese in 1960, and today 43% of the US population is obese, 43%! And so, if we continue to get that, and by the way, that is one of the key drivers of heart disease, of diabetes, of chronic illnesses. If we continue to not take care of ourselves, does the science really matter?
Albert Ratner: So, it matters to this reason: they now have tested in two animals being able to turn white fat into brown fat. Brown fat we are born with which keeps us warm. White fat is what gives us all of our obesity. What we believe among the fourteen things is within this decade there will be a pill that would obliterate totally obesity. Because the genome has allowed us to understand what happens to the body. So, we believe obesity is going to be gone and it now affects 50% of our people.
Willy Walker: Yeah, very much so. I mean, it's a huge issue. It's one of the big issues that Mike focus on. Go ahead, Peter.
Dr. Peter Linneman: Let me add. I would say exactly what Albert saying with a slightly different way, which is things that we cannot easily do for ourselves because we don't have the discipline, we don't have the resources, whatever it might be. Obesity being a good example, but not only. Think of addictions, think of other kinds of abusive behavior. Let me put it differently. We have in our capacity changing our own DNA to do it. But most of us, as you point out, Willy, find it very difficult. Well, one of the things medicine historically is good at is doing what you don't easily do for yourself. We immobilize your foot because yeah, you could I guess you could just hold your foot like that without a cast, without a walking boom. Just hold it like that for the next four weeks. Well, what medicine is very good at is figuring out “well, yeah, I guess you could be very difficult, let's make it easier.” And if you think about a lot of this genetic research, it's how do we make it easier for people to do what they find hard to do from a health point of view. And the resources that could be saved by doing so are just staggering. When you think about it and imagine addiction, you know, I know one of the things we don't write about it, but one of the things they're trying to figure out is the genetics of addiction. And we know that relates to a lot of deaths and a lot of crime and a lot of suicide. Okay, fine. Suppose they find, and it's not like people aren’t trying to stop being addicts. Now, let's suppose that we change three DNA cells and addiction disappears to substances. Amazing. It's not that people aren't trying to do it on their own and many people are trying and succeeding. Just think of it like: we're going to help you do what you find hard to do. And by the way, as a business matter, if you can find a way to make something valuable, easy to do for people that they otherwise find hard, you're going to get rich. You're going to get rich.
Willy Walker: Al, I was listening to David Singer at Harvard on a speech he gave and one of the statements he said that caught my attention was he said, “Frailty is more dangerous than actual age.” And he went on to say that every 19 seconds in the United States, an elderly person falls and breaks a bone, which in many instances is a death sentence at that time. What should we be thinking about as it relates to usability in the fixed environments? Peter talked about the changing retail needs of elderly Americans and clearly what is stocked on the shelves has to change. But what about from a usability standpoint, given that issue as it relates to frailty versus actual age?
Albert Ratner: Well, the answer is young people basically don't act frail. So, what it says in effect, is that if you're 90 and you're frail now, and 90 is like 40, you won't be frail because there are all kinds of things that you can do to prevent that from happening. And the key to this is all the things that I did were very strict things. So, I went to Pritikin, and it was very strict. The difference of what we're talking about is we're saying to people: do what you love and loves you back. If you don't like to take steps, play ping pong. If you don't like to play ping pong, play with your grandkids. But pick a lifestyle that suits you. We are giving sunshine not castor oil and you're making the decision of what happens. Nobody is saying to you, “you have to do this.” We have an application. And in the application you have all of these choices. What are you going to eat? When are you going to eat? So, we think we can't get out of our mind the world that we're living in, because it's been there. More people over 50 drink beer than under 50. You've never seen a commercial with somebody 50 years old drinking beer. 65 as a retirement age. That number came from a German general who in 1850 asked his people, “At what age could my soldiers live to, I want to give them a pension a year later, so I don’t give them one.” We're still living what we did when we had kids in the field. So, this is a mental transformation. This is what we believe. You don't have to do it.
Dr. Peter Linneman: A couple of small examples in our business are going to have to evolve. How many times have you been with a shopping center owner, and they say, oh, we re-striped our parking lot to get more cars in. Right? And you go, well, you just may as well put up a big sign out front saying Linneman Plaza, nobody over 65 is wanted here. Because they re-striped them to be narrower. They're harder to get into, harder to get out of the car. I mean, just tell them up front you don't want them there. It's a lot easier. You go to some garden, shallow in terms of the depths of somebody to step on as opposed to extending the step an extra inch, etc., and there's a lot of small things that are going to have to be done as well as some big ones. The big money is in figuring out the big stuff, but then you're going to have to execute on the small stuff as well as a real estate person.
But I would ask every apartment owner, there are not a lot of the people listening as apartment owners who are 75 and 80 years old. I'm sure there's a few. Go get your friend, your grandparent, your neighbor, whatever, who's 80 years old, and take them through your apartment complex and make them walk up, make them do whatever and listen to what their reactions are. Bring in a 60-year-old and have them react. Bring in a 50-year-old. Have them react. Albert's point about the Germans is right on. Don't just keep doing the same thing. Actually, bring in test customers, if you will, and have them react to the space.
Willy Walker: So, Albert, one thing that you said previously that I think is very interesting is your comment about smaller unit sizes and more common space. And that makes sense. But we are still to some degree living in a hangover from COVID and the sense of being separate from each other and not being together. And obviously, there has been this sort of reunification that's happened on the other side of COVID.
But I was wondering, as I was traveling this week, I went through TSA and I'm sitting there looking at TSA and I'm kind of scratching my head saying, 20 years later, we still have the most inefficient check systems, you can possibly imagine that darn bins were being hand pushed through and they were still doing the wanding and they're still doing the same thing. And I sat there and said 9/11 changed materially the way that we travel, and I don't know whether they'll ever go back to pre-9/11. I'm curious, do you think COVID and all the health issues around COVID have the similar type of hangover effect on the way that people live and socialize going forward? Or do you think we revert back to what life was like in 2019?
Albert Ratner: So, Michael, who's our expert in this, went back to look at what happened when the Spanish flu came, which was much worse. In the case of Spanish flu, the third year after it started, the population and growth rate were longer than it was before. When people get wiped out, the way they figure longevity is, they figure every year we'll have what happened the last year. But in the case of the Spanish flu, things were better when it was over. This is what I believe. What I believe is nobody knows what happens with pandemics. People are now studying it. What I believe is this: one, we're not going to go back to where we were. It's going to be better. Two: if we go back to where we were running our government, where kids don't get educated. Where hospitals don't function right. We have no future. Because you have to look at our national debt. Peter and I argue about whether it means anything. You have to look at what we're doing now.
The beauty of longevity is it changes everything because we can start all over again. I'll give you an example. We talk about income inequality. The single biggest reason for income inequality is the lack of longevity of people in color. And it's simple. If they live eight years less than other people do when they make $30,000 a year. What happens is they're going to have income inequality. Well, as you get better medicine, you should get telemedicine, things like that happen. Another big issue, it costs so much money to raise the kids. So, it costs $300,000 to raise a kid today between the years of one and 17, if you have three kids, it's $900,000. If you make $30,000 a year for 40 years, that's 30 of those 40 years. So, you look at that and you say, we're going to change our policy about kids, we're going to take care of daycare. The opportunity for longevity is to start over. That's what we need to do. We can't go back to where we were because it doesn't work. And by the way, there's this worldwide. There are some people who have more population, but they don't have increases. They don't have the resources. So don't look at going back. We have to do better.
Dr. Peter Linneman: That goes to the point you and I were talking about earlier, Willy, which is to the extent that medicine outstrips social adjustment, for lack of a better phrase. We're going to have some stumbling around. Right? People are still thinking I'm going to retire at 65 because I'm going to be dead when I'm 75. And it turns out they're going to be alive when they're 100 and they don't fully realize they're going to be alive when they're 100. But if they did know they were going to be alive at 100, they’d have worked till 75. Those kinds of adjustments are going to take place, and some are going to do it better than average, and some are going to do it worse. Probably government policy is going to be the laggard simply because it's a big ship to turn around, any government policy. It's a big ship to turn around. Albert and I have both and Mike as well have been proponents of something like Singapore or Holland or a couple of other, Australia I believe, have policies of essentially forced savings. Because one of the things, if you believe what we do, probably even if you don't, you want people to be sure they've been saving regularly from day one when they started working, even when they weren't making much, 5% of it was put away in a safe, well-diversified way. That's going to be an adjustment. Some individuals do it without the government helping. Probably the government helping, and incentivizing is a good thing there. But there's a lot of things that if we're used to growing linearly, the social pattern is going to have to catch up to health growing faster than linearly.
Willy Walker: So, in the pre-call questions, there were a number on immigration policy. And immigration policy has to play in with demographics. And so, I just want to talk for a moment about immigration, both legal as well as illegal, and the impact that has on overall growth in the economy. Because first of all, as I did some research on the numbers, I was actually quite surprised by the numbers. On the illegal immigration numbers that I pulled out from both the CDC, Homeland Security, and tried to back into exactly what the actual numbers were and its lagging data so in some instances, Center for Immigration Studies is making a projection of what happened in ‘21. But generally speaking, what I could take out was that we have about 11 to 11 and a half million illegal immigrants in the United States, but that number fell down precipitously during two things, both in tandem, the Trump administration and the pandemic. Very difficult to sort of differentiate at that time because you had kind of a, if you will, a double whammy of both, a very hard line from the Trump administration, as well as the pandemic, which brought immigration numbers down precipitously. But it went down to about 10.2 million illegal immigrants in the United States. And now it has gone right back up to about 11.4-11.5 illegal immigrants, but not a big change between where we are with Biden and where we were during the Obama administration as it relates to that number of illegal immigrants in the United States. On the legal immigration side of things, what I was surprised at is that the number of green cards issued by the United States government peaked at about 1.8 million in the late 1990s during the Clinton administration and has come down quite a bit over the last 20 years to the point where right now we're giving out somewhere around 800,000 to 1,000,000 green cards a year, which is legal immigration. What's your take, Peter, on either really fighting illegal immigration because that is the, if you will, the black market of the economy. We're not getting tax dollars for it. Those people are costing us for social services and things of that nature and increasing legal or given that there are 48 million immigrants in the United States, including both legal and illegal immigrants, is that just kind of part of the numbers and that's not materially going to change the GDP outlook?
Dr. Peter Linneman: So, most people don't know what you just said about the legal part. It's why people like me have been saying for almost 25-30 years, we need a revamp on the legal immigration because it's been in a downward spiral, even though world population has increased, even though the number of people desiring to be here and work legally is way up, it has been going down. We need a reform to get more people here legally. That's pretty clear. And by the way, I think, Albert, you're a second generation born in this country. I'm the second generation born in this country. Lots of your listeners are either first, second, third or fourth generation born in this country. I also remind people of the legal. Let's stay with the legal one more part. Everybody says, well, we need to let the PhDs in. I have a PhD. I'm not so sure I want all the PhDs in, but that's a, you know, don't go into the kitchen and see how things are cooked. No, but seriously, everybody says, oh, we want the nuclear physicist, we want the engineers. Of course, we want them. But I don't know about your parents. I don't think your parents were PhDs, Albert. My grandparents couldn't speak English. They were largely illiterate. And but their subsequent generations have done a lot for this country as they well should. And so, I encourage people to not get hung up on yep maybe a point system is a good thing, maybe it would get more in, maybe it would be politically viable to use a point system. But I would bet a lot of the people on this call have ancestors who were close to illiterate when they came to this country and weren't highly educated. And we wanted them as well.
On the illegal front, the hard thing on the illegal front is it's hard to say I'm for illegal immigration. Right? It's hard to say you're for anything illegal. What I think there has to be done. These are people who want to be here. They want to be here. They want to contribute to our society. Most of them would be very happy to work. I gave a talk once where somebody said, the problem with these immigrants is they want to take our jobs and collect welfare. And my comment was, you can't have both. You can choose one or the other. And the truth is they want jobs and they're not taking jobs from U.S. citizens. By and large, they're adding to the workforce. They're adding to demand. So obviously, I don't think any of us want real criminals, hardcore criminals. So, what we need is a route to get more people in legally who should be here, who 30, 40, 50 years from now will be on your show when you're still doing interviews for Walker Webcast still.
Albert Ratner: If you look at the cities that have the greatest economic growth, they are the cities that have 15% or 20% of their population as foreign-born people. That's been the whole history of the country. And you go to places that have 5% immigrants, they have no growth. So, the first thing is we need immigration. The second thing is you cannot have illegal immigration because it means you have no border. Whatever that means, you can’t have it. But if you say, I'm not going to have illegal immigration and you don't have legal immigration, you have no future as a country. Remember this, the new immigrants will not be white people. They will be people of color. Because that's the whole increase in population. So, this is going to be a very different country in 20 years than it is today. As far as the racial makeup is concerned, which is why we have to get people educated.
Dr. Peter Linneman: It’s the challenge for society and it's not an easy challenge is the same as what we've always had. How do we have a vital enough country with a viable enough political environment and a vibrant enough economy to absorb all that? Even as we change, as we're doing it, even as it changes, we're doing it. And if you're afraid of change, you shouldn't be living in the United States. I don't mean that as a throw them out. I mean of all countries in the world, this is the country about change historically, it really is.
Willy Walker: So, one of the things that I found very interesting when I was doing research on immigration numbers and the number of first-generation immigrants to the United States is at 46 million. I sat there and said, how can it only be 46 million? And I then went in and read, which I'd forgotten and Al, you'll definitely remember this. In 1986, under President Ronald Reagan, we signed the Reform Immigration Act, which did two things which this Congress in Congress is controlled by Democrats and Republicans have not been able to come to agreement on this. But the ‘86 Immigration Reform Act did two things. It cracks down on businesses for hiring illegal workers. And so, it made it so we had to check documentation, which was, if you will, to say we want to make sure that everyone who gets a job is paying taxes and is an actual citizen. And at the same time, we gave amnesty for everyone who had been a long-term illegal immigrant in the United States up until 1980. And so, in 1986, all the people who had been here for, I think it was ten years prior to 1980 were given amnesty and became U.S. citizens. Therefore, if you will, capping everybody and making them U.S. citizens and not immigrants, the United States, which is what caps it at 46 million Americans. And I just find it to be so interesting, this big, major issue, that both sides understand we must do something about cannot come to some type of agreement to really put the dollars and the enforcement behind doing exactly what you said Al, which is stop the illegal. And at the same time, as Peter said, increase the legal.
Dr. Peter Linneman: By the way, Willy, it's worse than you said, because in those years since the Reagan reform we have had where the Democrats had sufficient power in Congress and the White House to do it by themselves. And we've had periods when the Republicans alone could have done it by themselves. They didn't even have to come to a compromise with each other, and we couldn't do it. I mean, what a disgrace.
Albert Ratner: 65% of Americans agree with exactly what Peter just said.
Dr. Peter Linneman: Yeah. I mean, people want it. I tell you, one of the other things that as you saw, I get a little exercised when people say, well, don't let the uneducated in because they would have never let my predecessors in, right. But I also get a little exercised when people say, well, you know, some of them are criminals. Well, I don't know if anybody's read the history, but some of the Jewish immigrants were Meyer Lansky and Bugsy Siegel and some of the Italian immigrants were Mafia guy and some of the German immigrants and some of the by the way, it would have been better if we could have kept quote “them.” But that was a great bargain. If you've got to let the occasional Meyer Lansky in or the occasional Al Capone in to get what we got from those populations. And you can do this for every population, right? You’d make that bargain.
Willy Walker: So I want to close on specifics as it relates to, if you will, the cohort, the seniors housing space for just one moment, which is just that what I hear both of you saying is that there will be need for housing, but potentially not the type of seniors housing that we all thought people were going to need. That if you can actually impact the genome and you can do genetic re-engineering, that people will not only live longer but live more active lives. So am I hearing there, if you will, don't go long on critical care, seniors housing, go along into active adult, go long into sort of new forms of senior housing that are doing what Al said as far as smaller units and more common spaces than what we traditionally have had of older people wanting their own units to stay in them and be a little bit less on the social side.
Where would the two of you invest in the senior housing sort of orbit, if you will, right now, given what you are thinking about medicine and given about demographics? The one other thing I'd say before I shut up and let the two of you answer that question is this: we all know that typically seniors live closest to their oldest daughter. So, while everyone says, let's go long Florida seniors housing and lots of people who are older like to live in a nice climate, many times they are located near where their daughter has a job. Does that rule break as the daughters actually are retirees themselves taking care of mom and dad? And so that actually in those you now have double retirees living in warmer climates rather than older adults living in Buffalo, New York, where the daughter has a job?
Dr. Peter Linneman: I'd say on the last one, yes, you're going to get a big change that way in the shorter term. I've been trying to figure out the seniors’ space, and I think your active adult is the easiest or the most transparent play, because if 90 is the new 45, they'll still want that active adult because a lot of people, it’s funny, people want their own kids around, but not other people's kids. That's an active adult. Active adults want my kids to be able to visit me, but I don't want anybody else's kids around. That's what it is.
The one that's harder, Willy, that I haven't really been able to quite figure out is for the next seven, ten, 12 years, there are going to be early phase boomers who have not taken care of themselves. The medicine hasn't gotten to that point. They are not self-engineering and there's a spurt in demand coming from the boom. However, behind that, let's say, the latter half of the boom who medicine is going to help a lot not to need to be there and the subsequent generation. So, you could have this situation where there's a spurt for 5 to 7 years of early boom, where they haven't self-engineered, and genetics hasn’t engineered and then dip off as they become younger in the relevant sense of life. So, I think that's a tricky space.
Willy Walker: So, Al, I'm going to ask the last question which is this, your uncle Charlie was one of the first developers to go to South Beach and build a hotel called the Clevelander Hotel. And the hotel has been not only a staple of the South Beach hotel market, but he was early. He caught a trend early. So, as you look at everything here, you had to put a dollar somewhere in the senior housing world. Where is your Clevelander Hotel going? In other words, where and what type of asset?
Albert Ratner: So, I was listening to this conversation and thinking everybody on the phone heard something else. The beauty about America is we never all did the same thing. And there was always a group of people who everybody thought were nuts, that went somewhere else. So, if I were looking at this, I would look at where everybody is going and say, that's not where I want to be. You go there. But I want to take a piece of this and go here. And whether that go here means you build a city, there is a city in Florida like that. That's fantastic. The beauty of America is we solve problems individually. We don't have a government that says, you do this. It's our brain that makes this happen. So, if you think at 95, I'm going to give advice to a whole bunch of guys that are smarter than I am, no, the trick isn’t to be smarter, the trick is to be a better thinker.
Dr. Peter Linneman: But what I just said before we went on, I said, I saw a question from Jim Klingbill beforehand saying that he has no question. He just wants to listen to Albert, who's a living legend. And if Jim, you're listening. I agree. He's a living legend.
Willy Walker: And I would agree, and I would say that about both of you. And so, I get to close this out by both wishing both of you extremely happy holidays. Happy fourth day of Hanukkah. And to everyone who's listened in, have a wonderful holiday season.
To Susan and the team again, thank you for all your great work on this, this year. And to everyone, have a fantastic holiday season. To Al and to Peter, thank you both very much.
Dr. Peter Linneman: Thank you.
Albert Ratner: Take care.
Willy Walker: Bye bye.
Albert Ratner is the former CEO of Forest City Realty Trust. The two experts, along with Cleveland Clinic’s Chief Wellness Officer, Michael Roizen, have authored the best-selling book, The Great Age Reboot: Cracking the Longevity Code for a Younger Tomorrow.
The show starts with Ratner presenting the most compelling data about longevity and its financial implications. Lifespans will increase by 30 years within the next decade, and 80% of deaths are determined by the things we do. The Congressional Budget Office predicted a free fall, a lack of births, and a GDP of 1.5%, but Ratner believes this is too pessimistic. Dr. Linneman adds that these added decades to one’s lifespan are spent being active and healthy, meaning a 10-20% increase in lifetime productivity because more people can still continue working past retirement age. It’s estimated that every additional year adds $38 trillion to the GDP. However, trust fund withdrawals might disrupt the system and take a lot of adjustment to recover.
Dr. Linneman thinks that retiring for the sake of reaching a certain age shouldn’t be the norm. Although with the expected dislocation, reducing lifestyle illness and genetic engineering can cushion the gap. Ratner attests his secret to reaching 95 are his purpose and his posse, juxtaposing it with the reality that the 50-year-old population decreases annually. Longer lifespans also entail more business opportunities. Ratner shares how he still continues to improve in terms of knowledge and networking, comparing his 70-year-old self to the present one. He predicts the housing market to flourish, leaning towards smaller homes and more communal spaces.
When it comes to rentals, Dr. Linneman describes the looming trend of people being more mindful of how much they own, where they want to gather with relatives, and which amenities they’re most likely to use. “We are in the early phase of the largest, healthiest, and wealthiest group of people in history,” he says. More disposable income is expected to fuel single-family homes, condos, and rentals. Ratner adds that services like doctors will be at an arm’s length from residential areas to save space.
