Real Estate

A bright future for CRE: ULI leaders on going green, future of office, affordability, and more

December 8, 2021

A bright future for CRE: ULI leaders on going green, future of office, affordability, and more

Billy Grayson & Ed Walter

EVP of ELI's Center for Sustainability and Economic Performance & CEO of ULI Global

The Urban Land Institute (ULI) knows just about everything CRE related and we welcomed Ed Walter, ULI's global CEO to the webcast. Urban Land Institute (ULI) has a finger on the pulse for just about everything CRE related, which is why we were thrilled to host Ed Walter, ULI's Global CEO, and Billy Grayson, EVP of ULI's Center for Sustainability and Economic Performance, on the latest Walker Webcast. They emphasized the importance of sustainability, what will happen to all the 40-year-old office buildings sitting around empty, affordable housing, and so much more.


For this Walker Webcast episode, Willy welcomes Ed Walter and Billy Grayson to the show. Ed is the Global Chief Executive Officer of the Urban Land Institute, a global real estate organization with more than 40,000 members dedicated to responsible land use and creating thriving communities. Prior to ULI, he was both CEO and CFO of Host Hotels and Resorts. Additionally, Ed has four-year tenure at Georgetown University as a professor, where he created and taught the real estate public equity course. He is Chairman of the Federal City Council and sits on additional boards. Billy Grason is an expert in sustainability program development for companies and organizations. He is the Executive Director of ULI’S Center for Sustainability and Economic Performance. Prior to ULI, he founded Bent Branch Strategies and was Director of Corporate Sustainability at Liberty Property Trust. 

In light of the current good fortunes of the banking sector, Ed begins today's discussion by highlighting the state of the commercial real estate industry and the perspective of its members. The current real estate market predicament, in which housing is attracting record amounts of capital with low cap rates, is one no one could have predicted. In 2020, things were looking very promising for the world of sustainability and ESG. Since then, we’ve seen a doubling in green bond issuance, with more than $100 billion being invested in real estate projects. Additionally, a number of heads of leading real estate companies have made bold commitments to be on a path to net-zero carbon and achieve the goal 28-30 years earlier than their target. 

The real estate sector is responsible for 40% of global carbon emissions, making it challenging to achieve a carbon-neutral status for the built environment. At the same time, it is a huge opportunity and responsibility. GreenPrint is the leading method for accomplishing carbon neutrality by 2030. Discussing Washington, D.C.’s climate action plan, Billy highlights the process of setting climate targets and pathways to achieving them, a key in making progress. The conversation has shifted as of late to become what we have to do rather than what we should do. Next, they discuss the innovation occurring to transform vacant retail and business spaces into housing and urban farms. 

Regarding the current housing crisis, Billy believes it will take many years of negative growth in population to really see any relief on housing stress. We need to think about being modular and adaptable in designing structures to change in accordance with the ever-evolving population, future of work, family dynamics, and immigration policies. If we are creatively reusing our buildings to accommodate the needs of the moment, we are doing ourselves a great service. At the major company and institutional level, climate and taxes are the biggest policy issue among investors. Ed explains the negative effects of rent control orders on the rental market at large. Cities with rent control measures only motivate developers to look elsewhere to build. 

The market trends report segments the country into four distinct markets. First are the magnets, or cities attracting people and companies due to tax policy. The second is the establishment, encompassing the gateway cities of New York and San Francisco. The population in these two categories is essentially the same, though productivity in the establishments is 44% higher. Then, there are niche cities such as Baltimore, which have medical and educational centers. The final market is the backbone, which defines cities that are cheaper to operate in which are still vibrant but with a much lower growth rate. Initially, capital tended to flow towards the gateway market. However, the last five years have seen a shift, largely driven by cost factors, that have led people to aggressively move elsewhere. From a sustainability standpoint, Billy says any temperature in the extremes is detrimental for the environment due to the energy needed to withstand the conditions. Temperate areas near a large body of water are the best places, as they may rely on natural heating and cooling. In closing, he shares the areas and leaders who are ahead of the curve on these issues. 


Learn more about the Urban Land Institute
Connect with Ed Walter and Billy Grayson
Check out Walter & Dunlop’s website

Read Transcript

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