At the beginning of a panel entitled “The View From 10,000 Feet,” part of the N.Y.U. Schack Institute of Real Estate’s 15th Annual REIT Symposium on Thursday afternoon, the always outspoken Steve Roth had a question for moderator Robin Panovka.
“Is there press in the room?” asked Mr. Roth, chairman of Vornado Realty Trust.
Perhaps Mr. Roth was wary because of a a week earlier, after which he from the mayor of Boston for remarks about blight. Nonetheless, he spoke relatively openly about the state of the industry and of REITs, along with Sam Zell, chairman of Equity Group Investments and William L. Mack, chairman of AREA Property Partners, in the trio’s fifth annual gathering (it was dubbed “Round V”).
The setting was the swanky Pierre Hotel at 2 East 61th Street, replete with chandeliers, small bottles of Evian water and many, many business suits, with talks throughout the day on real estate investment trusts, or REITs, companies that are traded on the stock market and perceived by some as more resilient in the face of the real estate downturn.
“This is a demand recession,” said Mr. Zell. “Nothing of any consequence has been built since July of ’07.” He said that he invests in distressed properties in the U.S., focusing on properties overseas. In January, he purchased three New York rental towers from Harry Macklowe and a vacant lot from Shaya Boymelgreen, the first deals in three years by his company, Equity Residential.
Some of Mr. Zell’s reluctance to invest in the U.S. comes from frustration with the Obama administration’s regulations of the industry. “In foreign countries you have growth and no rule of law. In the U.S., you have no growth and no rule of law,” he said.
Vornado focuses on “well-located assets with fair prices” in the Washington, D.C., and New York areas, said Mr. Roth, but it has seen a shortage in desirable properties on the market. The company is reportedly looking into the landmarked 510 Fifth Avenue.
The lack of desirable property was a major sticking point for the three landlords, but they also acknowledged that “human nature” could very well lead to another boom-and-bust cycle. Nonetheless, Mr. Zell encouraged the 100 or so N.Y.U. graduate students from Schack to keep their chins up and – and tried to dispel any notion that it was any easier when he was young.
Mr. Roth was less sympathetic. “Get out of my business,” he joked. “The old guys should get the spoils.”