Roger Staubach, the former football great and the long-time real estate executive today spoke of concerns of the economy – from housing to commercial real estate – but also how tough times bring out the best in people.
“Adversity reveals genius, and prosperity conceals it,” Staubach, the former Dallas Cowboys quarterback and the current Executive Chairman of the Americas for real estate company Jones Lang LaSalle, today told about 200 real estate, political and business leaders at Palettes restaurant at the Denver Art Museum. He later granted InsideRealEstateNews.com an exclusive interview at the Ritz Cartlon Denver, before he and his wife left in a rented car for a conference in Aspen.
Staubach, who will always be remembered in Denver for leading the Cowboys to to a Super Bowl victory over the Broncos more than three decades ago, echoed a common thread of all of the speakers at the Economic Forecast Breakfast: Investor/Occupier Outlook for 2010, sponsored by Jones Lang LaSalle. (Alas, he told me that he doesn’t think the Broncos are Super Bowl-bound this year. But he added that he didn’t want to upset Bronco fans, and said that while at best they’re likely to have a 9-7 season, underdog teams have pulled upsets in the past, so you never know.)
Although JLL, which bought the Staubach Co. last year in a deal valued at more than $600 million, is a commercial real estate firm, housing and its woes often took center stage.
Kenneth Rudy, chief operations officer for Capital Markets for Jones Lang LaSalle, kicked off his presentation with a slide show linking the connections between dozens of acronyms, such as TARP, TALP, GAAP, FDIC, CMB and even WSJ (for the Wall Street Journal.) He ended the show by flashing three letter on top of all of them, showing what this alphabet soup has created: I.O.U.
He noted that the government has pumped $4 trillion of $12 trillion into the economy, so far. Some programs, such as cash-for-clunkers and the $8,000 federal tax credit for first-time home buyers, clearly have provided benefits to the economy, but what lies ahead is unclear.
And although the financial meltdown famously began with the housing crisis, what really caused it was a debt crisis, which had an underlying asset of homes and to a far lesser extent, commercial real estate and consumer loans, he said.
“Real estate is is a very complex asset,” Rudy said. “It is an investment…but it also has utility. If it is a home, you live in it. If it is a commercial property, you have tenants occupying space in it.”
It also tends to be expensive, long-term and highly leveraged. The underlying value of real estate purchased in the past few years is underwater, even when homeowners or landlords are current on their debt, he said.
“Cash is king,” Rudy said, and those with it can find screaming deals, whether for a “one-off” property in Denver, or a giant portfolio.
“But you need some courage,” to pull the trigger on an investment, he said.
Still, there must be a “silver lining,” in all of this turmoil, he said.
The current buzz phrase is “green shoots,” to indicate positive signs in the most dismal economy since the Great Depression. And although he said there are weeds scattered among those green shoots, he said what is more important than all of the statistics he cited – and there were many – is the psychology of American consumers and businesses.
That is the same message that Mayor John Hickenlooper brought the table, as he kicked off the event that lasted almost three hours.
“Denver is in the worst shape it has been in since 1933, during the Great Depression,” Hickenlooper told the group.
Not only are sales tax collections down 12 percent to 17 percent, but building permit fees for housing and commercial properties have declined by 30 percent to 45 percent, he said.
Still, as Staubach later said, great things can emerge from this current economic black hole.
“A crisis is a terrible thing to waste,” Hickenlooper said, quoting Stanford economist Paul Romer, a son of former Colorado governor Roy Romer.
Hickenlooper noted that since an “international media spotlight” was focused on Denver during the Democratic National Convention, Denver routinely now is being listed on the top three best lists, for such things as best place to work, to grow a business, or to see a recovery in the housing market.
He did say that the recession will not be really over until jobs are created and companies begin hiring again. He urged business owners in the audience to follow what he is doing in the city – finding ways to retain as many jobs as possible, while still making the necessary financial cuts.
But Hickenlooper said paramount to real change will be a belief by Americans that this cycle will pass and things will get better.
He quoted Abraham Lincoln, who once said: “Public sentiment is everything. With sentiment, nothing can fail. Without it, nothing can succeed.”
Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.