YouSaid · the spoken record

Michael Levy

lines on the record: 102
first: 2022-10-07
most recent: 2022-10-07
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“And so the thing I know now that I didn't know then is how do you run your business when you know you don't know? And those of us who spend time trying to think that we know what the future is going to hold with respect to these cyclical activities fundamentally are setting ourselves up to either just be lucky or just wrong a lot of the time.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Technical stretch. It's a great guy. And he sat up in front of all of us young, smiling faces and showed us these charts predicting the future. And I hung on his every word. And I could have sworn that Ralph could predict the future. And then I went and worked in these firms and listened to the brightest people talk about the future, predicting the future with respect to the capital markets, the stock market, the GDP growth. And finally, at some point along the way, I realized that none of these people, irrespective of their models, know anything about the future. And so we sit here today worried about the future. We feel it's a time of tremendous uncertainty with the future. You know what a maximum point of uncertainty was? What everybody felt certain, December 2019. Because nobody anticipated that COVID would come.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“And even real estate investing it's highly fragmented and all over the world. Do it in the United States. You can do it anywhere.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, look, I think some of the basics. First of all, if you want to be successful in these worlds of investment, broadly speaking, you're going to have to work really hard. And you're going to have to make sacrifices with respect to your life. And are you prepared to do that? And that's the first thing. The second thing with respect to young people looking to go in an industry, my first argument to them is go geographically where the epicenter of that industry is. And so if you want to be in fashion, you want to be in New York. If you want to be in music, you're going to want to be in Nashville or New York or in LA. And so if you want to be in finance or investing, these cities like New York still remain the epicenter of this. And so go where there are lots of people in the industry doing what it is that you want to do. Now, the nice thing about real estate development.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“And that was also by coincidence how Trammel Crow viewed our business and our industry that love was the most important factor in terms of success. The books, I've been reading a more philosophy and history recently, so I read this great book called The Cave in the Light. Which is about Plato and Aristotle There's this terrific thinker named Jordan Peterson who written several books, and I'm reading a book called Beyond Order right now. Occasionally I read fiction, but not that often.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Use that example. A lot of people There was a book I read as all professionals. We read books on leadership and management. And in 2005, I read a book called The Radical Leap. Which was a leadership book written by this terrific guy named Steve Farber. And the radical leap was love, energy, audacity, and proof. And it was just a great easy read, and it stuck with me. Basically, love in business is fundamentally the source of being successful.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It just shaped the way that I thought about it. World, and it was affected me in very profound ways, really like no other book. There was another book I read”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“When you pose a question that immediately comes to mind Ayn Rand's Atlas shrugged, there's no book that's ever had such an impact on my life, and I read that when I was a young man.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Know still call me kid. I'm at 40. He said, Listen, I just want you to know I'm going over. I'm going to do this. And I was so deflated. And I sat on my desk and realized, okay, maybe you're just old enough now and you're just going to have to figure this all out for yourself. But the truth of the matter is even today I work with the senior partners at my firm are terrific. I learned so much from them. And whether it's Harlan or a couple of the senior guys, I consider them mentors as well today.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I have always been lucky and blessed through my job to have someone senior to me, wiser to me along the way that would look out for me and I would look out for them. And so for my first job as a legal assistant, there was this great lawyer named Marty Hunger, you know, all the way through most of my career at Morgan Stanley. But something happened at 40 years old. I was working at Morgan Stanley, and a guy, a terrific guy who's a mentor to mine, went up and quit and walks into my office and says, hey, you know, last day.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think, like a lot of parents of older kids, that March, April, May period was just brilliant because every night I sat on the couch with my three kids and we binge watched the West Wing with Martin Sheen, which was just fabulous to watch that again. And a show called Royal Pains, which was about a doctor out in the east end of Long Island. And that was really just a terrific family time for us.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I thank these fundamental demand trends. Are here for the foreseeable future. I thank America is under housed, particularly with respect to the working class and attainable housing that we need. I think that office buildings, again, going back to the modern open light, collaborative space, I think there's a demand for that that will grow in time. And there are other areas of real estate that we're going to continue to need to increase the overall supply in America. And there are other areas of real estate or other markets where we're not going to. And so all topics, there's a broad brush to paint, and then there's smaller paint strokes within that canvas.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It's cheaper and easier, all things being equal to develop in the southeast and the southwest. And so the problems are less pronounced, as well as you'll have from an entitlement perspective more pro-business entitlement policies in place that allow for the development of real estate for these needs.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, this issue is most pronounced in the big cities where people want to live. And so when you go to some of the smaller cities or the Midwest cities, which aren't experienced in the type of population growth, these difficulties are not nearly as much of a challenge. And so those cities are doing relatively okay. Nowhere is perfect. There's homelessness everywhere. There's challenges for young people everywhere. There's challenges for teachers and hospital workers and cops and firefighters all over America. But it's most pronounced in your high cost of living markets, whether it's the New York metro area, whether it's the Southern California area, Northern California, Seattle”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“So, why bother from a development perspective and capital? This isn't the real estate developer's point. The real estate developer is responding to the capital markets. And investors investing in real estate are seeking a certain return profile.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“First of all, it's not a rural issue. This is in the dense Cities, but nonetheless, it goes back to this point, yes, we want it for the people who live here, but not in my backyard. Or if, all right, developer, you're going to build that, but we're going to require you to give 50% of the units at this rent. You're going to have to build a park. You're going to have to pay certain fees. And they put on you elements that make”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the most difficult is the west coast of the United States, whether it's parts of Oregon or Washington or California. These cities, these urban environments.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I understand. I'm just saying what are we solving for in America? Are we trying to produce housing for the less affluence in the working class or are we not? If we are, let's get serious about it.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Capturing all the rainwater, you need to capture all of the rainwater in your property and funnel it into a water filtration system.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Half of that might be land and labor, but half of that is related to the regulatory fabric requiring us to undertake certain building design and construct to meet the local requirements.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Solution for all of this is supply. And so Americans remember 2005, 6, 7, when we had the subprime crisis and all these houses were built. And arguably we were overhoused at that point in time. But then we were chronically undersupplied in the decade plus. And that deficit has grown year over year over year. And so there's millions of houses or apartments or housing units that we need to create again for the working class and for the less affluent in America. But it's very difficult. In the same exact places that we need this, it's the most difficult to build it. I'll give you one example. And the numbers are fictitious, but they'll be illustrative. We build a lot in Houston, Texas, which arguably is one of the easier markets in the United States to build in. And we can build an apartment building for, let's say, $150,000 per unit.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“How many units Well, depending upon whose data you're looking at, it's somewhere between two and seven million units of housing that were underhoused in America. I mean, look at the homelessness that's taking place in our major cities. The solution for that is supply.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“And at some point, you're going to want to leave your parents' basement. And at some point, you're going to need a place to live and you're going to rent. Now, you're going to rent an apartment or you're going to rent a home, but these forces are positive with respect to the underlying demand for rental housing in America.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Multifamily. Well, the irony of it is those factors which are driving down home sales are helpful with respect to rental properties. Because if you're not going to buy a home, there's so many place to live”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“At the present time, clearly the state could step in. and take control over these decisions, but elected officials want to get reelected. And if you want to surefire away in your local community to not get re-elected, Go and pursue policies that the single family homeowners don't support.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not aware of any other state. I know the city of Minneapolis has put some regulations in place. There's regulations both in the state of California and in Minneapolis to allow for dwelling units on single family properties so it's no longer single family zoning. So you can convert your garage into an apartment for someone to live there. That's not the answer. The answer is to allow density in transit-oriented places where people where the jobs are or where people can get to their jobs. But this is a very difficult challenge, and as a large apartment developer, it's very difficult to have any confidence in America today that we're going to solve this problem. And it's a real challenge for the working class and the lower class in this country.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, this is the challenge we have. There's no doubt that single-family homeowners do not want apartment buildings built in their communities all across the United States. And land entitlement and the ability to build is a local issue. The states and the federal government are not driving the decisions with respect to what's get built on Main Street in your village. It's your local community. And the city council and the city planning people live in those same local communities. And so the system is not developed to deal with providing housing for the working class in America. Now, whether the states are going to be willing to step in when Governor Newsom in California a few years ago was elected, he had some big plans for the state to come in and to tell the municipalities what to do. That didn't quite happen.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Every single year that goes by, it's becoming more and more difficult to build housing for Americans, whether it's the availability of land as we've become a denser Society, or whether it's the local nimbiism and the entitlement process to build new buildings. That's why we have a housing crisis in America”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“That article doesn't highlight. I don't believe all the data, but there are jobs coming back to the United States. And when those factories are built, there's going to be parts suppliers, and you're going to need to store inventory. And that's a big driver with respect to industrial real estate. And the last driver is the transition from just-in-time inventory to just-in-case inventory.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“That is terrific. Look, there are three forces driving demand for industrial real estate. We talked about e-commerce. The second is this onshoring trend. Hundreds of thousands of jobs are coming back to the United States.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Or the amount of capital you're going to need to spend to renovate the property. There will be properties that are handed back to the lenders. There will be new capital sources who come in. Some of them will get redeveloped to apartment buildings. Some of them will get scraped and torn down. And some of them will be made nicer and attractive to the office tenant going forward. It will be a combination of all these forces at work.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I don't know specifically. Well, New York has taken it on the chin more than most cities as a result of COVID because of the transportation networks and the trains. And so I think New York City is a bit unique across the United States. Not entirely, but it will be a very long grind. You talk about downtown Manhattan. That was 22 years ago. Right. 21 years ago. And so this is a matter of decades. The fundamental transition. And so there'll be a lot of pain to be experienced over a very long period of time as the leases roll over. We're in place, and you're not able to release the space at similar rents.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think it's going to be a very long, slow grind. And some of them, depending upon the zoning, I saw a month or two ago that Silverstein properties in downtown Manhattan was taking an old office building and converting it to apartments. And I think you'll see some of that.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“15 hours a week. If I was still commuting. Between my home and New York City, there's no way I'd be coming in five days a week. And so fundamentally, I think the urban environments with long commutes are more impacted than the suburban environments. And then on top of that, imagine, and let's say Manhattan on Sixth Avenue, the old 1960s white brick buildings, or older buildings. There's going to be a tremendous cost. To retrofit and upgrade these buildings, some of which will make no economic sense.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, at some level, it'll be difficult. It's difficult for people today. I think hybrid work, I wouldn't use remote work, but hybrid work is here to stay. But fundamentally, imagine if this office building was nine foot ceilings, fluorescent lights, no air. Whatever statistics are.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“But there's no doubt that not only today, but in three years from now, it's not going to be 4.1 days per week. Maybe it's 3.3 days a week. Maybe it's 3.6 days a week. But fundamentally, there's less demand. The second point is we are much more in a world of have and have nots with respect to office space. Really? Meaning office needs to be more attractive for your people to want to go to than working out of their bedroom. And therefore, who wants to work in an eight or nine foot ceiling fluorescent light, no air, you know, no common space, no collaborative space? And so you have the best office buildings, the nicest office buildings. Like your office building here”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, look, there is no doubt, and I'll make a number up to prove a point. Let's say before COVID, the average office worker was in the office 4.1 days a week. I'm making that number up.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“On that point, a year ago, this would be a global phenomenon as well as a US phenomenon, the vast majority of investors, when you said what are your most favored asset classes, would have said industrial and multifamily. What are your least favorite asset classes? They probably would have said something like retail and office. If you pose those questions to them today, you would get that same comment. Office has probably fallen further because of the impact of COVID and the way that we're using office space. And it's really the most interesting area of real estate now with respect to discussion, the uncertainty about how companies will use office real estate into the future.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not sure it's a unique opportunity in the marketplace. The marketplace today is still hunting for that bid ask spread. And the marketplace as well, and Crow as well is looking for what new opportunities are becoming available. We're all waiting for, anticipating some amount of distress, for example. That hasn't yet really developed in the marketplace. At the margin, if you were in the real estate debt business a year ago and you accepted a certain return or a certain yield, well, today, those returns and yields are better. But guess what? So is every other fixed income instrument out there? And so the marketplace for real estate investors has not demonstrably changed.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. Well, real estate is an asset class is generally leveraged. Now, not everybody is leveraging real estate, but generally it's leveraged. Most real estate investors are using some amount of debt to acquire their properties. The most core or stable investors might use 25% leverage. The most opportunistic might use 75% or 80% leverage. But simply put, the cost of debt is going up and the attractiveness and availability of debt is going down. And those two things are having an impact on overall asset prices and they're having an impact on overall transaction activity, which has been declining.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It's hard to believe, and I don't have the data off the top of my head, but city by city and building codes are city by city. But you can now build properties 10 and 15 stories tall. And in some markets, even taller, given the strength and durability of the technology underlying the mass timber.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“There is now technology that allows you to build very tall buildings out of compressed and laminated wood. It's a much better carbon footprint, the impact of trees growing versus the impact of producing steel has a profound impact. And so many companies have told their shareholders and society at large that we're going to achieve a carbon net neutral impact by such and such date. One of the ways they can impact that is by the real estate that they occupy. And so whether it's communicating how, in fact, your portfolio is doing or whether it's pursuing a specific building approach to help the investor meet their objectives. Those are all areas of sustainability for us.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. Well, first of all, there is no doubt that investors all around the world are more and more focused on the carbon footprint of their investors. And so their starting point of the discussion is an ability to communicate accurately and effectively what in fact is the carbon footprint of your investment activity because they want to know. Are some investors who are specifically focused on I want to invest in properties specifically. We are building in Frisco, Texas, which is in the Dallas market a mass timber building. What that means is instead of using an office building, instead of using steel,”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I think we often paint with very, very broad brushes, but real estate is, and there are broad brushes that make sense But ultimately, you need to peel the onion back further, and it is a local business, and you need to look at markets and submarkets and the corner of vine and maple and look at these property configurations. Sure.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think it's not how we're going to see. That's how it is separating. But I would layer on another element to the discussion, which is, and then there is the capital markets. There is fund flows. And institutional investors and individual investors have been very focused on industrial multifamily. And not focused on retail with a big R being retail, whether it's food and service or whether it's goods oriented. And so there are opportunities in the food and service retail space because the underlying property fundamentals are strong and the fund flows are diminished leading to less competition for that asset class So that's how we look at, and I look at retail real estate today”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, some of the tenants adjacent to the shopping center who may sell goods slowly over time are being disintermediated by the internet. And over long periods of time, that tendency is being reduced or mitigated. But food and service, and so think about in the neighborhoods in which you live in. Sure. You're going to have a little strip center that's going to have a Starbucks on one end, and it's going to have a subway on the other end, and it's going to have a cupcake store and a Verizon wireless store.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. Well, there's retail and there's retail. And what I mean by that there's retail that's focused on selling goods, whether it's your malls or your power centers. And these have for years been under a duress. And that duress is continuing. But there's other retail where the tenancy is food and service. And so during COVID, for example, grocery anchored shopping centers did particularly well.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I did expect, hmm, I'd imagine the CEOs all over the country are going to start examining their usage of industrial real estate. And maybe leasing is going to soften. I wasn't sure, but you just had to think that the market would cause that to occur. Well, sitting here as of this morning, leasing velocity and industrial across the United States has been as strong as it's ever been. And there's no softening in demand that we've seen. I know we're all anticipating a recession and we can talk about all those things. Good.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, sure. Well, there's no months ago, Amazon had communicated that they were going to slow down their industrial expansion phase and they were going to sublease something in the neighborhood of 30 million square feet. And the markets on those days, they announced it were concerned and the stocks pulled back on the industrial real estate companies. But the United States has 18 billion square feet of industrial real estate. And even though Amazon has been a major player and one of the largest market participants, it's overall market share is very small for the industry writ large. Now, Barry, I did expect when I sat here in January and February and March, and we all saw the capital markets cracking.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the main overseas property. There are a couple other smaller ones, but the signature properties are, again, properties that Trammeller Harlan developed. And there's an emotional aspect to some of them, but they're primarily good financial investments that compound over many years.”
2022-10-07 · Masters in Business · Michael Levy on Real Estate Finance · IDENTIFIED FROM THE TRANSCRIPT · source