Walker Webcast: CEOs of EQR, BXP See Rebound for Urban Centers
They’re the CEOs of two of the largest and highest-profile REITs in their property sectors, each operating in both urban and suburban settings across multiple regions of the U.S. What Equity Residential’s (EQR) Mark Parrell and Boston Properties’ (BXP) Owen Thomas also have in common is a belief that CBDs will rebound from the pandemic.
More to the point, a rebound is a must. “We’ve got to get people coming back to the office and coming back to big cities in order for the economy to fully recover,” Thomas said on the latest Walker Webcast. He joined the webcast from his office in Midtown Manhattan, to which he has commuted daily since June.
Thomas said that in the three markets where BXP keeps track of occupant traffic via elevator turnstiles—New York, Boston and San Francisco—only the New York properties are seeing more than 10% daily building occupancy, although the portfolio overall was better than 90% leased as of the third quarter.
Asked by Walker & Dunlop CEO Willy Walker how long it would take before those building occupancies returned to historic norms, Thomas projected a normal environment by next summer. Although the recent news on the COVID-19 vaccine front has been highly encouraging, rolling out the vaccine or vaccines may take months.
“It’s all about the virus” when it comes to establishing a timeline for returning to the office, Thomas said.
Parrell took the long-term view when asked whether he’s concerned about urban centers. Gateway cities like New York have been on the map for 400 years “and have been resilient,” he said. New York in particular has seen two world wars, the Great Depression and the Great Recession, 9/11—and other pandemics.
To help that resiliency along, though, “Good leadership is required” from both the public and private sectors, Parrell said. “Once the city is energized, then our renters return.”
The current economic environment is likely to see EQR diversifying from its focus on these gateway cities, Parrell said. However, he added, “There isn’t a risk-free apartment market. You go into Texas and you see a ton of supply.”
Replays of the Dec. 2 webcast are available by clicking here and on Walker & Dunlop’s recently launched Driven by Insight podcast series.
Pictured: 777 6th Ave. in Manhattan. Photo courtesy of Equity Residential.
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- ◦Economy