MIPIM 2023’s Mantra: ‘Wait and See’

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A struggling office market, an inability to raise debt, war in Ukraine, energy crises, constantly rising interest rates and a few bank collapses made it fairly easy to find the overarching theme of the MIPIM 2023 convention in Cannes, France: “Wait and see.” 

That’s how Alex Lukesh, the head of Madison International Realty’s London office, summed up the mood of the annual gathering of thousands of commercial real estate professionals at the Palais des Festival de Cannes

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Lukesh’s summation was not rare. Some version of “wait and see” was repeated in panels and conversations around Cannes this week as the real estate industry tries to get a full sense of just what the next year looks like and if the industry’s in store for another black swan moment like the collapse of Silicon Valley Bank.

“Nobody has a clear sense of what their balance sheet looks like,” said Shawn Lese, the chief investment officer for Nuveen Real Estate in America, “or what’s going to happen with interest rates.”

Lese said his firm has been waiting for interest rates to level off — which isn’t expected to happen even with the Silicon Valley Bank failing — before deploying capital, and Nuveen isn’t the only one.

“We’re all adjusting to really high interest rates,” said Steve McCarthy, the head of North America for investment firm AXA. “Only folks who have to sell are selling.”

Henning Koch, the CEO of Commerz Real, agreed on the overall theme of the convention, but put it a bit more bluntly for his European compatriots compared to the U.S. real estate players.

“People are still in a wait and hope mode,” Koch said. “Everybody is still hoping that the party goes on again and the music goes on, but I think we will have a quite tough time in front of us.

“That’s the nice thing in the United States — and in the U.K. as well – you have people that are pretty radical and accepting, ‘O.K., there’s a crisis, we need to correct the prices.’ They do so and go on,” he added. “But in Europe, most of the markets and people, they have the culture of waiting and hoping and calming down a little bit, and then it takes much, much longer [to recover].”

But for some Americans at the convention, the hopeful mood of the Europeans was a welcome break from the doom and gloom becoming common when discussing real estate back home.

“It’s more optimistic than I would have imagined,” said Aaron Block, the co-founder of venture capital firm MetaProp. “I think we can be a little myopic and a little more down than folks seem here. I hear a lot more about opportunities, I hear a lot more about business lines and growth relative to a lot of what I hear at home.

But it’s refreshing,” Block added. “Maybe it’s spring, maybe it’s sunshine, maybe it’s meeting in person, but there’s something energetic and optimistic here.”

The Americans are coming

More than 23,000 real estate folks from more than 90 countries descended on the streets of Cannes — passing by myriad movie star pictures on every construction fence in the city — and MIPIM, the organization behind the convention, has tried to boost its American contingency.

“For the first time we created a U.S. delegation that is discovering MIPIM and discovering how we make business here,” Nicolas Kozubek, the managing director of MIPIM, said during his keynote.

The event featured several panel and roundtable discussions focused on the U.S. market, along with a keynote speech from the New York City Economic Development chief operating officer Melissa Román Burch, and nearly 500 participants from the U.S. showed up, according to MIPIM’s website. MIPIM also rebranded and expanded its North American flagship event, MIPIM Propel, to become more like its European counterpart in focus and reach.

But major brokerages including CBRE and Cushman & Wakefield did not send any U.S. participants, instead relying on their European colleagues who had a massive presence at the convention. The brokerages declined to say why they didn’t send people from the States to the convention, but past attendees told CO the long, multiple flights and Euro-centric nature of the conventions was the reason they’ve soured on coming. 

The ones who did show up said the convention provided valuable face-to-face time with people they normally wouldn’t get to see stateside — and would have trouble making Zoom meetings with because of the time differences — in a super-charged timeframe.

“My practice is becoming increasingly cross-border,” said Ann Gray, the CEO of Gray Real Estate Advisors and president of the Royal Institution of Chartered Surveyors, who attended MIPIM for the first time this year. “We’ve got 134,000 members all over the planet, so for me to be able to meet with them and hear what their concerns are in one location is really valuable.”

Others said it was good to get in front of their foreign investors who convene at the event and hear their concerns, in person, about the market and what to invest in next.

And Elliott Sparsis, the head of U.K. operations for U.S.-based coworking company Convene, said the desire to get off screens and meet in person was a huge driver of Cannes’ attendance numbers, and a major theme he saw in the convention.

“Physical is back,” Sparsis said. “You can’t replicate that virtually.”

Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.