This real estate analyst remains an optimist during the Trump era — for now
Long before he became real estate powerhouse CBRE’s head of research for the Americas, Spencer Levy was a young lawyer in New York City. One of his first clients was a real estate developer by the name of Donald Trump.
One day, Levy said during a presentation in Seattle Wednesday, he called up Trump to ask what he thought about a contract clause. Trump volleyed back, asking Levy what he thought. Levy apparently gave the wrong answer, and Trump let him know about it and then hung up. Levy had to meet with Trump the following day at Trump Tower, and he thought he was going to get fired. Instead, there was no lasting damage from the previous day’s conversation.
This example, along with Trump’s decision not to fire a staffer who helped write Melania Trump’s famously plagiarized Republican National Convention speech, shows a different side to Trump than what he displays in the public eye.
“There’s the Donald Trump that everyone sees on the outside, rhetorical flourishes, itchy Twitter finger,” Levy said. “I’m not here to defend his rhetoric for a second. But then there is the Donald Trump on the inside, within his organization, where he is well respected. He empowers his people to do their jobs.”
Spencer Levy, CBRE’s head of research for the Americas. (GeekWire Photo / Nat Levy)
Levy gave a talk to CBRE staffers and clients on Wednesday, and topics ranged from how Trump’s policies will affect the economy, to real estate trends to jobs and more. He said Trump inspires optimism in some and anxiety in others. Talking strictly about his impact on business, Levy said optimists look forward to rolled back regulations and pro-growth policies.
On the flip side, Levy said, some companies with a more progressive bent and a propensity toward importing skilled workers are worried about his immigration policies. Trump signed a series of executive orders this week, some of which are designed to crack down on the H1-B work visa program used by many of the world’s largest tech companies.
Levy said he has heard from some companies about possibly moving significant resources up to Canada because of that country’s more liberal immigration policies.
Trump had the potential to be a destabilizing force for the economy, pulling out of trade deals, starting trade wars with countries like China and immigration restrictions. And while those things could still happen, Trump has blunted his rhetoric somewhat, Levy said.
Levy counts himself on the more optimistic side over the next few years, but the failure to pass a healthcare bill has been a black eye for the administration. Trump has always been a controversial figure since he burst on to the political scene, and his words and actions have led to significant resistance against him. But he has always painted himself as a dealmaker.
Trump has big goals on policy: infrastructure, tax reform, and he hasn’t given up on healthcare either. Levy says failure to pass a significant policy package in the next few months could sour confidence from his supporters as well as the business community.
“If we do not pass some major stimulative policy from Trump soon, I mean in the next six months, that could precipitate another recession,” Levy said. “Why? Not because anything really changed, but sentiment changed, and sentiment is what sparks recession, not necessarily facts.”
Levy hopes Trump creates as many jobs as he promised, but he doesn’t think he will be able to follow through on plans to boost manufacturing employment. Sure, he said, a lot of production could come back to the U.S. But it will be mostly automated.
Automation itself isn’t a huge problem. The big issue is that society has botched the transition from human to robot-oriented manufacturing and setting up those workers for future success.
While Trump policies will certainly effect the economy, Levy said, local rules and regulations are far more impactful on growth than federal ones.
In the real estate industry, Levy said the current cycle could last another two years before a potential downswing comes in 2019. Cycles tend to last seven to nine years, and we are coming toward the end of that time period.
He cited a CBRE report that named Seattle as a top 10 market for jobs and investor confidence. But over the long term, Seattle, and other booming cities like Boston, Austin and others, were not rated as favorably. That’s because many investors think these cities will come back down to earth, while struggling cities will rise up. Levy doesn’t see a big falloff for cities like Seattle for a couple of reasons, the main one being talent.
In the tech industry, and plenty of other industries, the companies go where the best people are. And that continues to be cities like Seattle, San Francisco, Austin, Boston, Washington D.C. and New York. Levy said Seattle has graduated from a secondary market to a “gateway market” in the same grouping with some of the most vibrant cities in the U.S.
Companies are going all out to retain their top people, and delivering things like flexible work hours and spaces, as well as amenities like bars in the office. But Levy said the most important thing a company do is trust their employees.
“Trust is the most important amenity of all,” Levy said. “If you show your workers you trust them, you will attract them, you will retain them and they will be more productive.”