Notes from the ULI Fall Meeting #1

Although I wasn't able to make Donald Bren's appearance at the ULI Fall Meeting in Los Angeles, the OC Register's Jon Lansner not only reviews this interview, but managed to snag a separate one-on-one interview with Bren at his Newport Beach offices:

It's no secret that construction is in a horrific slump nationwide. But look around Bren's land holdings and you'll see a rarity: extensive building of new homes, apartments – and even an office tower at Fashion Island.

This activity isn't any wild bet. It's largely the result of Bren's basic business mantra: "We can't predict, but we can plan."

He's leveraged the long-running homebuying appeal of Irvine – plus tax incentives for buyers in 2009 and 2010 – to get an early jump on a new homes rebound, selling 1,722 residences in north Irvine since the start of 2010. That's almost triple the budgeted pace.

His extensive apartment portfolio is nearly full with tenants, so he's aggressively adding new complexes in Irvine – plus in Silicon Valley. And he's constructing a new office tower around the bend from Irvine Co. headquarters only after he signed a world-class tenant to occupy the building: money management giant Pimco.

But Bren admits his overall business hasn't grown this year as fast as hoped. Rentals of his office space, for example, may be on the upswing – but the rents tenants will pay aren't acting in tandem. Then again, shopping increases at his malls are a pleasant surprise...

Bren notes that geography tells one a lot about economic opportunity these days. Especially, when he speaks of what he calls "two Californias."

His analysis essentially divides the state, down the middle, west to east. (He mentions this confused East Coast financial types, who tend to think of north-south divides. And it bemuses Bren that major financial players have yet to figure out a state that Bren boasts has the eighth largest economy in the world.)

Bren's "two Californias" comprise a reviving, even "vibrant" collection of coastal metropolitan areas – with 100,000 jobs added in a year, by his math. That's in harsh contrast to California's inland areas that are "devastated, maybe as bad as Nevada."

The state hot spot, in Bren's eyes, is clearly Silicon Valley. There, he says, some of this era's greatest artists – and Bren is a student of art – are creating innovative new products and services. Not to mention creating jobs and a thriving regional economy.

The industrial art discussion leads to brief talk about the late Steve Jobs of Apple fame. Bren says he'll soon be diving into a new biography of the technology visionary, part of what he's said is a lifelong pursuit of understanding other business giants' wisdom.

As for the state as whole, Bren's a touch optimistic, saying the trend line is "positive ... barely." California's economy, "has been jolted," Bren says, and clearly the recovery is at a pace "not what we're used to."

Click here for the entire article, which also includes videos of Bren's interviews.