Hines CEO talks coronavirus, Opportunity Zones and WeWork

The Houston-based real estate firm is pulling out of the March MIPIM property conference in Cannes due to coronavirus

Laura Hines-Pierce and Jeff Hines
Laura Hines-Pierce and Jeff Hines

Coronavirus and its impact on the real estate industry were top of mind at the University of Miami’s Real Estate Impact Conference.

During a session on development opportunities with Hines executives, Hines President and CEO Jeff Hines said coronavirus is a “major, major concern at this point.”

The Houston-based real estate investment and development firm, with more than $124 billion in assets under management and 148 projects underway, is pulling out of the MIPIM property conference in Cannes, France. Blackstone Group, Cushman & Wakefield, Savills, Knight Frank, PGIM Real Estate and other big firms have also said they will not be sending representatives to the commercial real estate conference slated to begin March 10.

Hines referred to the University of Miami event, held at the Four Seasons Miami on Friday, saying that if it were happening 30 days from now, it might be canceled.

“Milan has shut down. Everyone is working from home. People are not flying to that office anymore,” Hines said. “People are worried about getting stuck.”

Attendees at the Miami event said that some deals were being canceled due to coronavirus. Matt Cherwin, treasurer and chief investment officer of J.P. Morgan Chase, said coronavirus has led to “proactive shutdowns.”

“You are by definition removing economic activity and it’s going to be more and more the week after,” he said in a keynote address.

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In a wide-ranging conversation that covered Hines’ launch in 1957, its expansion into mixed-use development, its diversity and inclusion efforts, and more, its CEO also offered his opinion on the Opportunity Zones program, calling it “really bad public policy.”

“Anything you do to artificially affect the market forces for real estate is sort of a problem,” Hines said. While the company has projects in Opportunity Zones, “we do not go and look for Opportunity Zone deals,” he said.

He also considers rent control a bad public policy decision, adding that ”there is a real chance in some markets that it will be enacted in some shape or form.”

When the conversation shifted to WeWork, Alfonso Munk, chief investment officer of the Americas for Hines, said that the company has roughly 15 leases with WeWork.

Hines said that while WeWork obviously did a number of things wrong, “they’ve really demonstrated that that [large] tenant group really values flexibility.” Hines is starting to incorporate its own flexible workspace concept into its buildings. Its co-working brand, called Hines Squared, is operated by Industrious.

“Flex space,” said Laura Hines-Pierce, senior managing director, office of the CEO, “is going to become a required amenity in office spaces.”

Correction: A prior version of this story said Hines self-managed its co-working brand, Hines Squared. The space is operated by Industrious.