WEBVTT - Peebles on Expanding Opportunities to Create Wealth 0:00:00.880 --> 0:00:04.520 This is Bloomberg Business Week with Carol Masser and Jason 0:00:04.600 --> 0:00:08.440 Kelly on Bloomberg Radio. So, Jason and I have been 0:00:08.440 --> 0:00:11.240 really looking forward to this next how We've got two 0:00:11.360 --> 0:00:14.200 entrepreneurs where it's safe to say the odds were stacked 0:00:14.240 --> 0:00:16.440 against both. One of the minority one is a woman. 0:00:16.560 --> 0:00:19.160 First up, though, we want to bring in Don Peebles. 0:00:19.160 --> 0:00:21.960 He's founder, chairman and CEO of the Peoples Corporation. It's 0:00:22.000 --> 0:00:26.040 a privately held national real estate investment and development company, 0:00:26.120 --> 0:00:30.840 a multibillion dollar portfolio. They've got projects in New York, Philly, Boston, 0:00:31.760 --> 0:00:35.360 d c, um Miammi, San Francisco, also l A. He 0:00:35.400 --> 0:00:39.239 also served on the National Finance Committee Committee excuse me 0:00:39.280 --> 0:00:42.800 a President Obama and has really done a lot, he 0:00:42.920 --> 0:00:46.000 joins us on the phone in Coral Gables, Florida. Done 0:00:46.159 --> 0:00:48.320 so nice to have you here with us. Welcome to 0:00:48.320 --> 0:00:52.280 Bloomberg Radio. Thank you, good to be here. There's so many, 0:00:52.320 --> 0:00:54.240 so many different places I know Jason and I want 0:00:54.240 --> 0:00:56.520 to go. I do want to start with though your 0:00:56.600 --> 0:01:00.200 vattage point. In the real estate industry, UM one has 0:01:00.200 --> 0:01:02.840 certainly felt the impact of the pandemic. We've had a 0:01:02.840 --> 0:01:06.440 lot of conversations about how real estate uses and demands 0:01:06.480 --> 0:01:09.320 may change as a result of the crisis. What is 0:01:09.360 --> 0:01:12.080 the impact from what you see the longer term maybe 0:01:12.080 --> 0:01:17.120 short term and longer term impacts. Well, short short term impact, 0:01:17.160 --> 0:01:19.520 I think we're seeing it now. There's been a more 0:01:19.560 --> 0:01:22.240 of an exodus out of the cities UM and more 0:01:22.319 --> 0:01:26.399 so into the suburban markets. And then UM more people 0:01:26.440 --> 0:01:31.319 are relocating to places like Florida for example, UH in 0:01:31.400 --> 0:01:34.080 preparation for the winner. But I think that you'll see 0:01:34.840 --> 0:01:40.399 UM and a greater UM you know, stabilization as we 0:01:40.480 --> 0:01:43.039 get through this winter. I mean, the cities are not 0:01:43.160 --> 0:01:47.960 dead New York City, while you know it's it's limited 0:01:47.960 --> 0:01:51.559 occupancy right now in terms of office space, UM. Most 0:01:51.600 --> 0:01:55.000 restaurants are closed, in other businesses are closed. UM. So 0:01:55.400 --> 0:01:59.840 there is a a short term decline because tennis are 0:02:00.000 --> 0:02:02.960 able to pay their rent and the office tenants who 0:02:03.040 --> 0:02:05.760 generate a lot of activity and the marketplace the office 0:02:05.760 --> 0:02:08.080 workers are not there either. But I think that short 0:02:08.200 --> 0:02:12.400 term UM, I do think that the UM pandemic has 0:02:12.440 --> 0:02:16.080 structurally changed how we will consume office space as we 0:02:16.160 --> 0:02:19.440 go forward. I think that companies around the country and 0:02:19.440 --> 0:02:23.160 around the globe, especially here in the US are reevaluating 0:02:23.760 --> 0:02:28.160 how they deal with placing their employees, how much they're 0:02:28.160 --> 0:02:32.000 going to rely upon remote working, which has proven for 0:02:32.400 --> 0:02:36.399 the typical office workers to be much more effective than 0:02:36.720 --> 0:02:39.880 UM most companies thought. And so I think that that 0:02:39.960 --> 0:02:44.720 will be a structural shift in UM. The officis long term. 0:02:45.040 --> 0:02:49.919 I think that UM most retail UM has changed forever. 0:02:50.000 --> 0:02:54.440 But that was a pre pandemic technology. It had disrupted 0:02:54.480 --> 0:02:58.480 retail considerably. And so when you think about sort of 0:02:58.520 --> 0:03:04.640 the reorganized zation, the rethinking of offices done, you know, 0:03:04.800 --> 0:03:08.120 what does that mean? Does does the pricing change? Does 0:03:08.240 --> 0:03:12.840 the relationship between the owner and the tenant change? Does 0:03:13.760 --> 0:03:18.280 what gets developed change? I just wonder sort of thinking 0:03:18.520 --> 0:03:22.160 through the mechanics and and sort of playing that out 0:03:22.160 --> 0:03:25.400 what it looks like. Well, I think that, first of all, 0:03:25.440 --> 0:03:28.080 I think that's the easy one. Is what gets developed 0:03:28.320 --> 0:03:32.240 definitely changes. It will what gets developed going forward will 0:03:32.320 --> 0:03:35.840 change in terms of how the office space will be 0:03:35.920 --> 0:03:41.240 configured going forward, and how protocols will be put in place, UH, 0:03:41.280 --> 0:03:44.800 in terms of how people enter buildings, how we let 0:03:44.920 --> 0:03:48.640 people entering the buildings, in terms of health and UH 0:03:48.640 --> 0:03:52.760 and even once this pandemic is behind us, Uh, the 0:03:52.840 --> 0:03:57.920 new buildings will be better designed and better built to 0:03:58.520 --> 0:04:02.160 address a future a potential pandemic as well. I think 0:04:02.200 --> 0:04:08.520 also the close proximity of coworking and how most companies 0:04:08.560 --> 0:04:11.480 were shifting towards over the floor plants. I think that changes. 0:04:11.920 --> 0:04:14.080 Isn't that kind of sorry to interrupt you, but isn't 0:04:14.080 --> 0:04:17.039 that kind of amazing because that really felt like something 0:04:17.279 --> 0:04:19.760 And listen, you know us, I mean, you know Bloomberg, 0:04:19.839 --> 0:04:22.520 like we were all about the open We still large 0:04:22.560 --> 0:04:25.000 it to a large extent because nobody's really here, But 0:04:25.080 --> 0:04:28.280 I mean that seemed like a trend that was just 0:04:28.520 --> 0:04:34.320 going into going into the future, un unabated in many ways. Yeah, 0:04:34.320 --> 0:04:36.760 I mean Bloomberg was very innovative. When you all built 0:04:36.839 --> 0:04:41.160 your your officers um um um and on the East 0:04:41.200 --> 0:04:44.800 Side and the old Alexander site. What happened there is 0:04:44.839 --> 0:04:49.120 you all created a almost a live and work environment 0:04:49.160 --> 0:04:52.799 to a degree because you've got the open cafeteria. Everything 0:04:52.920 --> 0:04:56.080 was open um, even the waiting areas and so forth 0:04:56.080 --> 0:04:58.880 where visitors were open, and your studios were pretty visible 0:04:58.880 --> 0:05:02.120 and open as well. So I think that that configuration 0:05:02.240 --> 0:05:05.960 is going to change to some degree, especially um, how 0:05:06.360 --> 0:05:09.360 how people work at their desks. And also I think 0:05:09.440 --> 0:05:11.280 GONEA is going to be the days, even with the 0:05:11.320 --> 0:05:15.920 law firms and the like, where each individual has their 0:05:15.960 --> 0:05:19.640 own office for this specific workspace. I think that that 0:05:19.680 --> 0:05:23.239 will change because you'll see a lot more remote working 0:05:23.520 --> 0:05:26.800 and also those who travel to other locations will not 0:05:26.920 --> 0:05:29.640 need a fixed office. So I think the fixed office 0:05:30.160 --> 0:05:34.800 um UH or fifth fixed workspace has changed, will change. 0:05:34.839 --> 0:05:38.920 And I think also you'll see more collaborative spaces that 0:05:39.040 --> 0:05:43.120 have some form of social distancing potential and for the 0:05:43.160 --> 0:05:46.480 immediate use, you'll see that in place now. I mean 0:05:46.520 --> 0:05:48.240 but you, I mean you can really you can see 0:05:48.279 --> 0:05:50.200 that across the board. I happen to be, by the way, 0:05:50.240 --> 0:05:52.200 I'm not implored. I happen to be in zach Harbor. 0:05:52.360 --> 0:05:55.400 But I'm in Manhattan last week, and and and and 0:05:55.480 --> 0:06:00.440 what you're seeing in in UM office spaces that are 0:06:00.520 --> 0:06:03.440 being utilized and very few people are there, and I 0:06:03.440 --> 0:06:04.839 think that's going to take a lot of time for 0:06:04.880 --> 0:06:07.080 people to come back, and and buildings are going to 0:06:07.160 --> 0:06:10.080 have to employers, they're gonna have to tell people by 0:06:10.160 --> 0:06:13.520 action UM that it's safe to come back. So done. 0:06:14.080 --> 0:06:16.840 Let's talk about the wealth gap, because it has been 0:06:16.839 --> 0:06:20.920 a subject that we have I think taken much more 0:06:21.000 --> 0:06:24.920 seriously candidly over the past couple of months, as we've 0:06:24.960 --> 0:06:30.560 really started to I hope embrace this reckoning that we're 0:06:30.600 --> 0:06:36.440 seeing around racial inequality and being Bloomberg and Business Week, 0:06:36.880 --> 0:06:40.239 we follow the money and the wealth gap is vast. 0:06:40.360 --> 0:06:42.240 I don't have to tell you what do we do 0:06:42.320 --> 0:06:46.760 about it? Well, I think we've got to widen the opportunity. 0:06:47.080 --> 0:06:52.440 I think that there's no talent is discriminated, distribintate and discriminately, 0:06:53.000 --> 0:06:57.560 and uh, you know, opportunity is discribuinated on a discriminatory basis, 0:06:57.839 --> 0:07:00.200 and I don't. I think that we've got to look 0:07:00.279 --> 0:07:08.280 at expanding access to capital, expanding opportunities in every industry 0:07:08.320 --> 0:07:13.160 across the board, and be mindful that we as business 0:07:13.240 --> 0:07:17.520 owners and entrepreneurs and CEO have to take affirmative steps 0:07:17.600 --> 0:07:22.600 and providing fair access to career and economic opportunities to 0:07:22.760 --> 0:07:28.160 minorities and women because both are severely underrepresented in every 0:07:28.200 --> 0:07:31.760 industry of any consequence in this country. You know, don 0:07:31.760 --> 0:07:34.600 the you know, our team here at Bloomberg did a 0:07:34.600 --> 0:07:39.840 story about Silicon Black Silicon Valley entrepreneurs venture capitalists and 0:07:39.960 --> 0:07:44.760 how they had reached certainly success in their lives and 0:07:44.960 --> 0:07:47.200 you know, in terms of Silicon Valley, but they were 0:07:47.240 --> 0:07:50.480 even having trouble being able to support other minority owned 0:07:50.480 --> 0:07:54.000 businesses at their own firms. We're finding it difficult to 0:07:54.080 --> 0:07:57.040 get others to get on board with them, and so 0:07:57.160 --> 0:08:02.440 I wonder, what's the trick here, how do we interess Well, 0:08:02.480 --> 0:08:04.600 I think that we have to. I mean, my industry 0:08:04.680 --> 0:08:07.760 is one that I think is has an easy remedy 0:08:07.800 --> 0:08:11.040 to it. It's um. You know, the real estate development 0:08:11.040 --> 0:08:14.320 business is a low barrier to entry industry. You can 0:08:14.360 --> 0:08:19.040 start off from any perspective UM as an entrepreneur and 0:08:19.080 --> 0:08:21.960 go into real estate development. Doesn't require any kind of 0:08:22.040 --> 0:08:26.280 license of specialized skill, requires some talent and access to capital. 0:08:26.680 --> 0:08:30.440 And the capital that funds real estated mainly through private 0:08:30.440 --> 0:08:36.360 equity and private equity. Biggest investors are public employee pension systems, 0:08:36.520 --> 0:08:39.880 and so for example, there's about seventy trillion dollars in 0:08:39.960 --> 0:08:42.959 venture capital and private equity right now, and about one 0:08:42.960 --> 0:08:47.080 point three percent of that money is deployed to businesses 0:08:47.400 --> 0:08:51.360 owned or run by minority to women combined. And yet 0:08:51.679 --> 0:08:55.520 a significant portion of the contributors to the public pension 0:08:55.600 --> 0:08:59.679 systems of workers who whose money is being invested are minorities, 0:08:59.679 --> 0:09:02.600 and when me and so if we can have fair 0:09:02.720 --> 0:09:07.920 access to that capital, and those investors tell the allocators 0:09:07.920 --> 0:09:11.080 of capital that they want to see their capital deployed 0:09:11.400 --> 0:09:14.320 in a more diverse manner. Prudently by the way, but 0:09:14.520 --> 0:09:18.120 more diverse matter. Um, there is no shortage right now 0:09:18.400 --> 0:09:22.080 of capital in the marketplace. There's a shortage of where 0:09:22.120 --> 0:09:24.320 to deploy the capital. That's why we're seeing this from 0:09:24.360 --> 0:09:27.800 the market reactive way. It is um and so I 0:09:27.840 --> 0:09:31.040 think the other aspects it's important is people have to 0:09:31.120 --> 0:09:34.360 understand we're not we don't in order to bring equality. 0:09:34.400 --> 0:09:39.400 It's not about redistributing wealth, redistributing opportunities. It just expanding 0:09:39.440 --> 0:09:44.959 it and expanding opportunities to create wealth. And so don 0:09:45.480 --> 0:09:49.200 how do those institutional investors. I agree with everything you're saying, 0:09:49.240 --> 0:09:52.960 and you're echoing something that John Rodgers said on this 0:09:53.040 --> 0:09:57.839 program about the institutional investors and especially the public pension funds, 0:09:57.880 --> 0:10:02.320 which candidly they've gotten legion about some other issues. You know, 0:10:02.480 --> 0:10:06.280 sometimes it's around gun control and other things where they've 0:10:06.320 --> 0:10:08.640 essentially said, look, I'm not going to invest in certain 0:10:08.679 --> 0:10:10.760 sectors or I'm not going to invest in certain managers 0:10:10.840 --> 0:10:14.000 unless they meet these certain criteria. E. S G has 0:10:14.040 --> 0:10:16.840 been an area, especially around the environment and climate where 0:10:16.840 --> 0:10:19.440 they've done that. Why haven't they done this yet in 0:10:19.480 --> 0:10:24.040 your estimation? Well, I think that in part because they 0:10:24.240 --> 0:10:28.760 are missing misinterpreting their role in studuciaries. I think that 0:10:29.080 --> 0:10:33.280 the idea to pick the most qualified, the best, and 0:10:33.600 --> 0:10:38.480 the least risky, it's got the firm that's been around longest. 0:10:38.520 --> 0:10:41.679 And so if you're going to have an aversion to first, second, 0:10:41.760 --> 0:10:45.160 third time funds, then it's going to be very difficult 0:10:45.480 --> 0:10:48.200 for you to create an environment where there will be 0:10:48.240 --> 0:10:51.599 more minority and women manage funds. So they've got to 0:10:51.880 --> 0:10:57.400 be willing to um make strategic, prudent investments and utilizing 0:10:57.400 --> 0:11:01.839 a different criteria, one that doesn't say you were established firms. 0:11:01.840 --> 0:11:04.920 And by the way, it's just as hard for a 0:11:04.960 --> 0:11:09.360 white male who starts off with no family money to 0:11:09.480 --> 0:11:13.840 go into this space also, right, So, because the system 0:11:14.000 --> 0:11:18.760 favors the established, larger firms and UH, and so I 0:11:18.800 --> 0:11:21.760 think they've got to change how that capital is deployed 0:11:21.800 --> 0:11:25.800 by how they evaluate where they're going to deploy with right, Well, 0:11:25.840 --> 0:11:27.720 we could talk to you all day. This is fascinating. 0:11:27.720 --> 0:11:30.400 As you can tell, we are pretty into this topic. 0:11:30.480 --> 0:11:32.960 And and I couldn't agree with you more. I mean 0:11:33.679 --> 0:11:36.360 I have said on this program and elsewhere that you know, 0:11:36.480 --> 0:11:39.040 nobody had a public pension fund ever got fired for 0:11:39.080 --> 0:11:42.000 giving more money to Blackstone or KKR, Carlisle. I mean, 0:11:42.000 --> 0:11:44.679 it's just the system is built in a certain way 0:11:44.720 --> 0:11:47.240 and it needs to be rethought. John Peoples, thank you 0:11:47.280 --> 0:11:50.000 so much, Chairman and CEO of the People's Corporation joining 0:11:50.040 --> 0:11:53.120 us on the phone from Long Island. Really thoughtful, um 0:11:53.200 --> 0:11:56.040 and constructive in many ways. And he's exactly right that 0:11:56.080 --> 0:11:57.480 the institutional money has to change.