China's 'Wake-up Call' for American Real Estate

"David G. Marshall, CEO of Amerimar Realty in Philadelphia, has made a career of seeking out bitter lemons and turning them into sweet -- and profitable -- lemonade. Through the years, he has taken over distressed properties such as The Rittenhouse in Philadelphia, Pier 39 in San Francisco and Denver Place in Colorado and turned them into successful enterprises. Using this contrarian investment approach, Amerimar has accumulated a portfolio of hotels, offices, apartments and retail centers from New York to California. Marshall recently went to Shanghai as part of the Wharton Fellows program and came to the conclusion that what is happening in Chinese real estate ought to be a wake-up call for the U.S. market. Knowledge@Wharton spoke to Marshall about his visit to China and other issues.

Knowledge@Wharton: Let us begin with your visit to Shanghai. What did you learn about China, and why should that be a wake-up call for the U.S.?

Marshall: China is growing like crazy. Let's just take it from a real estate perspective. My wife and I had the opportunity to go to China in 1985. The tallest building in Shanghai was 19 stories high at that time. You could count bicycles by the jillions and cars by the handful.

In the last 10 years, not the last 22 years, Shanghai has built 2,000 high-rise buildings between 20 and 108 stories high -- one more spectacular than the next. We stayed on the fifty-ninth floor of the JW Marriott, which was the headquarters for our Wharton Fellows Conference. You can look in four directions as far as the eye can see and you see nothing but spectacular high-rises. At night it looks like Las Vegas: All the buildings are lit up, they look like rocket ships going off. It looks like the Fourth of July. It is absolutely incredible what they have accomplished.

And we, on the other hand, are arguing over Sarbanes-Oxley, stem cell research, an archaic tax code, social security and health care -- and I could go on and on. They're all very important issues, but we are paralyzed by these issues and we are not growing. It is reminiscent to me of what probably took place with Great Britain not watching the United States -- when the United States went flying by Great Britain. [China is] going to go flying by us and we're going to wake up one day and say, "Oh my God, look what we missed." That was my take away from China". read more

From Knowledge@Wharton