San Francisco Real Estate Revival: Lisa Knee at EisnerAmper's West Coast Summit

Paul Sweeney: We're live here at the broadcasting live from the Eisner Amper West Coast Real Estate Summit in San Francisco. Scarlet, the last time I was here, was it 2019?

Scarlet Fu: Pre-pandemic.

Paul Sweeney: Pre-pandemic. I'm a huge San Francisco fan. As a TMT banker and analyst, I've been coming out here for 35 years. This is one of my favorite towns in the country. Great town. But man, it got just rocked by the pandemic.

Scarlet Fu: It definitely did.

Paul Sweeney: But I'll tell you what, I mean, it is back in spades, I'll tell you here today. I mean, and you know, there's a new mayor here doing and getting some really good feedback. But I'll tell you, it's really been AI has, I think, been a savior for this city.

Scarlet Fu: You walk around the city, and it's populated. There are people walking around, they're doing their things, they're meeting up. That feels very different from the early days right after the pandemic when it was like a ghost town.

Paul Sweeney: Yeah, so it's just great to see. It's a great U.S. city. Lisa Knee joins us here, Managing Partner at EisnerAmper. She covers the real estate business for EisnerAmper. Lisa, again, you and I were here in 2019. Talk to us about how you guys at EisnerAmper, as you think about the real estate practice, talk to us about San Francisco. What's your San Francisco call here?

Lisa Knee: So we were really excited to be able to bring this event back. So happy to have Bloomberg and back to doing it with us. And it was always a great vibe when we were here, whether it was the tech center or the people in that thing. And so, we had come back every year since after COVID, waiting for the ability to have San Francisco come back, and we decided it's back. And absolutely for all the reasons that you said, whether it's part of the mayor getting things done or AI and venture capital, this is where things are happening. And so now to all of a sudden see office space being occupied and having people there and having that lifeline, what a great way to have and host an event talking about real estate and AI in the city where all of it happened. And so agree with you more and couldn't be happier to have that vibe back here in San Francisco. Important, very important for us as a firm.

Scarlet Fu: Yeah, it's exciting to be here because you really feel the energy coursing through everyone. When we talk about AI in real estate, for years, it's been data centers, AI data centers, data centers, real estate. How else is AI affecting the real estate industry right now beyond data centers?

Lisa Knee: Well, so let's talk beyond data centers, which is what's fueling everything for AI. But when we look at real estate as a sector, they've always been a little bit lag in adopting technology. And so to have to bring AI into all of your classes of how you're viewing and using it is a little different. So when you talk about office, you're still going to have that hybrid approach and how you bring AI in, whether it's from the workforce or from how you're managing your space. The same thing with residential, that tenant experience is being fueled by AI. How quickly I can speak to my managing agent now through use of AI? When you're looking at deals, how am I looking at it? So it's helpful with the due diligence process, but it's never going to be taking away the actual, does the math still work on a project? And looking at each sector and seeing, how am I going to adopt and adapt using AI, keeping that human element still in place, but where am I using it as a tool? Whether it's looking at operating expenses, lease abstraction, underwriting models, how do I use that as a tool to elevate and enhance real estate? And so it's time for people to adopt, they can't sit back on the technology the way that it had been historically in the past.

Paul Sweeney: Step back, just look at real estate holistically. I got 30-year mortgage rates back up to 6.5%. What's your real estate call here? What's the message to your clients here at this conference?

Lisa Knee: So again, it's the same call that it's been for the last 7 years, is that each asset class is going to favor differently on whether these deals are penciling out and where you are in that cycle of where the mortgage rates are, like where you are in terms of needing to refinance out or pay off your loan. And it's always looking at that project and doing the due diligence. So there's some deals that should have never mapped out. They did because of low interest rates. And so it's really having that information to be able to look at the deal, make that smart investor decision and show the transparency. Those fundamentals haven't switched. And which darlings are you going to find within that asset class? So we always walk when we're in New York, you guys are always pointing out some of the empty retail that's there. Retail is back, and it depends on the type of retail of where you are. We look around San Francisco, retail needs a little bit more of a surgence here. That's probably the one sector that's a little bit lacking. Multifamily here is booming, as is office. Retail needs that little sweetheart of where it is. But when you look at retail across the country and it's high-end retail, doing great. Same thing with hospitality. The hotel rooms, I don't know if you noticed here, couldn't get a room.

Scarlet Fu: Couldn't get a room. And that kind of is the case across a lot of the big cities now. When you look at the different aspects of real estate and AI, what part, which kinds of cities are also getting us supercharge from AI? San Francisco, obviously, and we're here right now, but where else do you see this really taking shape?

Lisa Knee: So there's gonna be a trickle down from your San Francisco, New York, Boston, Chicago, those big cities are absolutely gonna see it. But now with the invention of this, some of those Midwestern and not just the Sunbelt cities, but a Dallas-Fort Worth. Going to really start seeing a lot of activity happening there. We already have. It's always been something that people can't stop talking about. Maybe we'll do our next conference there. But there's definitely a lot of buzz with Dallas for the right thing. There's land, they've got infrastructure, there's a lot of smart technical people there, and technology companies are moving, and let's not kid ourselves it's a tax-favorable state. So all those factors seem to line up for those types of cities.

Paul Sweeney: Residential real estate, people have been telling me for years that we have a that were underbuilt in residential. I don't know how we got there. I don't know how that happened. Talk to us about residential and building and that type of thing. Where are we?

Lisa Knee: So it happened in 2001 when they stopped building all the homes and looking at the census tracts, we never really caught up to where we were. So that's where we have that affordable housing crisis and certainly in the single-family homes. And looking at the life cycle, certainly if someone like myself, I'm an empty nester, I should be ready to move on. I like where this is going. Thank you.

Paul Sweeney: I'm an empty nester.

Lisa Knee: So when we look at that and we look at our mortgage rates and replacement, where are we replacing that house too? And so where are we building those types of opportunities of where we can start moving for that? And the affordability of that single home user just isn't there yet with the housing. And One Big Beautiful Bill did have some provisions in there to help encourage housing, but it's not enough quick enough for the shortage that we started in 2001.

Scarlet Fu: Did multifamily homes pick up some of that slack then?

Lisa Knee: So multifamily have and it depends again in the city. Affordable housing has, but there's that workforce, the in between what affordable housing and the fair market value housing is really where we need it for those workforce skilled workers. That's where the housing needs to be built more, and we need more excitement around that as well, and more policies for that.

Scarlet Fu: I feel like in places like China, if you need housing, it can get done in like 6 months. How long does it take to get that done here? Like very quickly.

Lisa Knee: Each city is different. That's why they have NIMBYism.

Scarlet Fu: The longest and the shortest.

Lisa Knee: Yeah. Every city has its own.

Paul Sweeney: Yep. I don't. It's just that's what they say. And that's one of the things that I hear from real estate people. If you didn't get the permitting easier and the prices easier, we could deal with this.

Scarlet Fu: We could move it on, right?

Paul Sweeney: A little bit quicker. Yeah. Lisa, thanks so much for joining us. having me. Lisa Knee, Managing Partner, Head of Real Estate at EisnerAmper. So I'm an empty nester, but I'm empty nesting in the Jersey Shore.

Scarlet Fu: Well, yeah, that was a very deliberate decision there.

Paul Sweeney: Yeah, I'm not doing the Florida thing. Come on, you've got to be kidding me.

Scarlet Fu: I like you being near the center of gravity, New York City.

Paul Sweeney: You've got to be near the city.