CRE Legend Ethan Penner Talks Opportunities at Connect LA – Robert Khodadadian

Connect Los Angeles hosted more than 600 attendees at its one-day event at the InterContinental Hotel in downtown Los Angeles, Wednesday, May 1, as expert panels and special guests spoke of the challenges, successes and future of commercial real estate.

While the six panels kept it lively and drove the conversations that were on the minds of many in attendance, a highlight was a one-on-one interview with Matt Wyman of Cox, Castle & Nicholson and CRE legend Ethan Penner, who offered a moment of reflection and stepping back and saying, “We will get through this, but it’s not going to be easy.”

Penner, who is the founder and managing partner of Mosaic Real Estate, is a recognized pioneer in real estate and finance with a 30-year career marked by filling voids and responding to unseen or poorly understood opportunities. Most noteworthy is the fact that he was the creator of the CMBS market for which he received broad recognition including being named one of the U.S. real estate industry’s 100 icons of the 20th century. He has recently written and published a book, Greatness is a Choice, a chronicle of his life and philosophy.

“It was my parents who taught me that anything that can be done by anyone can be done by me, too. So that sense of life, I could do anything. Why not?”

It was this and an “incredible Jewish foundational education” and studying the Talmud that provided a key foundation of critical thinking for Penner, which he speaks of in his book. In addition, growing up poor was a big factor in his outlook on life. “I grew up poor and I had a single mother and I was very committed to her and making sure she didn’t age in poverty. I had a lot of ambition for financial success,” which he said was connected to keeping his mom out of poverty.

And today, what would those who raised him think? “I’m living the life that they would want me to live and I’m acting and operating as they would want,” Penner said.

Touching on the political climate and the Fed, Penner did not mince his words.

“The Fed determines the rate that the borrower pays. We are so stupid as a country that we raise the rate on ourselves. If you talk to the Uber driver, the bus driver, the homeless person, everybody knows this, right? Except for Jerome Powell. So somehow we’ve got the head of the fed not knowing as much as the Uber driver, the bus driver and homeless person about basic economics, which now prior to the great financial crisis, I was born free. The Fed really was very mildly involved, if at all, in the direction of interest rates. The free market dictates where industries have gone in reaction to what I think might have been correctly perceived as an anarchic moment.”

Penner reflected on the past and the challenges young people are facing after college graduation or entering the CRE workforce. He can see and read their depression on social media. “I can see the comments and I can see they’re naturally depressed. When we were coming out of school we were excited. The world was our oyster. Sure, it was competitive, but it seemed like there was no limit to what we could do. Young people don’t feel that today.”

Penner said he looks at the upside and advises to look at things another way.

“Every system in our society is collapsing at once. It’s like a forest fire. New trees have to grow. So, in the face of every system collapsing, there’s tremendous opportunity to be creative and be part of new systems that will be born in the wake of the destruction. I think it’s an extremely excit ing time, but I don’t think it’s going to be a pleasant or easy time, but I think it will be excit ing.”

Always one to share his experience and helpful advice, especially with those who work for him, Penner makes it a point to remind folks that he learned and grew tremendously during those tough times. He also sees a resurgence of CMBS. “CMBS is likely to grow, over the next decade. I think that if I were a young person in my career, I would be more into those capital markets rather than the regulated financial market.”

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.