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Part 2: Vinik, Wood talk real estate and the impacts of inflation

Veronica Brezina

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Tampa Bay Lightning owner Jeff Vinik (left) and ARK Invest founder and CEO Cathie Wood have a fireside chat at the ULI conference in Tampa. Photos: B2 Communications.

Business icons Jeff Vinik and Cathie Wood shared their insights into the global challenges Tampa Bay is combatting and how the region is meeting the demands of today’s market.

Vinik, owner of the Tampa Bay Lightning and visionary behind Water Street Tampa, alongside Wood, who recently uprooted her ARK Invest New York firm to St. Pete, discussed the hot button topics during the ULI Tampa Bay’s signature 2022 Trends in Real Estate Conference on Tuesday at Armature Works. 

Here’s a highlight of the insights they provided. This is Part 2 of a two-part series. Click here for Part 1

Tampa Bay Lightning owner Jeff Vinik and ARK Invest founder Cathie Wood at the ULI conference. Photo provided.

On real estate

Vinik: “Rents are higher obviously than when we planned these projects, the costs are a lot higher also in the general inflation that we’ve seen. Affordable housing is a high issue for the country but specifically, the Tampa Bay area, and we’re not immune from it at the Water Street District,” Vinik told the St. Pete Catalyst during the event. 

Vinik has wrapped up Phase 1 of the phased $3.5 billion Water Street Tampa development. The first phase consists of residential towers, an office tower, a Publix GreenWise Market and a JW Marriot hotel. Vinik said he is preparing to enter the next phase. 

“We already have different price points, but we want to make them wider in our Phase 2,” he said, regarding future residential units. Vinik also said he is entirely focused on those 56 acres in Tampa and not on any potential investments in St. Pete. 

He also shared with the Catalyst his view on the future of blockchain and real estate, although he doesn’t consider himself a blockchain expert. 

“I do believe there is going to be an increase in fractionalization of various assets – which means at some point in the future, individuals will be able to buy pieces of offices, things like that. I do think because of the security of the blockchain, just like we see with NFTs [non-fungible tokens], it’s going to make for many more investment opportunities for people for a market that’s previously been illiquid. The same thing is true with private equity. I think we are going to open asset classes, which up till now have only been open to large institutions, open up much more to the broader public.” 

On transportation 

Wood: “We believe the cost of transportation as we go to autonomous is going to collapse – now, that is the history of technology. When a new technology permeates an economy, cost come as efficiency and productivity increases,” Wood said, noting how 80-90% of accidents and vehicular-related fatalities are caused by human error. 

“If we’re right on autonomous taxi networks, we’re probably going to need much less parking. For every car on the road today, I think there are five parking spaces, and I noticed parking is a big issue around this area,” Wood said. “Another thing in real estate are landing pads for air taxis, and they are not that far away.” 

Seeing autonomous transportation in the form of ferries moving across waterways would be very interesting in Tampa Bay, she said.  

Vinik: “We have the worst bus service in the country,” Vinik said, adding that he feels the region needs a transit surtax to funnel more funds into developing options for commuters. 

Vinik shared that he and his youngest son and, who is an avid fan of Tesla and its CEO Elon Musk, visited Las Vegas where Musk’s The Boring Company recently completed an underground tunnel system to transport passengers in Tesla vehicles. The 1.7-mile network of tunnels shuttles people across the Las Vegas Convention Center.

The company is also planning to build a 6.2-mile underground tunnel to transport Tesla vehicles and passengers in North Miami Beach. 

“We talked to the mayor here about connecting downtown to the airport via tunnel underground. I want to see how it works in Miami and Fort Lauderdale. I don’t think we want to be an early adopter of this because know how hard it is with the subsurface we have here,” Vinik said. 

ARK Invest founder and CEO Cathie Wood (third from left) and Tampa Bay Lightning owner Jeff Vinik (third from right) and the ULI conference in Tampa.

On inflation and supply chain pains

Vinik explained he keeps track of companies and their investors, including Dell’s activity, and has noticed how inventories are piling up. 

“At some point, we are going to have a hell of a manufacturing slowdown,” he said. “Who would’ve thought inflation was possible after 20, 30 years ago? … You are short one item and then the prices go up by 30%. I’m confident and think you are too [referring to Wood] that is not going to be the long-term trend. Supply will get caught up.” 

He said an increase in inventory cycling on raw materials and a boost in productivity should help ease the supply chain burden.

Wood said that given her background in economics and finance, she’s surprised the nation is still facing headwinds in the supply chain.  

“I know we’ve got variants of the coronavirus, China and now Russia and Ukraine – it seems like we could have more supply chain problems,” Wood said. 

“Human nature is such that even though we have all these incredible automated logistic systems that, when the shelves aren’t being filled the way retailers expect, they start double, triple ordering – it’s human nature. I don’t know when [the typical supply chain cycle] is going to come back  and hit us in terms of lower pricing,” Wood said.

“Higher wages will attract people back into the workforce, but I also think we’re going to solve part of the problem with innovation. Innovation does solve problems.

“Think about oil today, oil prices are up 8 to 9%. If we were in a truly inflationary world and you would believe that would be baked in the cake and we are now embedding 7% inflation, the bond market would not be where it is,” Wood said. 

She explained that the nation is seeing the flattening of the yield curve, which peaked in March of last year – meaning the bond market is taking into consideration a major economic slowdown, or decentralization of inflation, or perhaps even both scenarios. 

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    John Donovan

    March 2, 2022at4:29 pm

    Thx to Spark for this enjoyable two-part series. Vinik is to be admired for delivering a lot of a very large project, and he isn’t done yet.

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