Phase 3 - Advanced (more than one main point to the post, ebooks)

Podcast - What An Increasing Life Expectancy Means For The Economy

Marcia Cuenca
August 25, 2022
Podcast - What An Increasing Life Expectancy Means For The Economy
Put on your horse blinders. You'd need to be able to see the fundamentals of where you're going, but don't get distracted. Just stay focused."

-Dr. Peter Linneman, Principal at Linneman Associates

Dr. Peter Linneman, joins us on the podcast to discuss his upcoming book, The Great Age Reboot co-authored by Michael Roizen - Emeritus Chief Wellness Officer at the Cleveland Clinic and Albert Ratner - an expert on Population Economics.

People are going to live massively longer, healthier, and younger. Then their chronological ages."

-Dr. Peter Linneman

Dr. Peter Linneman gives us his insights on how longer lifespans could impact the economy and the real estate market. He also gives us his stance regarding today’s rising interest rate environment.

About Linneman Associates

Linneman Associates, LLC is a premier consulting and research firm, specializing in commercial real estate investment strategy. Their clients represent a wide range of industries and countries, but primarily include institutional investors, REITs, developers, and opportunistic private equity firms seeking to implement thoughtful and disciplined investment strategies. Their clients value their market insights and analyses as well as their ability to assess and simplify the ever-changing macroeconomic, political, and capital market environments, particularly as they relate to commercial real estate investing.


Learn More About Linneman Associates, click here
Linneman Letter, click here
The Great Age Reboot: Cracking the Longevity Code for a Younger Tomorrow, click here


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Adam Hooper (00:03) Hello and welcome, I’m RealCrowd CEO Adam Hooper, and this is the Real Estate Investing For Your Future podcast. Here we explore the latest in commercial real estate trends, insights, and investment strategies that passive investors can use to build real estate portfolios that last.

Disclaimer (00:21) All opinions expressed by Adam, Tyler and podcast guests are solely their own opinions and do not reflect the opinion of RealCrowd. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions to gain a better understanding of the risks associated with commercial real estate investing. Please consult your advisors.

Adam Hooper (00:43) Today, we welcome back Peter Lineman, former professor at the Wharton School for Real Estate, Economist and Principle at Lineman Associates. In today's information, rich conversation, Peter shares insights from his upcoming book. The Great Age Reboot co-authored by Michael Rosen Chief Wellness Officer Emeritus at Cleveland Clinic, and Albert Ratner, an expert on Population Economics. The book is on cracking the longevity code and the economic impact of our extending lifespans. Our conversation then turns to the longevity of the real estate market. What happens when greed turns to fear and how to keep some perspective in today's rising interest rate environment, be sure to check the show notes for a link to Peter's new book, and we hope you enjoy today's episode with Peter Linneman.

Adam Hooper (01:31) Peter. Thank you so much for coming back on the show. It's been a little while since we've had you on, but, you know, we've always enjoyed the conversations. I know our listeners love getting to hear from you. So, thank you for again, taking some time out of your day to share your thoughts with us.

Dr. Peter Linneman (01:43) Well, you're very kind to have me and I hope everybody's having a lovely day as they listen to this.

Adam Hooper (01:48) Perfect. Well, you've been busy since we last spoke. I know you maybe suggested it, a few things you were working on, when you were last on the show. So why don't you tell us what's been keeping you busy these days and what have you been up to?

Dr. Peter Linneman (02:01) Yeah, I've been busy with the normal stuff of writing Lineman letter and my charity Save a Mind, my clients and my boards and my investing, especially for opportunity zones. the one new thing, is a book that I coauthored with Michael Rosen of Cleveland clinic and Albert Ratner comes out next month called The Great Age Reboot. And that's very exciting. Because it’s very important and provocative piece of analysis.

Adam Hooper (02:44) And so Tyler and I were talking, and I mean this with the greatest respect and no disrespect, but what are you as an economist doing, writing a book about health and aging?

Dr. Peter Linneman (02:55) Ah, well, Mike Rosen, is one of the experts in the world. On that topic and has been for a long time, very serious medical researcher at Cleveland Clinic. And, my dear friend, Albert Ratner was working with him on a book about the great age, reboot living longer, healthier, the changes that are underway that are about to hit us from genetics. And they ran into, Michael could do the medical scientific, but they got lost in what it meant for the economy and what it meant for moving forward for our country and others. And they would tell people, well, it's clear. People are going to live massively longer, massively healthier, and massively younger.

Dr. Peter Linneman (03:56) If you will, then their chronological ages. And everybody would say, well, we can't afford it. We can't afford it. You know? And they think of their grandmother living her last year of their life. Right. And so, they called me and said, we need somebody to help us on the economics of it. And I thought, well, you know, what do I know about aging and genetics? Well, it turned out to be just a magnificent experience. I read a lot about genetics working with Michael and Albert was a real treat. We worked on it for a long time, and I think it's pretty exciting. And National Geographic is our publisher, and it comes next month.

Adam Hooper (04:40) Fantastic. And in this concept, The Great Age Reboot, and obviously wanted to dive into that. Just a couple of my kind of quick thoughts is when we think about aging like you mentioned, it's kind of assume that it's going to be like, who wants to extend those unenjoyable, you know, like the last years of the kind of winding down of life. Right. And is this about extending that later stage? Or is this more about living a longer middle-aged necessarily, but extending the good years if you will, rather than the later years.

Dr. Peter Linneman (05:15) Well, you're dead-on point. So let me give just a couple of things off top of my head. One is over the last 150, 170 years. Life expectancy let's say for women has risen from 42 years to over 80 today. And it increased over that time period by about two and a half years. Every decade. Now imagine 150 years ago, we were doing this podcast. You say, well, who wants to live from 40 to 42? I mean, that's miserable, right? Those are death years. You can go. No, no, no. It's all. The good years getting longer. And yeah, first it was done mostly by sanitation. Then it was done by medical and scientific breakthroughs like penicillin and better medical treatments and cancer treatments and heart treatments and so forth. Right. And we're on the verge of the era where genetic engineering is going to do it.

Dr. Peter Linneman (06:27) And the analogy. I used is one of my first assignments as a consultant was for Michelin Tire back in the 1970s. And at that point, a good tire for an automobile lasted 6,000 to 10,000 miles, 6,000 to 10,000. Now, today, if you take care of your tires, they're going to last. Easily to a hundred thousand miles and maybe to 130,000 miles.  by the way, the last thousand miles that you're going to do on a tire today, it's going to be getting bold. But in between it had a lot of great tread. So just like that tire, that was lasting 8,000 miles. The last thousand were a little rugged today's tires, which last to 130,000 miles. The last thousand are rugged but in between are lots and lots and lots of a way to think about it is the end of our life could probably still be not so pleasant, you know, kind of the image we have, but think about getting an extra 20 or 30 years. Where you're getting two more in your twenties, two more in your thirties, two more in your forties, etcetera.

Dr. Peter Linneman (07:54) That's a good deal, that's a really good deal. And when you think about some of the things that are going on in genetics, I mean this is going to explode. We're not going to improve two and a half years per decade. It's going to be multiples of that. And that's because we now understand the genome and the research that's going on in the genome is faster than other research kind of trial and error research, if you will. And, as the genome gets cheaper and cheaper to analyze and to manipulate, you're going to get a new hip that way. By the way, if we know who's got proclivities to obesity. We'll genetically engineer out that you understand what that does to heart disease, diabetes, et cetera.

Dr. Peter Linneman (08:49) Or by the way, what we'll do is if you develop, and become overweight, we genetically engineer it so that your fat burns. And therefore, what that does to your blood pressure and all those complications and diabetes and heart disease, et cetera. You are prone to smoke. Well, if we could genetically modify so that you don't want to smoke what that does, and I'm just replace of organs replacement of cartilage, cetera, cetera. Pretty exciting stuff. And it sounds like science fiction. But as we describe in the book, everything we talk about in the 14 main areas of working on extending life, medically extending life, they're not all going to occur, but they're all underway. They're all underway. And over the next 30 years some of them are going to have radical breakthroughs. And I'll give you just one or two if you want. One is for example, I mentioned,  we spend huge amounts of GDP. Like 14% of GDP is spent on chronic disease related to diabetes, obesity, high blood pressure, et cetera. Right. And the main, cause it's not the only, but the main cause of that is being overweight.

Dr. Peter Linneman (10:28) And in many cases, literally tragically overweight, right, morbidly. So, imagine we could make your fat burn faster. Well, that issue would disappear. And not only would it disappear, maybe we can go get an ice cream together. Right. And so not only did we eliminate the problem, we increased the joy, and you say, well, but that cant happen. They've done that at a number of major institutions, and they've replicated it and they've done it to three species and you go, wow.  Imagine if that happened to us. Another one that is just kind of amazing is if, this is, I won't go through all the technical, but if you can imagine you can understand aging, you could then think about how can I undo aging, like rewinding the video, you know?  They have taken, they at a number of major institutions have taken dogs that were kind of at the end of their lives. And, by genetic engineering made them energetic, like pups and they kept their memories and they lived longer and better accordingly, a real reboot, if you will, and you go, wow.

Dr. Peter Linneman (12:05) Imagine I could go from being 71 to 30 and I keep all my judgment, all my experience and I'm gonna live then another 30 or 40 years healthy. You go the productivity gains, and you quickly go, we cannot afford not to have this kind of stuff, because if you're going to live an extra 20 or 30 years in the way we're talking about. You're going to want to and need to work at least five of those. And then you do the math. This is where my part came in. You do the math on what that means, and I'll give you a very, very simple math. The typical person works 40 to 45 years in their lifetime, you know, roughly, just so you started working when you were 22, right. And you retired when you are 65, I'm just giving a simple, imagine you work, four years longer because you're living 18 years longer. That's a 10% increase in your lifetime output. 10% increase into your lifetime output and you go, oh yeah. And when you realize how much that saves and I'll give you another variant.

Dr. Peter Linneman (13:29) I mentioned 14% roughly of GDP is spent on chronic diseases. Right? Like we were talking about, imagine we could genetically engineer and get rid of half of that. Just half of that. That's 7% of GDP. That's more than $3 trillion a year. Every year that we have to use for other things. and you go, well, I'll tell you what, I'll go and buy a nicer car or have a nicer vacation, or we'll have greater welfare support or, or, or right. $3 trillion a year would be freed up if all we did was genetically modify or our way to that. So, it's pretty exciting stuff. And the economics of it are really staggering in the two ways. I just said. Longer productivity, not to mention you're around longer to share time with your loved ones and, share the energy and joy in life and have that judgment around longer.

Dr. Peter Linneman (14:44) It also means that instead of the population growth, largely ending as a result of people not living as long, like for example, the census pop, the census bureau predicts about 1 million population growth per year for the next 30 years. Okay. That's quite low. Remember we have 330 couple of million people right now. Our analysis suggests that you'll do more than three times that. Even though birth rates stay low and the way we do it is we don't die.

Adam Hooper (15:30) So you've got 10% increase in lifetime output. You've got potentially trillions of dollars a year in more available money. And it sounds like relatively good upside. What are the concerns? What some of the risk factors that you're thinking when you look?

Dr. Peter Linneman (15:48) Two big issues. I think one is if you're going to live longer, let’s, let's take the reverse away. Suppose you're gonna die at the age of 13. Okay. Like many, like a thousand years ago, 2000 years ago, if you make a mistake, you don't have to live with your mistake very long and I'm being flip about it, but you get the point, right? On the other hand, if you're going to live to be a pretty productive or potentially productive, a hundred, 110 years, you may have to live with your big mistakes a lot longer, lot longer. And it says, therefore that in a way society and the individual are going to have to become more attuned to not making big mistakes in their life.

Dr. Peter Linneman (16:51) that’s socially, that's economically, that's physically, right? The second one is you've got put some money aside for those extra years to enjoy them and to live them to their fullest. And that means. You better start saving you better save smart, don't get carried away with fad saving, you know, just fundamentals, and save now save more now and just let the power of compounding and putting more aside. Take care of it. I always remember people say, but I don't want to save. And I say it is not saving. All you're doing is consuming later. You're going to get to. The only question is when, and the more you don't consume today, the more you do get to consume tomorrow. So that's a second issue. There's a third issue.

Dr. Peter Linneman (17:50) Actually. I said there were two, there's a third, which is, I don't know when the advance I need is going to come and you've got to stay alive and healthy until the cavalry gets there. Right. And it may take six years for some things to get here. It may take 29 years for the cavalry to get here on other things. And that means you have this break, these breakthroughs coming, you have to take a heightened control of your own DNA. And one of the things we point out is you control about 80% of your DNA through your diet, through your exercise, though not smoking through avoiding alcohol and drug abuse, through having stress management, through having good social interactions. You control about 80% of your DNA. Really? You're a, you are a genetic engineer.

Dr. Peter Linneman (18:55)  For real, by doing those things and it says, wouldn't it be a shame if right before the the genetics that gets rid of fat, wouldn't it be a shame that a day before that was available, you had allowed yourself to get to the point where you died of high blood pressure complications. Okay, so start taking care now. So, it's around that you can help you deal with your problem. Those are the three things.

Adam Hooper (19:30) Yeah, I'm going to attempt Segway here. Building off the13 year old analogy of not really having to live with your problems for too long. And it's a word that getting us back in the real estate space that a lot of people are thinking about right now. Is inflation, interest rates, and this transitory word. So, can we kind of look at some of the issues that we're going through now as we're living a longer-term economic life here. I'm curious to get your thoughts. Maybe that's a terrible segue.

Dr. Peter Linneman (20:01) You may think you're struggling, but you're not. Look real estate. And by the way, most businesses don't depend a lot on what's going to happen in the next six minutes or even the next six hours. Probably not the next six days, next six weeks, next six months, right? Real estate is, do I have a great location? Do I have a good design? Do I have active management. Am I able to attract tenants, etcetera? That is an evergreen kind of discussion. It's hard work, right. But it's an evergreen kind of discussion. And I always find it a little amazing how people get fixated on the shiny object, our interest rate's gonna be. In the next month or they're gonna be down or is inflation gonna be up to more percent or is it gonna be down or are we gonna go to under recession?  And you go wait a minute, you're gonna own this asset five to 20 years.

Dr. Peter Linneman (21:08) And the person who buys it from you is going to own it five to 20 years. The fate of this property does not depend. On what's gonna happen in the next six months, it's influenced by it, but it doesn't depend on it. You may use financial engineering on the real estate to change its risk profile and things that happen in the next six months may make certain types of financial engineering more or less attractive, but the real estate. Is more of an evergreen exercise. When you come back to that piece of property, 25 years later, I suppose you bought a property today and you hold it for 25 years. The fate, the financial fate of that property is about its design, its location, its management. It's not about what happens in the next six months.

Dr. Peter Linneman (22:10) Just isn’t and people lose sight of that. They get fixated by the shiny object. And I said to a very valued, very smart client the other day, who's a major developer of multi-family put on your horse blinders, you know, how horses in the cities, when you see 'em they have the blinders on, so they don't see too much to distract them. Right. That’s a good thing. You'd need to be able to see, you need to be able to see the fundamentals of where you're going, but don't get distracted. Right. Don't just stay focused. So, is inflation transitory? Yeah.

Adam Hooper (22:59) Interesting parallel though, right. Of, of real estate has always, or historically has been on a longer-term horizon. Right. And I was having this conversation the other day. It seems like whether it's political or consumption or media or investment decisions, it seems like there's just been such a shift lately to the short term. Right. And, and how do we start thinking? I think what you're trying to do, and, and what you're uncovering with this book is there's a, the comments you made earlier, there's a much longer-term picture that we need to be considering here. Right. So how do we. How do we get this mindset shift? And this is maybe more of a philosophical than a real estate question, right? How do you get that mindset shift into this? I mean, that very seriously longer-term thinking, right?

Dr. Peter Linneman (23:40) The challenge that you face is that you want to be informed because understanding what's happening with GDP and job growth and your own community, those are all part of the fabric that you operate in as a real estate owner operator, investor. So you need to know on the other hand, you have to remember their strands in the fabric. They're not the point, right. They're strands in the fabric and it's easy to get infatuated, right. It's just easy to get infatuated. And, because I'm not saying, well, ignore it all. That would be stupid.

Dr. Peter Linneman (24:26) Right? Just ignore it all. That's why I use the, the blinders on a horse. They don't cover their eyes; they just restrict their vision. Right. So, they can focus on the important things. And, if you think about it, the media runs out of the main stuff and they got a lot of hours to fill. And so they pump out all kinds of stuff that are designed to scare the Beji out of us. And you I said to another client, if the interest rate rising by 25 basis points is the difference between this being a good project or a bad project. Don't do it. Cuz nobody's that good? I mean, I spend a lot of time. I'll tell you what I think will happen in interest rates. I'll be wrong. And by the way, even if I'm right, come back, six months later, two years later it'll have changed, right? If this investment depends on a 25 or 50 basis point in the short-term interest rate or the long-term interest rate, or it depends on a three to 5% difference in construction cost, I'm going to make your exercise a lot easier. Don't do it you know, just don't do it. which is another way of saying, of course it doesn't depend on that.

Adam Hooper (26:01) And that's another interesting again, and I'm seeing more and more now why you were involved and excited about this book, right? I mean, it's building in that margin of error, like you just said, you don't want to get to. almost there whenever this health breakthrough comes through and not have the opportunity to do that. Right. And so, by looking at building in these larger margins of error, whether that's in lifestyle or things that we can control when you apply that. And again, this is maybe reductionist, but when you apply that to some of these real estate and investment decisions, if you're on the Razor's edge. You just want, give yourself a chance.

Dr. Peter Linneman (26:35) You want to give yourself exactly that. and if you are so close, if you have so financially engineered this or your product, even absent financial engineering is so marginal, I'm just going to make your life easier. Don't do it right. Don't do it. I sound like I don't care about what's going quite the opposite. I care tremendously. Interest rates and job growth and so forth and so on. But I do know, take the moment we're in, in what, the last four or five months we've seen capital markets, skittish, term sheets being pulled on loans, not just term sheets. The lender of the day before I had a lender the day before we were close on the loan, say, Nope. This is after we had just pull out, and I've talked to others who have had the same thing. What we're going through is another episode of greed or the visibility of optimism, turning to fear, or the focus on, or the total infatuation with the things that can go wrong, the pessimism.

Dr. Peter Linneman (27:53) And by the way, it's happened a lot. I'm 71 it's happened a lot in my life. But, you know, one of the things I've learned about moments when, greed turns to fear and I'm not using greed in a pejorative sense, I just mean you're seeing all the wonderful things that can happen much more so than the terrible. Whenever greed is turned to fear, markets, get skittish, people get skittish, they sit on the sideline we're herd animals. So, we reinforce one another's hesitancy. Which makes it worse temporarily, but you know what? Greed always returns, always returns. You're much younger than me. Have you ever seen a period where greed hasn't returned? And far faster than we normally think.

Adam Hooper (28:45) We have short memories. We have very short memories as humans, right?

Dr. Peter Linneman (28:49) Yeah. And by the way, we're herd animals on both directions. Right? One of my good friends was a very prominent banker in her career. And she was with my group one time and we were over in Kenya watching the wildebeest cross the Mar River. And I don't know if you've ever seen the nature channel, but the crocodiles and the wildebeest jumping in and the whole deal. And what you don't realize is that they too, and fro deciding if they're gonna go for days sometimes for days sometimes like, oh, we're ready. Nope. We're not, oh, we're ready. No, we're not. Oh, we're ready. So we were sitting out there one time, watching this happen and then they went and something like 30,000 in a matter of minutes, 10 minutes, 15 minutes go plunging and going across in the crocodiles and the whole deal and they're breaking legs and the whole deal. And my friend looks at me and says, they're bankers.

Dr. Peter Linneman (30:01) And I said, you got it. And then they suddenly stop. Then they just stop and a whole thousands of them stand on the riverbank for another day, touring and F throwing or for another four hours tour. And I'll never forget her saying these, these they're just bankers. So, we are herd animals, both directions.

Adam Hooper (30:24) So when you look at what is going on today and we're just, again on a recent episode here talking about, yes, there's been a pretty dramatic increase in obviously both inflations. And when you look at interest rates, but historically at least on the interest rate side, we're still really low relative to what we've seen historically. So, I guess, how have you seen, or what are your thoughts on how that's impacting just generally the health of the real estate market today. Given what we've talked about that volatility, or it will go up, it will go down. How much of a concern, I guess, are you looking at more than your term versus term?

Dr. Peter Linneman (31:01) I was just talking to a couple of people the other day saying, what are you complaining about on the interest rates? They are on the short end, right around where they're at in 2019 on the long end. They're shorter. Excuse me. They're lower, than they were in 2019. And I remember talking to you in 2019 and you said, wow, this is a low interest rate environment. What are you complaining about? It's a low interest rate environment. And they said, yeah, but they're up? And I said, no, no, no, they're low. And one of them looked at me and laughed and he said, yeah, but you get used to it. And I said, yes, but you don't deserve. right. You can be used to it, but you don't deserve it.

Dr. Peter Linneman (31:50) And, he said, yeah, you're right. Interest rates that they are pretty attractive still. And then people say, well, cap rates. And I don't know, you know, and I've done a lot of work on cap rates. They're mysterious in their own. Right. But the one thing I cannot find a correlation between is cap rates and interest rates. And I'm not the only one who can't find it. So, everybody talks about it and I've been looking for it for the last 10 years and haven't found it. It just doesn't exist. At least in the relevant range, maybe of interest rates went to 30%. Gee, I think cap rates would go up, but that's not, what's going to happen. and if it does, we have a whole different ballgame, right? We got bigger issues. If  interest rates went to 30%, our problem isn't interest rates, our problem is what the hell just happened in the economy. Right. That that's what we would really worry about. Not interest rates themselves. We worry what the hell's happening in the economy.

Dr. Peter Linneman (33:01) Right. And there's just not any statistical relationship you can find and you can't find it. Anecdotally. I read a very interesting piece of research, by someone at Crow Holdings recently that looked at episodes. The six episodes when short term interest rates increased dramatically, doesn't find any. Pattern of movement of cap rates associated with it, et cetera. And there's a lot of reasons you can give, but just take the agnostic version, right? I've written about the intellectual reason, but just take the agnostic version. It doesn't exist. At least historically it doesn't exist. And that's because the spread above the base rate is massively more volatile than the base rate itself. And therefore, most movements in cap rates are driven by the spread, not by the base rate.

Adam Hooper (34:16) And spread being more emotionally ethereal, momentum driven or fundamentally driven.

Dr. Peter Linneman (34:24) Being driven, I think by two things well, probably 3. 1 is inertia. Right? Kind of what is continues. But then you go to the other extremes. It's driven by, is there a lot of money? And if there a lot of money is out there and wants to invest, spreads, get narrow, they just get narrow. And for example, I say to people, suppose I told you $6 trillion tried to buy apartments, 6 trillion more dollars tried to buy apartments in the next week. What do you think would happen to cap rates in the next week for apartments? And everybody says, well, they go way down. I said, yep. That's because there's a lot of money chasing it. I said, you didn't ask me what interest rates were when you answered that. Right. You just asked, was there a lot of money? The flip of that? If there's no money if there's no weight of money spreads, widen. And that is largely about the fear and greed when it happens that the spread really widens, right? It's the move to the flight to safety, right out of risk assets and the spread wideness. And you've seen that any number of times.

Dr. Peter Linneman (35:45) And it's not about the real estate per se. It's about the psychology of fear where I'm getting out of risk assets. And, and then when I want to come back in which invariably we do, you get the weight of money, narrowing spreads with a lot of noise in between, and there's a lot of money out there. Now that money is not being put to work so much in the last four months. but we have record dry powder at private equity. We have record unused reserves at bank. We have record cash holdings by individuals. We have record cash holdings by corporations. I mean, there's a lot of liquidity out there. It's just sitting on the sideline temporarily because fear is winning, but it's not going to win forever.

Adam Hooper (36:42) And so I guess maybe getting back to the longer picture and what we were talking about before was some of the, the forecasting and longevity. When you look into the future, senior housing is the most obvious area that's going to be impacted. How are you seeing some of these forecast and, and extension of life issues coming to play in some other asset classes, do you see challenges and opportunities.

Dr. Peter Linneman (37:06) There let's talk housing, but because I think it's the easiest  to see first off, remember I told you, I think we add about 115 million people over the next 30 years. They're gonna live somewhere. Right. And the census is predicting like 30 million. That's a big difference. And yes, they'll be chronologically older, but they'll be physically, probably younger. Physically younger, chronologically older. And first of all, it just has a big implication for the number of units, single family. And multi-family we want, secondly, it says maybe we won't be retiring quite as early. So, on the other hand there's going to be a lot more of us. So, and then senior, you think about people start thinking about senior housing at 78 or 80 years. That could easily move to 85 to 95 before they even remotely think about it. Easily could move to 90 before they remotely think about it. And, that has big implications. Give you another sector that has huge. And by the way, you can imagine how you can then start working those kinds of things through. Now, remember, it's not gonna happen overnight, right? It's gonna happen. One after another, after another. But let me give you another, let's assume that we live 20 years longer and all of those 20 years are highly productive. That is, we still have a bad last year or two, but what we did in the meantime was give ourselves 20 more good years or 30, more good years, has huge implications on retail. And in particular, what it says is. we could have enormous impacts on like the cosmetic industry. Suppose just for example, I could genetically, make skin younger and tighter. Go have a big impact on cosmetics. You would agree and big impact on what we consume. Go back to another on retail. Remember, I used the example. What if we cut spending for chronic disease from 14% of GDP to 7% of GDP, we have $3 trillion more to spend on stuff, right. And that's going to have big implications. Of what is it what are the next things we want to consume? So that has, obviously warehouse, if we're living longer, we're going to be, and we have a bigger population, we're going to buy more stuff and we're going to have more boxes that need to be stored.  and so. People working longer. You're not going to get as big a turnover and you're going to maybe need bigger office space over time. Now none of this happens in a day, just like the health advances hadn't happened. It's funny I was giving an example the other day. I remember in 1976, I was doing my PhD thesis at the university of Chicago.

Dr. Peter Linneman (40:46) And I would dutifully go over to what was essentially the most sophisticated computer facility in the United States or in the world, or one of them, which was this huge, huge mainframe and red tapes and boxes of cards. Okay. So, in 1976, I'm feeding boxes of cards into a computer at the University of Chicago that took a small building. Right. Took a small building five years later. On my desk was a home computer that had more crunch power than that thing had. Right. There's no way you'd have predicted that. Right. There's no way. And yet it happened, and you've seen other things in life, right? I mean, think of phones 20 years ago versus a phone today and now start imagining those kinds of breakthroughs with your health over the next 20 years, you don't think of the phone happening overnight. It was a constant jump, but it was jumps, right? It was not just a steady slog. It was jumps. So that's what we see happening. And that's what we make the comment in the book. And I think it's, I think we're. Which is to say we've had transistors. That was a great breakthrough. We had penicillin. That was a great breakthrough, you know, and you can go through other great breakthroughs. The automobile, the internal combustion. I'm not trying to denigrate any electricity in an odd way. The ability to reboot our age and be longer lives with massively greater productivity. During those lives is like the ultimate breakthrough. It's giving us more human capital. And the invention of transistors came from human capital and the invention of the internal combustion injury came from human capital, cetera. And if we have more human capital out there and being productive longer, we're going to get a whole bunch of breakthroughs in other areas because we have that.

Adam Hooper (43:15) An exponent to that, of the multiplier of it's not just about the productivity and longevity, right? There's you have all that opportunity for the, the power of just human output, just to multiply.

Dr. Peter Linneman (43:29) Just take for example, just a silly example. Suppose life when Warren Buffet's born, I think his life expectancy at birth was around 55 years, a male born in that year. Well, what would've the world have looked like if Warren Buffet would've died at the age of 55 and what is he now? 93 or some age. Think of all the things he's achieved. Not only as an investor, but as a person, as a charitable and you I'm just taking him because he's famous. Right. And you can do that in field, after field with person after person. One of my closest friends is essentially this era is example of it. She's a hundred and a half years old, lived independently until about two years ago, still doing okay. Talk to her every day she worked until she was 92. She worked for profit until she was 76.  She kept reinventing herself. You know, she got an MBA at Northwestern in 1946 was the only woman in her class. Then she had a career in business. She sold the business. And then her forties goes back and gets a PhD in economics after her family was old enough. And then she becomes a professor and then goes on corporate boards. And then she retires from quote, the paid world at the age of 76 and runs a very effective charity, for a dollar a year from the age of 76 to 92.

Dr. Peter Linneman (45:22) And again, reinvented, herself that's what we're talking about and was highly productive. Now imagine she's the norm, maybe not in intelligence, but in an energy, but she's the norm right now. She's the exception, right? Imagine she's the norm Albert Ratner. Our co-author Albert's like 94. Same as Buffet. Imagine if Albert. Lived only to life expectancy, the things that happened, the people we helped, and so forth. So, it has an effect way beyond what you first might imagine was all you need are one or two big breakthroughs come out of those extra years. I met Steve Jobs, unfortunately passed away at what he was 49 or 52 or whatever 50, whatever age tragically he was. Right. Imagine he could have been genetically modified so that his disease didn't take him. And he had another 20 years, 30 years, 50 years. The good he could have done.

Adam Hooper (46:33) Yeah. It's fascinating. And I think again to your point earlier. These are processes and science that's much more near term than what you're talking about would indicate far off in the future science fiction.

Dr. Peter Linneman (46:51) That’s why the genome mapping, which was what 18 years ago or whatever it was, but it took 'em we've got in the book, it took them a long time and lots of money to do. Now, it takes like a day and it's almost trivially expensive and it's getting cheaper every day and faster every day. And the manipulation of it, we do have CRISPR and a CRISPR competitor and yes, they'll get improved. You know, my gut is come back 20 years from now and these massive breakthroughs by CRISPR or CRISPR, like genetic modifiers that we go, wow. We're going to look back at those and say, oh yeah, that's like the initial internal combustion engines versus what's there 20 years later, 30 years later. I’ll give you another one. You may have occasionally seen these professional athletes injure a knee. For example, and they go get a treatment that injects stem cells in their knee to replace the cartilage to hopefully undergo cartilage. And you pretty much have to do it outside the United States. And it generally doesn't work. It may give some temporarily relief, but it does work. That is to say the technique they're doing does. The problem is you have to inject about a million more cells than they're currently doing. Now think about that because those injections would get rid of. Arthritis and the need for knee replacements and hip replacements and shoulder deterioration.

Dr. Peter Linneman (48:44) Right. They know how to do it. They're actually even doing it to athletes, not just athletes, but athletes get the most note, but they aren't working because they're not injecting enough cells. Right. That's a manufacturing problem. That's not a science problem so much as it. And engineering science. So, take that one.  We know how to do it. We just don't have the manufacturing capacity capability to manufacture as many cells as we need. Well, what's one of the things we're really good at as a society, figuring out how to make stuff once we know what to do now, is it going to happen overnight? No. But there's one where you can imagine in 15 years you go in for something akin to arthroscopic surgery, except they're not doing surgery, they're doing injections that are modifying your and injecting stem cells and suddenly you're cartilage regenerates and all that pain you have in your knees and hips and so forth go away. And all the surgery that went with it and all the rehab goes away. You kind of go, wow, that's staggering. What that would do to change life quality. I have two artificial hips. Thank God that we have that technology. Imagine if we would've been able to do this, because if I had not gotten two artificial hips, I got one when I was 59, I'd have been one of those lame old guys, right. That I saw when I was growing up before they had replacements. And once you are a lame old guy, you're going to become an unwell lame old guy pretty quickly. And you know, the breakthroughs that can happen are, are pretty stunning, but you got to take care of yourself until they come.

Adam Hooper (50:48) Well, Peter, I can attest you or anything about a lame old guy. You can, you can cross that one off that. There you go. Well, I know you've got a hard stop coming up and since we are still a primarily real estate focus show here, just as we wrap up. What's keeping you up at night about the market and then what has you most optimistic? And again, ton of fascinating optimism in the book, right? We'll have links in the show notes. Amazing read whether you're listing this pre-order or after it's out. We'll have links in there and highly recommend you pick that up. But bring it back to the real estate here. What’s keeping you up at night and what's got you most optimistic about the market these days?

Dr. Peter Linneman (51:28) Well, let's start with the most optimistic. People keep saying that people aren't coming back to work, right? That's been the narrative since about April 2020 that people are never going to back to work. They've reexamined their lives. You know, all that kind of stuff, and they're not going to come back to work and all that's happened since then is people keep coming back to work. And so, we've added something like 2.7 million jobs in the last seven months. A stunning people are coming back to work. Yes. They're not coming back as quickly as you'd liked. But they're coming back. You can't deny that. Right. They're coming back. That's exciting because it, it means vibrancy comes back to the economy. It means, the chance for great things to happen. It means demand is picked up, all those good things.

Dr. Peter Linneman (52:28) And I see that continuing over the next 12 months, not quite at that clip, but I see about 3 million jobs over the next 12 months as we catch up. I feel good about the economy because I'm not shocked by where interest rates are at. Industrial output is expanding pretty rapidly to try to catch up, demand recovered faster than supply across the economy, not just in real estate and that pushed prices up. I think supply is catching up and as it does, inflation will moderate, across the board. I feel pretty good about the economy and about supply and demand in any kind of horizon. I can see. Yes, the economy's slowing, but in a way, that's just normalizing, right? It's like you were caught in a traffic jam in March, April, May, June, July of 2020. Right. And the traffic didn't move. Right. Just didn't move. And then it came out and it was really great. We were moving really fast, but you can't just keep accelerating. Right. You have to then normalize and we're over the next six months going to be in a normalization of the economy, which will be lower growth rates, but at higher levels.

Dr. Peter Linneman (53:58) So those things don't keep me up. I feel quite good about it. Those excite me, real retail sales adjusted for inflation retail sales at all-time highs, et cetera. What worries me at night? Probably.  I really worry. wage and price controls being introduced. I lived through it during the Nixon, then Ford, then Carter, they're a disaster. They do nothing for inflation. They just create more shortages, and they would be a disaster for the economy. And you hear the same rhetoric I do about nasty companies jacking up prices, and we need to control the market. That kind. And if we did, that would be a real disaster. I worry about at night, I have family in Germany and they're much more concerned about the Ukrainian situation than are we because it's close.

Dr. Peter Linneman (55:00) And I do worry about that war spilling over probably accidentally if it did so into NATO countries, as a shooting conflict, which would be very difficult. I worry about that and I still worry about COVID.  If we got a virent strain, we're doing quite well as you well know, but if we got a virent strain, that would be a big drain, not only on human and human activities and so forth and lost lives, but it would also be a big drag on the economy. So those are the three things that kind of keep me up at night. I'm a generally optimistic person and I believe you don't bet against the US economy. It's been a dumb bet to bet against the US economy in any interesting time horizon. And yes, you can bet against the economy and be right for a few months. Few quarters, maybe even a year, but don't bet against it in the long term. And we're in the long-term business in real estate.

Adam Hooper (56:19) There you go. And hopefully more in terms of health longevity.

Dr. Peter Linneman (56:24) Hopefully a lot longer time to enjoy it.

Adam Hooper (56:29) There we go. All right, Peter. We’ll, again, always love having conversations with you. Wont you let everybody know how they can learn more about what you're up to and your book.

Dr. Peter Linneman (56:37) So the easiest is to go to Lineman Associates. We have links to all types of things. This talk would be there and information about my book and the new book, The Great Age Reboot will be there. You can go to Amazon and I think they're doing presales right now on The Great Age Reboot, but go to Linneman Associates and you can find out about our charity. You can find out about our business activities. You can find out about our opportunity zone investing, et cetera. So, thank you very much for the opportunity today.

Adam Hooper (57:22) Absolutely. And we'll have links to the show notes for all those resources. So, Peter, thank you so much again for joining us today. We'll hope to have you back here soon and terrific conversation.

Dr. Peter Linneman (57:32) Thank you very much.

Adam Hooper (57:34) All right. Thanks. And everybody, that's all we've got for today as always, if you have any comments or questions, send us a note to And with that, we'll catch on the next one.

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