like. A good example is when you saw PC Richard take some
Circuit City stores in the New York area. We’re seeing a lot of
landlords who previously would never have accepted certain local or regional tenants in their shopping malls, but now have to
fill the space and drive traffic. They are now willing to go that
route, so it creates a great opportunity for the local guy to start
expanding.
HENRY: I agree. Some of the privately owned regional players
are stepping up and trying to take advantage of the situation.
Publix, for instance, bought a lot of the Albertsons that we acquired. Wegman’s is a good, strong local retailer that’s looking
at ways to take advantage of this situation. Ross Stores is another
one that’s growing right now.
LONG-TERM RELATIONSHIP
GRAISER: A company like Big Lots, which is expanding, has
done a good job of being very patient. Now the market has come
to them whereas before, in some cases, landlords wouldn’t give
them the time of day because of their type of merchandise.
Some of these tenants now have the opportunity to go into centers at really good rates.
RITTER: What’s your forecast in terms of recovery? What
needs to happen for the market to improve?
SCHECHNER: We need to reach stability, which leads to con-
sumer confidence. We need two quarters during which the
banks around the globe stop announcing losses. That will help
lead to a change, though that’s at least six months away. But
given that real estate is a lagging indicator,
the real estate universe is not going to turn
around until 2010 at the earliest. In terms
of transaction velocity, we won’t see normal
activity levels until the second half of 2010.
HADDIGAN: From a transaction and capital
point of view, there is just so much uncertainty and perceived risk out there that investors are only targeting best-of-class, infill
locations. It will be very interesting to see
how things play out with the FDIC and the
Treasury in terms of trying to bring some liquidity into the system. Once we start to see
some motion and the market starts getting
some direction, you’re going to see a lot of
capital come back in on the equity side. It’s
going to be a number of years before we get
back to the froth of the old days. At a very
macro level, the investment sales business
will start picking up later this year, and 2010
to 2012 will be a very busy time in the business, simply in terms of bringing order back
to all the disconnect that we’ve seen.
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GRAISER: Unemployment really has to
start going in the other direction. It’s in the
papers every single day. It’s a reminder of
how bad things are. Once that starts stabilizing, it will start taking some of the fear out
of the market. Until that changes, we’re going to see this for a while; I’m going to say
toward the second half to the end of 2010.
HENRY: I agree. Even though the economists will tell you that unemployment is a
lagging indicator, I’m not so sure in the
state of the world today. Every company is
looking at ways to cut costs right now, and
that includes people. If the US is going to
continue losing jobs at 500,000 or 600,000
a month, that is a horrible thing for real
estate fundamentals. As long as real estate
fundamentals are under attack in terms of
rents and cap rates and so forth, it’s hard for
the market to find its feet. I look towards the
employment. ◆
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