With hints of a
recovery in the air,
players are now
mapping out their
strategies for doing
business in a new
It’s several months into 2010, and there’s a sense that the economy, at least, will not get any worse. And once commercial real estate gath- ers steam, there’s a wave of capital waiting to move into the market.
This time around, though, the industry will need to grapple with global
demand in order to stay afloat.
Some of the nation’s top institutional investors gathered together to
discuss these issues, and more, during the Sixth Annual Transwestern/
Real Estate Forum Capital Markets Symposium, held at the Waldorf-Astoria hotel in New York City. While the previous edition of this annual
symposium focused on gauging the length and depth of the downturn,
panelists this year discussed how investors could translate the emerging
recovery into real estate terms. Specifically, they charted possible signs of
life in the CMBS market, the Obama administration’s role in assisting the
industry, strategic opportunities in 2010, the budding IPO market and
the need for equity in distressed-asset deals. An edited version of that
STEVEN E. PUMPER: The broader economy is emerging from the recession. How
much further behind is real estate?
C. STEPHEN CORDES: A recovery in values
will result from an improvement in liquidity
and in jobs, and the real estate market will
begin to show signs of real recovery on a
three- to four- quarter lag. Job replenishment
will take some time. Our view is that we are
talking about mid- to late 2010 and into early
2011 before we see meaningful job growth.
FRANK COHEN: Net absorption tracks job
growth. So as long as we’re losing jobs, we’re
going to see tremendous pressure on office
absorption. Once we see that begin to turn,
then absorption will begin to pick up.
CHARLES B. LEITNER: I have a little more
of a pessimistic view. I have no idea when
we’ll recover to yesterday’s normal; we could
probably debate that for a while. It’s all
about jobs, and it hasn’t gotten better yet.