“Developers believe in confidence,” says Richard Walter, presi-
dent of Irvine, CA-based Faris Lee Investments. “They don’t
believe in negativity. Investors need to get their money out. A 7%
yield looks pretty good next to zero.”
But nearly all of the good centers are taken by the major REITs.
Eventually, all that will be left to be acquired are centers with vary-
ing levels of problems. All of this ties into a five-year window
where distressed properties will dominate.
“The distressed markets are heating up,” Walter says. “These
lenders over the past year to year-and-a-half have come to under-
stand the landscape, so they’re saying ‘Let’s start executing.’ ”
In some ways, things are better, Walter adds. His firm closed more
than $1.8 billion in sales of more than 100 retail properties last year.
“We actually had a decent year. But transaction volume was down,”
he says. “No one knew where the side was, let alone the bottom.”
With transactions still relatively small, determining a true valu-
ation is still difficult, creating an acquisition Catch- 22. “Buyers are
out there, waiting for the fire sale to begin, so rather than a short
but ugly correction, it will just be ugly and long,” Brown says.
OVER A CENTURY OF DOMINANCE
Investment Real Estate Brokerage.
New Jersey’s New Jersey’s
Multifamily Real Estate Broker Multifamily Real Estate Broker
multifamily. retail. office.
Ranking based on reported 2009 multifamily transactions.
Kislak was the #1 listing and selling brokerage firm.
The Kislak Company, Inc.
732 750 3000
Investors need to get
their money out. A 7%
yield looks pretty good
next to zero.”
Faris Lee Investments
And REITs have sold off properties on a
“pretty predictable” basis, Gould notes: “We
look to buy high quality assets and manage
them well.” That philosophy is usually the key
to success in any market. But after the Great
Recession, the Great Reckoning, or whatever
this last down cycle is called, the industry is
still searching for its new normal.
“The market hasn’t shaken itself out yet,”
Walter says. But it’s not 2009 by a long shot;
there is cautious movement on all fronts—
shoppers, retailers, sellers and buyers. What
the industry needs, it seems, is time. By
2013, valuations should be clearer, new players will be expanding gradually and a stronger industry could emerge. ◆