Annual Review
& Forecast 66th
The euro zone crisis and gridlock in DC mean uncertainty and maybe turbulence in
2012, but pockets of opportunity are emerging as fundamentals continue thawing out
The European debt crisis. Social unrest in the Middle East. Legislative gridlock in the US. Questions about
the impact and timing of Dodd-Frank rule-making. The availability of credit, or lack
thereof. The extended slump in housing
sales. Minimal personal income growth. All
of these challenges heading into 2012, even
as the country’s economic vital signs continue to improve, mean another year of
uncertainty. It’s little wonder that after ticking off these issues during a Real Estate
Board of New York seminar in February,
Lang LaSalle, predicted that the pace and
depth of recovery would remain “highly
segmented” across the US this year.
Sikaitis is hardly a lone voice crying in
the wilderness. At its annual commercial
real estate finance conference in Atlanta
last month, the Mortgage Bankers
Association forecast a low-single-digit
increase in US GDP for 2012, a marginal
decrease in unemployment and the possibility of some deal paralysis as the presidential campaign winds on.
Another assessment that barely qualifies
as bullishness came from Mort Zuckerman,
chairman of Boston Properties. “I do think
that the economy is getting somewhat better
and not really getting worse,” Zuckerman
said during a late-January conference call.
“There is a chance that it will get worse,
because at some point, everybody is going to
get exhausted with the fumes of optimism
and really begin to think very differently
about the economy.”
Yet amid the uncertainty and the head-
winds, domestic and foreign, there are
plenty of opportunities, albeit highly seg-
mented ones in keeping with Sikaitis’ fore-
cast. “We see the economy and the job
By Paul Bubny
market continuing their slow march to
growth that in turn pulls up real estate values and draws investors back to the markets,” according to a 2012 forecast prepared
by Phoenix-based Cole Real Estate
Investments. “But not all commercial real
estate will fare equally, and in our opinion,
markets with exposure to technology and
commodities will outperform.” Sikaitis’
assessment at the REBNY event was similar.
“The darling of 2012 and 2013 will be
energy,” he predicted.
Over the past year, Orlando-based CNL
Financial Group focused mainly on “seniors
healthcare, multifamily development and
REO properties,” Paul Ellis, group president
of CNL Commercial Real Estate, an entity of
CNL Financial, tells Real Estate Forum.
“For the first half of this year, we don’t anticipate that those themes will change.” CNL
Financial’s funds, including the recently
renamed CNL Healthcare Trust, made $1
billion of acquisitions last year, and Ellis says
the group expects to do the same in 2012.
What seniors healthcare and multifamily
have in common, says Ellis, is that both are
“demographic-driven real estate. The
decline in homeownership and the cultural
shift toward renting are independent to
some extent of what’s going on in the economy. The same thing with seniors housing:
you’re going to have 10,000 people a day
turn 65” regardless of the economic news.
At the Praedium Group in New York City,
co-founder and president Russell Appel
similarly sees multifamily demand as “not
dependent on job and economic growth.”
In multifamily financing, Centerline
Capital anticipates a significant growth
year, says Robert Levy, president, CFO and
COO of the New York City-based firm. On
the debt side, Centerline expects “north of
33% growth” in conventional multifamily
lending, and 100% growth in its affordable
housing platform. In equity for affordable
multifamily, Levy says his company also
expects volume to grow by nearly 100%.
54 REAL ESTATE FORUM FEBRUARY/MARCH 2012
www.reforum.com
