By Ian Ritter, Custom Content Manager
Managing Director, Real Estate
and Advisory Services
Marcus & Millichap
Real Estate Investment Services
Founder & Co-CEO
What macroeconomic chal-
Head, Real Estate
Zurich North America
lenges do we face in the
The long-term issue is that we have to
pay the piper. We have to bring down
debt, increase taxes and reduce expenses. It’s the only way it can work. Because
of that we need to look and see where
the opportunities are.
Despite all of the headwinds, the
organic condition of the US economy
has improved significantly, and we’re on
a much stronger footing. That has given
us the confidence to say that we don’t
think a double-dip recession is going to
happen. Today, we stand about 10%
above the 2007 retail expenditure peak.
The whole notion that the US consumer
is going to hide in caves didn’t pan out.
On the corporate side of the ledger,
we’ve exceeded the Q3 2006 peak in
profits by 10%. But the organic strength
of the economy, both on the consumption side and the corporate side, is being
held back both by political paralysis and
global headwinds. The economy just
needs time to take its own organic
momentum forward by the reduction in
How do you see workouts
trending in the next year?
Put yourself in a position where everything you did was subject to scrutiny by a
group of people with very different motivations than yours. This is the position a
CMBS special servicer is in. And as a
result of being second-guessed for everything they’ve done in the past few years,
they tend to be very careful. What does
this have to do with workout trends in
2013 and beyond? Everything.
When the workout selected by the special servicer is the best option for all certificate holders, there’s little likelihood of
future scrutiny. Now let’s take an over-lev-eraged property and assume the special
servicer agrees to a discounted pay-off
with the borrower. No matter what the
number is, another bond holder in the
pool could possibly second-guess the decision and the specific dollar amount of the
That’s why we will see more over leveraged deals getting resolved by letting the
“market speak” in 2013 and beyond. By
broadly marketing notes, the special servicer has little chance of getting second-guessed for the number they settled for.
In the wake of Hurricane
Sandy, how can CRE owners
better plan for hurricanes?
Hurricane Sandy’s destruction reinforces the importance of preparing commercial properties for windstorms.
Owners and managers should keep in
mind the following guidelines when preparing for a hurricane.
Institute a hurricane safety plan. Such
plans should take into account the properties’ emergency power, business data,
utilities, equipment and stock, personnel
and vendor communication in the event
immediate repairs are necessary.
Personnel safety is a top priority. Protect
tenants’ employees while they work at
heights under high-wind conditions.
Enforce safety procedures while moving
equipment or preparing for the storm.
Rectify roofing issues. Enlist roofing professionals to clear gutters and local
authorities to clear sewage drains before
the storm. Make necessary roof repairs in
advance to prevent more damage later.
Safeguard critical information. Take
important documents with you in the
event of an evacuation and make certain
that servers are in a secure area.
Check out Nadji’s regular GlobeSt. blog at
Check out a free webinar Hambly hosted on
GlobeSt. at www.globest.com/1stService Webinar
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