CPN - March 2009 - (Page 26) ECONOMIST’S VIEW Continued from page 6 POSITIVE SIGNS housing starts have hit their lowest level in more than 40 years. This near-term outlook is bleak, but several substantial policy initiatives do have the potential to jump-start the sector and the economy. The stimulus bill will provide a 10 percent tax credit, as much as $8,000, for first-time home buyers. There is also talk of a mortgage-rate buydown and comprehensive foreclosure relief plan. On the commercial and multifamily front, the REIT market dropped dramatically again in January and early February, as the MSCI US REIT Index declined MARKETPLACE Mortgage www.DoctorMortgage.com ANDREW LICHTENSTEIN (Lic REB) Inc. FAST, DIRECT PRIVATE LENDER! LOWEST RATES 3.85% + & HIGHEST LTV • WORLDWIDE Brokers Protected • Fax: 212-255-5277 32 percent. This occurred, of course, after a 38 percent drop in 2008. The drop in REIT stock prices has put companies near an eight-year low on a number of value metrics. So why do REITs and private real estate continue to weaken so dramatically? My main explanations are the continued credit crunch and the rapidly deteriorating economy.Real estate by its very nature is capital intensive, relying on 50 to 60 percent leverage. A number of excellent properties have debt coming due in the next two years that is subject to refinancing risk. Credit markets that are shut tight are punishing real estate deals that have substantial short-term debt maturities.The lack of debt has also pushed cap rates up to the 7 to 10 percent range. When the economy and credit markets do stabilize, expect the best-quality office, apartment, industrial and retail real estate to surge in value. —Kenneth Rosen is chairman of Rosen Real Estate Securities L.L.C. Editorial Index Aegon 20 Allianz 20 Allstate 20 Alvarez & Marsal 14 Apartment Investment and Management Co. 16 Apollo Real Estate Advisors 18 Archstone 16 ARGUS Software Inc 25 Association of Foreign Investors in Real Estate 23 Aviva 20 Axial Advisory Group L.L.C 14 Beacon Capital Partners L.L.C 18 Behringer Harvard 21 Binswanger Corp. 14 Boston Properties Inc. 6, 17 Broadway Management Co. 17 The John Buck Co 17 California Real Estate Journal 16 Cassidy & Pinkard Colliers 4, 18, 24 CB Richard Ellis Global Property Advisors 23 CB Richard Ellis Inc. 9, 12, 14, 17 Colliers International 8, 23 Colliers Spectrum Cauble Realty 13 Curtis-Rosenthal Inc. 14 Cushman & Wakefield Inc. 18, 23 Cushman & Wakefield of Texas Inc. 18 DTZ FHO Partners 17 INDUSTRIAL Continued from page 9 FINANCE Continued from page 20 CLOSE TIES In Detroit, for example, vacancy slipped from 13.2 percent two years ago to 11.5 percent at the end of 2008. St. Louis vacancy dipped from 7.2 percent to 6.4 percent, and Indianapolis enjoyed a similar 80-basispoint decline to finish the fourth quarter at 7.4 percent. It is too soon to determine why so many Midwestern markets appear to be holding their own,but Moore speculated that manufacturing factors in. Though oil prices have fallen dramatically during the past year, the spike in transportation costs sent the message that making goods in the United States cuts shipping costs. Some overextended industrial owners may face forced sales, but the relative stability of warehouse and distribution facilities may limit the volume of distressed warehouse assets,Hefner suggested, adding, “I don’t think it will compare to office and retail.” —Reach industrial editor Paul Rosta at paul.rosta@nielsen.com. FINDING FINANCING 6 percent interest rate for the final two years.By contrast,banks quoted him interest rates of 6.5 to 7 percent, with recourse. Insurance companies were offering interest rates around 8.25 percent. On the other hand,“seller loans are typically for a shorter term, less than two years, and the buyer must still underwrite a recovery in the debt markets in order to refinance the seller note when it comes due,” Lassere noted.“Since the seller that is providing the financing is already an expert on the real estate, borrowers must be leery of the fact that their new lender might not be afraid of owning the real estate again at their new, lower basis when the note comes due,” he said. “If traditional sources of financing are still not available when the loan matures, the seller might be less willing to work with the borrower on an extension.” —Reach senior editor Eugene Gilligan at eugene.gilligan@nielsen.com. 800-242-9888 FOR ADVERTISING OPPORTUNITIES, CONTACT Regional Sales Director Jason J. Wafalosky 484-228-8481, jason.wafalosky@nielsen.com Classified Sales Representative Fatima Ruiz 646-654-5763, fatima.ruiz@nielsen.com Web Services Directory Data Center www.cpnonline.com/datacenter Regions www.cpnonline.com/regions Business Specialties www.cpnonline.com/specialties Property Types www.cpnonline.com/propertytypes Finance www.cpnonline.com/finance Business Management www.cpnonline.com/ businessmanagement Advertiser Index COMPANY PAGE Buchanan Street Partners 13 CapitalSource Inc. 5 CIBC World Markets 9 Commercial Defeasance L.L.C 12 First Industrial Realty Trust Inc. insert Flagler Development Group 11 Grandbridge Real Estate Capital L.L.C. 7 Green&Design 27 Rockefeller Group Development Corp 2 Westmount Realty Capital L.L.C 20 Yardi Systems Inc. back cover This index to advertiser page location is for readers’ convenience. This listing is not part of the advertising contract, and the publisher is not liable for errors or omissions. Duff & Phelps L.L.C. 14 Charles Dunn Co. 16 Eastern Consolidated 4, 17 Edens & Avant 11 Ernst & Young L.L.P 16 Faris Lee Investments 20 FirstService Williams Commercial Real Estate 23 Georgia Department of Labor 11 GreenBank 6 GVA Kidder Mathews 16 Hines 17 Hypo Real Estate Bank AG 21 Integra Realty Resources Inc. 14 Intuit Real Estate Solutions 25 Jones Lang LaSalle Germany 21 Jones Lang LaSalle Inc 4, 17, 21, 24 Jones Lang LaSalle Retail 13 Marcus & Millichap Real Estate Investment Services Inc. 4, 8, 18 Marshall & Stevens Inc 14 Mesa West Capital 19 Mesirow Financial 17 Henry S. Miller Consulting L.L.C 14 Mortgage Bankers Association 19 NAI Global 22 National Development 17 Nationwide 20 New Resource Bank 6 NorthMarq Capital L.L.C. 19 One Earth Bank 6 Pacific Coast Capital Partners L.L.C 20 Perkins Coie L.L.P. 24 PPR 10 ProLogis 6, 22 Real Capital Analytics Inc 10, 23 Real Data Management 25 Regency Centers Corp. 13 Related Cos 6 Resolve Technology 25 RFR Holding Corp. 6 Rosen Real Estate Securities L.L.C. 26 The Sembler Co. 12 ShoreBank Pacific 6 SiteStuff Inc. 25 Sotheby’s 6 Southland Economic Development Corp. 20 SS&C Technologies Inc 25 Standard & Poor’s 19 Starrett City Associates 6 StonebridgeCarras L.L.C. 18 Stonehenge Management 17 Strategic Storage Trust Inc. 19 Tishman Speyer Properties 17 Transwestern 4, 16 Van Ness Property Group 18 Voit Commercial Brokerage 8 Weiser Realty Advisors L.L.C 19 Yardi Systems Inc. 25 COMMERCIAL PROPERTY NEWS • March 2009 • www.cpnonline.com http://www.DoctorMortgage.com http://www.cpnonline.com/datacenter http://www.cpnonline.com/regions http://www.cpnonline.com/specialties http://www.cpnonline.com/propertytypes http://www.cpnonline.com/finance http://www.cpnonline.com/businessmanagement http://www.cpnonline.com
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