Weekly News & Capital Markets Perspective

December 15, 2011

This week’s perspective is provided by Tom Powers:

The investment real estate business is looking more and more like the stock market as we work our way through all the political and economic uncertainties, both domestically and around the globe.  Why is that?  If the stock market has a good day, there are still stocks that went down that day. The same is true if the stock market went down – many companies still saw their stocks go up that day.

With real estate, we do not measure things day-to-day, but rather in quarters and years.  Depending on who you talk to on any given day, the investment markets are doing very poorly, or they are doing just fine.  This past quarter we have seen the announcements of a number of large transactions such as the Duke/Blackstone $1 Billion office sale.  What you may not hear about are the many large portfolios that have been pulled from the market due to lack of interest or pricing that did not meet sellers expectations.  For every successful closing, I would guess there is another that did not happen.  This has been the situation for the last few years and we are not seeing a lot of change in this trend.  With the upcoming elections next November, we are concerned that we will not see much positive momentum for 2012 either.  Transactions will get done, and you will hear about the larger ones, but keep in mind that there will most likely be many that will not get completed – you just won’t hear as much about them.  So just because you hear about a number of larger transactions that have been completed, do not assume that things are necessarily looking up for the entire industry, as this is not the case.

I know we have said this a number of times, but things have not changed much lately – we still have a very bifurcated investment market.  Core type properties are finding buyers, with good pricing but most everything else is lacking for investor and lender interest.  Here’s to hoping next November gets here real soon!


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