This week’s perspective is provided by Mike Sullivan:
Unpredictable. I’m not sure there is a better, more descriptive word for this time of year. From the weather producing storms that surface seemingly out of nowhere and then vanish just as suddenly to kids’ behavior on spring break to my personal favorite, March Madness, one can never really know with any degree of certainty what will come next.
As a fair number of us begin our annual two-day mini-holiday to gather with friends, co-workers and clients in front of televisions, clutching our bracket sheets and eagerly following the unpredictable games that define march Madness, I can’t help but think of the overall economy and the commercial real estate market and the similarities they have to this unpredictable time of year. The past few days I have listened with mild amusement as economists pontificate on the recent conflicting GDP and unemployment data. Unemployment is down but so is GDP. That is a conflict. Some economists assume that GDP might indeed be up but not accurately reported while others view the economy still recovering at a very deliberate and slow pace. Just this morning I heard that the home foreclosure rate is up in 24 states, some at a rather brisk pace. But the rate is down in the other 26 states. While it could be a function of the backlog in those 24 states finally running the course, the fact remains there is still significant distress in the housing market which affects virtually everyone, directly or indirectly.
Between phone conversations and meetings over the past few days, it is apparent to me that there are still different points of view on our commercial investment real estate market. Some investors claim they are as busy as ever underwriting deals for acquisition while others lament the lack of product. From what we can tell, distressed real estate is still plentiful and in demand by many investors. However, we are also seeing more stable opportunities coming to market or being considered or prepared for marketing. From our vantage point, activity is up no matter what the product type. One just might have to search a little harder for the right deal.
Now if you’ll excuse me, I need to finish my brackets in time for my obligations this afternoon with my friends, co-workers, and clients. Go (insert your favorite team name here)!