This week’s Capital Market commentary is provided by Tom Powers:
Less than a week ago, the news talked about how the worst may be over, at least for the time being, for Europe’s financial problems. Jump ahead just a few days and riots are going on in Spain and Greece – all related to the financial crisis. We recently had offers due on two different assets, one a Class A office building, the other a class A- industrial portfolio. We received very little interest in the office building and plenty of aggressive offers on the industrial portfolio. This week I read articles from the ‘experts’ saying that the CMBS market was back in full swing to such an extent that there is now concern that credit quality is weakening. Another article stated that the balloon maturity risk for existing CMBS loans is a major concern that has no simple resolution in sight. Finally, there is no limit to those pontificating on whether the fiscal cliff will be devastating to the economy, or not that big of a deal.
My point? Things are moving so fast and in so many directions that it is virtually impossible to have a good handle on what is really going on, much less what is probably going to happen next. We are in a world that changes on a dime, and we are inundated with data about it, almost before that coin has landed on heads or tails. I get asked all the time how the real estate markets are doing. Is activity picking up? What is capital looking for? I don’t always have a good answer, but if you have to ask, I would think that with all the uncertainty out there throughout the world, owning core assets with good tenants is probably going to be a good strategy for some time to come – especially with the incredibly favorable debt that can be placed on these core assets.