Ronen: Yes. The best analogy is the Great Depression. Those people that lived through the Great Depression had a different mentality about risks and the economy. Because the last recession was so deep and is still very fresh in peoples' minds, it is causing investors to take less risk.

GlobeSt.com: Is this a generational change? Will millennials be risk adverse as well?

Ronen: They may not be as risk adverse. The younger generation that is in the field now really didn't go through the recession as a member of the workforce. They may have had a secondary impact where they had a family member impacted, but they weren't part of the work force and so they didn't experience a first-person impact. They aren't going to be as cautious, but even if they were willing to take the risk now, the market won't let them. Before, the market structure was allowing more risks.

GlobeSt.com: Some experts have said that the cycle is broken. Do you believe this is a longer runway, or that the cycle has been extended?

Ronen: I think we are going to see a longer runway. I am still a believer in cycles because centrally, people are going to forget or people are going to change fundamentally that will enable excesses to happen in the market, and there will need to be some sort of correction.

GlobeSt.com: When do you think it will end?

Ronen: If we look at the market today, we have slow and steady economic growth; unemployment is at record lows, but we have low wages so there is no inflation. Companies are hiring, which is good for real estate. From that side of the equation, we are okay. There is nothing happening in the near term that I can see that will cause the economy to fall off a cliff. On the supply side, we are building a lot of multifamily, and the single-family supply is being constrained because of the financing and we are seeing labor shortages. There has been zero office development. I am not seeing the excesses in the system that would lead me to believe we are going to have an end to the cycle anytime soon. People often point to the peak pricing where you are buying assets at or above the last cycle, but rents are up and fundamentals are good and there are historically low financing rates. Investors are able to lock in low rates and get a good yield.

LOS ANGELES—Investors can settle in for a longer cycle, according to Shlomi Ronen, managing principal and founder of Dekel Capital. While fundamentals are healthy and demand across asset classes is strong, Ronen says that investor sentiment and concern about the end of the cycle—questioning and speculation that has gone on for years—has actually helped to create a natural check and balance that will lead to a longer cycle. To find out more, we sat down with Ronen for an interview.

GlobeSt.com: How has concern about the extended cycle actuality helped to create a longer runway?

Shlomi Ronen: Investor sentiment is much different today than it was before the prior downturn. Investors are thinking about the end of the cycle and are worried about the end of the cycle, and there is a pull back that is associated with that. That has prevented the rampant speculation and “trees are going to grow to the sky” mentality that leads to a downturn. At this point, we seem to have well constrained ourselves in not allowing excesses in all sectors. There may be isolated cases of excess in some markets, but when you look a couple of years out, the supply will be reduced because we have seen a pull back in equities and in construction lending. Those are going to be strong mitigants for future supply that would create issues. It is going to help prevent another 2007 or 2008 crash that people are worried about.

GlobeSt.com: Is the consistent focus on the end of the cycle residual anxiety from the last recession?

Ronen: Yes. The best analogy is the Great Depression. Those people that lived through the Great Depression had a different mentality about risks and the economy. Because the last recession was so deep and is still very fresh in peoples' minds, it is causing investors to take less risk.

GlobeSt.com: Is this a generational change? Will millennials be risk adverse as well?

Ronen: They may not be as risk adverse. The younger generation that is in the field now really didn't go through the recession as a member of the workforce. They may have had a secondary impact where they had a family member impacted, but they weren't part of the work force and so they didn't experience a first-person impact. They aren't going to be as cautious, but even if they were willing to take the risk now, the market won't let them. Before, the market structure was allowing more risks.

GlobeSt.com: Some experts have said that the cycle is broken. Do you believe this is a longer runway, or that the cycle has been extended?

Ronen: I think we are going to see a longer runway. I am still a believer in cycles because centrally, people are going to forget or people are going to change fundamentally that will enable excesses to happen in the market, and there will need to be some sort of correction.

GlobeSt.com: When do you think it will end?

Ronen: If we look at the market today, we have slow and steady economic growth; unemployment is at record lows, but we have low wages so there is no inflation. Companies are hiring, which is good for real estate. From that side of the equation, we are okay. There is nothing happening in the near term that I can see that will cause the economy to fall off a cliff. On the supply side, we are building a lot of multifamily, and the single-family supply is being constrained because of the financing and we are seeing labor shortages. There has been zero office development. I am not seeing the excesses in the system that would lead me to believe we are going to have an end to the cycle anytime soon. People often point to the peak pricing where you are buying assets at or above the last cycle, but rents are up and fundamentals are good and there are historically low financing rates. Investors are able to lock in low rates and get a good yield.