Real Estate Makes Good Defensive Play

PORTLAND-Lou Lauman, the local CB Richard Ellis investment sales specialist who handled last year’s $120 million disposition of Portland’s tallest office building, the 42-story U.S. Bancorp Tower, says the real estate industry is in an unusually good position to reap rewards from the slowing economy.

“At other times in the past when we’ve had a slowdown in the overall general economy, real estate has historically been overbuilt and therefore has not represented at that moment in time a particularly attractive alternative investment option for people who want to move money out of the stock market,” Lauman tells GlobeSt. “What we have in our economy today is significantly different; commercial real estate is very healthy. It continues to be a landlord’s market and the vacancies continue to remain relatively low.”

In other words, we are not overbuilt this time around, says Lauman, which means real estate represents a very safe and viable investment alternative to the stock market. “You combine good fundamental real estate market conditions with very low interest rates—commercial mortgages are running 7.25% to 7.5% today—and the net result is I think is continuing low cap rates and steady investor demand,” says Lauman. “As things stand now, I think it represents a safe and profitable haven from the stock market.”