When Will CMBS Jumpstart?

NEW YORK CITY-Preferred equity, mezzanine and private sector funds are all stepping into the breach created by the dramatic slowdown in the CMBS market. Still, though, a robust CMBS pipeline is sorely missed by the market’s participants. It will come back, it is widely believed, when the current glut of paper that the investment banks cannot – or are not willing to – move right now finally works its way through the markets. When that will happen, and what will prompt that event, has become the industry’s favorite guessing game.

Bill Huges, SVP and managing director of Marcus & Millichap Capital Corp., tells GlobeSt.com that he doesn’t think the CMBS markets will be out as long as some in the industry believe it will. “I think it will come back quicker than a year – which is what some are saying – and it will come back with a vengeance.”

Jerry Pietroforte, a managing director with Alvarez & Marsal Real Estate Advisory Services, also belongs to the sooner-rather-than later school of thought. “I think we will see the capital markets start to turn around within two to three months,” he tells GlobeSt.com. Unlike Hughes, though, he believes its recovery will start gradually and ramp up to previous volumes slowly. “In Q2 and Q3 we will see signs of a capital markets comeback.” However, this will happen only if the economy doesn’t fall into a prolonged recession, Pietroforte says.