WHAT WILL LESSONS FROM THIS SLUMP ACCOMPLISH?

Last week's poll addressed the lessons to be learned from the current real estate slump. 75% of respondents said the downturn teaches us that cycles always rule, while 23% said it's still too early to tell what is to be learned. Only 2% of respondents said the downturn would make the industry bulletproof. Bill Moss, senior managing director of Florida for CB Richard Ellis, has been involved in commercial real estate for nearly 30 years, and has seen worse slumps in the past. He shares his views about the current market downturn below.

"This slump validates the cyclical nature of the real estate industry, which has been characteristic for the last 40 years, and probably longer. The reasons that we go into these slumps is usually some combination of liquidity challenges when the capital markets become unsettled as far as their appetite for commercial real estate; slowing economic conditions, which decrease the demand; and in some cases, overbuilding.

"We've had a real estate slump in the early part of each decade, from the 1970s to early 2000s, and this one is not quite fitting in to the early part of the decade. The worst slump was in the early 1990s, and this will be far less severe.

"From a commercial real estate standpoint, the current slump that we're in is focused primarily on liquidity challenges and slowing economic activity. The capital challenges were being hit by the shrapnel coming out of the single-family residential problems. We are in a slowdown from an activity standpoint, but I would not see it as a crisis based on the cyclical nature of the industry. This is one cycle that we will probably come out of in the next six to 18 months.

"The important part is the commercial real estate markets are in fundamentally good shape. We have a good balance of supply and demand, and stable market conditions. I don't think Florida, nor the rest of the county, is in any kind of severe situation. I think we will come out of this slump as the capital markets stabilize.

"I've been in commercial real estate for 30 years, and can say neither the good times nor the bad times last as long as everybody thinks they will."

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