CBC's Rick Davidson

WHAT LESSONS HAVE YOU LEARNED?

Cycles Rule! Despite the widespread belief, born of the recent high-times, that commercial real estate was no longer cyclical–or only mildly so–respondents to last week’s Quick Poll apparently weren’t fooled. Some 75% of the 304 voters believe that the current slump will Teach Us That Cycles Always Rule. Another 23%, possibly taught caution by the lousy market, cautiously state that It’s Too Early To Tell. Only 2% think that we’ll come out of this recession-or-not Bulletproof. Richard Davidson, president and COO of Parsippany, NJ-based Coldwell Banker Commercial/Oncor International, has lived through a downturn or two, and he has his own thoughts on the subject. Here they are:

“If you look at cycles back to the early 1970s, we run on a 10-year cycle: five years of growth and expansion followed by two to five years of some sort of transition. What’s different from what I have seen in other cycles is that you have the value side and the fundamental side, and they’re not running together.”The value cycle actually accelerated beyond the fundamentals cycle. As a result–and clearly it’s a matter of availability and affordability of debt capital that has reduced the number of buyers–there’s less competition for quality assets, which means lower pricing pretty much across the board.