A leading real estate consultant who tracks appraisal trends doesn't see net operating incomes increasing enough to support existing values. This company expects cap rates to move up and values to head down give or take 15% before bottoming. That's not terrible given the significant increase in prices over the past decade. But again, for the late buyers and their lenders, it's not what they were betting on.
A pension fund advisor with ample funds to allocate says they're having trouble finding deals. Sellers are holding out for top dollar, while buyers see the writing on the wall (see above). "It's hard to get anything done. Sounds like what was happening in the housing market about 12 months ago before reality set in.
An executive from a major financial company says borrowers are getting leeway: "A lot of people owning loans don't want the assets that are underwater so we are forebearing." The absence of headlines about owner defaults speaks to how many lenders and their borrowers are working in frenzied states to stay of out of the newspapers. "I hope I can survive, " says one bleary-eyed banker.
If you are interested in finding out more about the sorry state of American infrastructure, you can link into the report I authored for the Urban Land Institute. Click here and you will find link on the Miller Ryan homepage. It's called Infrastructure 2008: Competitive Advantage and is available in hard copy through ULI.
And last week I was giving some developers a hard time. Here's a project in downtown Denver, 1800 Larimer, that feeds into the city's resurgence and reinforces both the city and state's push for reducing the region's carbon footprint. (Note Miller Ryan represents Westfield).
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
