ULI's Chief Forecaster: CRE's Time to Suffer

IRVING, TX-Going into next year and 2010, the commercial real estate industry will have to stay focused on operations, scuttle development plans and hunker down for the long haul. As the nation moves into a full-fledged recession, the worst has yet to come for the commercial sector.

“Housing, bonds, REITs have all suffered, now it’s time for commercial real estate to suffer,” Dean Schwanke, senior vice president of the Washington, DC-based Urban Land Institute, told 415 professionals at yesterday’s forecast luncheon sponsored by the North Texas ULI chapter. Schwanke confirmed the present economic state is the worst it’s been since 1991. “Look for the fourth quarter to be a severe downturn,” added the author of ULI’s emerging trends forecast, a telling 71-page report based on 700 interviews and surveys of leading industry professionals.

Schwanke’s message wasn’t for the faint of heart: three years and real estate will be back on track. “Real estate has been very good to real estate investors and there’s no reason to bail out now,” he said, tempering the brutal reality with tips for surviving the storm. Fortify returns by putting good asset management and leasing teams in place along with workout specialists. Don’t build and don’t sell unless it’s necessary, a message that’s dominated nearly every CRE forecast to date. But, he did offer a new tip: it’s a good time to seek entitlements because the public sector is “much more receptive than before.” And, by all means, go green.