Amid all the talk about peak-to-trough value losses of 40 to 50 percent in commercial/multifamily real estate, some sectors in certain 24-hour cities may be firming up even as the overall market continues to sink-albeit more slowly. This very limited phenomenon embraces a classic flight to quality and appears to concentrate in Class A apartments and select high quality office in the primary coastal gateway markets.
Investors with cash-remember we´re talking cash buyers since there is little if any available credit-circle apartments, because they figure there will be significant pent up demand among young adult baby echo boomers who have been doubling up or moving back in with parents. As soon as, jobs activity and wages show some sign of upticks, more people will look to rent their own place. House-hunting won´t be in the cards because of ongoing credit restraints-the days of putting little to nothing down are over for the foreseeable future.
For now the investor attention concentrates on Class A apartments which appeal to a higher-income strata-baby boomer empty nesters who may be downsizing out of big suburban homes or the unmarried single/young couple without kids urban professionals who don´t have enough cash to buy, but do have enough income to rent a nice, hip urban residence. In prime coastal West Coast markets like San Francisco and down the Pacific in Southern California, upscale apartments start to fetch lots of buyer attention-even lowering cap rates. Can you imagine?
Foreign buyers, in particular, figure Washington, D.C., New York, and San Francisco office is ripe for the pickings at or near market lows. Investors believe these markets will not only be the first to recover, they think these places also will bounce back more quickly because of direct links into global pathways and world business markets.
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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.
