LOS ANGELES-“US commercial real estate is heading into a slow but steady recovery.” So said CB Richard Ellis’ Mike Lafitte, president of the Americas at CBRE, who recently offered his perspective on the commercial real estate markets in a company podcast. What could derail that recovery, he says, will be bigger factors that are going on as the global economy is playing out. Jobs, he says, is at the center of the discussion.
Asieh Mansour, head of research for the Americas and senior managing director of global research at CBRE, facilitated the discussion in the Global In-Sights presentation. “When you look at the office, industrial and retail sectors, all are at high vacancy rates today, so the recovery on the pure fundamentals side of the equation will be a fairly lengthy and slow recovery,” Lafitte explained.
When Mansour asked Lafitte where we are today compared to 10 years ago, Lafitte pointed out each peak and valley of each real estate down cycle, has a different feel and is very different. “This one feels really broad based,” he said. “It is hard to point to one industry that will lead us out of the downturn.” He does point out that there are some sectors like the financial, technology, healthcare, and education sectors are coming back strong and are “emerging as leaders” in the recovery. “The one bright spot in this cycle is that we didn’t find ourselves with a lot of overbuilding and capital is more disciplined.”
On the leasing front, Lafitte said that there has been a slow gain in confidence from the occupier community. He also pointed out that the shadow space hasn’t been this significant this time around as it was 10 years ago. “Leasing activity has remained steady,” he said. “There is still a tremendous focus on driving cost down and being more efficient.”
When Mansour asked why so much capital is coming in to real estate, Lafitte says that real estate is an asset class has fared quite well, and has grown in the global investment community. He also pointed to low interest rates, availability of debt and attractiveness, as attractive to investors. “The yields are attractive relative to other investment alternatives.”
Overall, Lafitte says it will be a slow and steady climb out of this, and that “there are good times ahead.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
