CHICAGO-Economic and financial experts who addressed the recent Counselors of Real Estate midyear conference here said it’s no surprise the current economic recovery doesn’t feel like a true recovery. “We’re coming back from a much deeper hole,” Lynn Thurber, non-executive chairman of LaSalle Investment Management, told the organization’s members.
According to Thurber, “You can’t compare it to a ‘typical’ recession, such as those we endured in the past four decades. It’s a slower recovery than we’ve ever seen,” Thurber told Kenneth P. Riggs Jr., president and chairman of Real Estate Research Corp., and 2012 chair of the Counselors Organization. Riggs conducted an onstage conversation with Thurber as part of the deep examination of economic and commercial real estate issues that took place during the conference.
While affirming that the US is “no longer in a recession,” Thurber said the recovery continues to drag because in today’s interconnected world, “every bit of bad news is reflected in the stock market” with near instantaneous reactions to both domestic and international news headlines. She also cited the negativity in the market, driven by risk concern.
“Over the next five years,” she said, “more than $20 billion in commercial mortgage backed securities are maturing. While I think they will make it through the system, that is followed by $100 billion from the 10-year peak, with weaker underwriting and more risk attached.”
Thurber says the investor market has warmed to real estate. “Real estate has earned its place in the investment portfolio,” she said, “and investors are not afraid to invest in it today.”
J. Jason Choulochas, regional director of Ares Management, said retail has had a long climb back but today is finally in a better position because companies have already closed their weakest retail locations, a sentiment echoed in sessions at ICSC’s RECon 2012 conference in Las Vegas.
Thurber noted, however, that retail opportunities will be different than the “old” retail. She said “Gen Y” consumers are not as materialistic as the market has been used to, and this is keeping sales down.
Lenders at the podium said there are signs of new investment in selected commercial real estate sectors, but while showing signs of optimism, they stopped short of predicting overall recovery in the near term. The hospitality sector, for example, is experiencing a rebound according to David L. Henderson, senior managing director, commercial mortgage lending at PPM Finance, but compared to pre-recession levels, it’s still very slow.
Karen Case, president of commercial real estate for Chicago-based the PrivateBank, said she has seen several deals completed in the past few months in student housing, office and medical sectors in addition to the oft-cited popular multi-family sector.
“So we’re in the recovery phase,” Thurber said. “But it doesn’t look like it or feel like it if you are constantly looking back to pre-recession levels of activity.”
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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.
