This is an HTML version of an article that ran in the July/August 2013 issue of Real Estate Forum. To see the original story, click here. 

You could liken the recent economic unpleasantness to the iconic TV character Barney Fife, lone bullet buttoned away in his shirt pocket for safe-keeping. Buy that premise, and the recovery, slow as it might be, can be likened increasingly to Sam Peckinpah's The Wild Bunch. In short, guns are blazing.

To judge from the results of our new Investor Sentiment Survey, neither a slowly improving macro economy nor threats of increasing interest rates or muddle-headed government intervention can hold anyone back.

Nearly 192 real estate professionals across the country responded to our recent survey, in addition to the 200-plus who took the survey live during a series of interactive sessions at RealShare Investment & Finance in San Diego (See sidebar). Across the board, the results carry the same message: Real estate pros are getting back to business.

Overwhelmingly, our respondents are net buyers once again, with a whopping 64.6% saying their current strategy favors acquisitions. This renewed aggressiveness may be simply a sign that investors can once again afford red meat, but only 12.5% said their balance sheets show more dispositions (with 22.9% pursuing both equally).

“You can't leave money in your mattress or a bank,” says one investor. “There's no return. Real estate and the stock market are the best bets.”

“It is a good time to buy and improve assets,” says another. “Rent increases are possible and projects can be financed with positive leverage.”

But as the returns indicate, not everyone is equally bullish. “We are looking at new deals,” writes one respondent, “but have not been successful buying in 2013 (after success with a number of acquisitions in 2011 and 2012). We see pricing as somewhat unjustifiable. Accordingly, we are in more of a disposition mode and have sold some properties into the stronger market.”

The dominance of buyers squares with those (39.1%) who say they've become more aggressive in the past year (compared with the 36.5% who are maintaining a steady course or the 8.9% who have trimmed their sails). And nearly a quarter—22.9%—are sounding out new markets. For 23.4%, this means secondary and tertiary metros.

Now, venture a guess as to what these net buyers are eyeing. If you said Multifamily, you are right, with some 81 pros checking that box. Retail is on the buy list for 69 of our respondents, and Office for 65. Industrial got the vote from 62 survey-takers, and 36 of our respondents are focused on Hotels. Healthcare garnered 31 votes and Student Housing, 23.

Property types clustered more tightly together on the sell side, though Multifamily still led the pack with 29 votes. Retail was #2 again at 16, followed by Office (15), Student Housing (14), Hotels (13), Industrial (12), and Healthcare (10).

“We believe that there is considerable opportunity in the office market,” writes one respondent, “as the economy continues to show improvement, especially in multi-tenant office product, due to an increase in small/start-up businesses as the economy recovers.”

Of course, you can't do deals without capital. Happily, 57.8% of respondents find debt more readily available than they did six months ago. Thirty-seven percent see no change while just a handful, 5.2%, think it's harder to come by. 

It should come as no surprise then that 44.8% think terms have improved in that time frame, while 30.2% think it's unchanged. But a surprisingly high percentage—25%—think it's tougher to land a loan these days than half a year ago.

One of our respondents, clearly feels a new freedom of choice in the current lending environment, reporting that there are “lots of good options between the agencies, banks, small life companies and conduits.”

But speaking for those who are finding debt a bit more problematic, one respondent writes: “The debt market is much more volatile now, so lenders have tightened up the reins. Where earlier CMBS loans were dominating the debt market, now that rates have risen and spreads have exploded the demand for that product has softened for the time being.”

In all, it would seem our investor audience has the pedal to the metal as they scan the road ahead and see nothing but straightaway. But what are the potential roadblocks?

There are many, and we asked the polltakers to rank them on a scale of one to five, with five being the severest threat. The top choices were tightly clustered, but the dubious winner (with 186 votes) was Possible Changes in Interest Rates.

Despite Fed Czar Bernanke's promises to the contrary, the folks are worried that the fall unwinding of quantitative easing will make things, well, less easy. Changes in Cap Rates was the second most dire threat, garnering 173 votes, with Unemployment (171 votes) coming in at Number 3.

Increased Operating Expenses filled the #4 spot with 165 votes, and there was a tie for #5. Taxation and the Global Economy both received 161 votes. Other areas of threat were: Tenant Creditworthiness (155 votes) and Sequestration (149).

Of course, those are threats. In the meantime, it seems, the investment throttle is wide open.

WHO WERE THEY?

So who took our poll? Not surprisingly, the vast majority (92.7%) were male, only 7.3% were women. Overwhelmingly, they work for owner/investors or development firms, the only two choices that logged double-digit answers (52.6% and 11.5%, respectively).

The remaining polltakers worked for brokerages (6.8%), lending institutions or private equity houses (tied at 5.7%). Fewer than 5% work for life firms, sponsors or other institutions.

In terms of their target products, 56.8% of pros seek Multifamily. Retail is the focus for 45.8% of our respondents, and Office, which tied with Industrial, for 37.5%. Some 16.7% of our respondents are focused on Hotels, while Healthcare garnered 14.6% of the vote. Student Housing brought up the rear at 9.9% (10.9% chose “Other”).

The majority of our polltakers (35.9%) focus equally on core and secondary markets, while 27.6% cover core markets primarily and 18.2% spend most of their time in secondary locales. Only 9.4% of those surveyed report focusing on core areas to the exclusion of all else, and 8.9% do only secondary.

Most of them (42.2%) are regional players, while 27.1% are nationally focused. Nearly 22% are local and only 8.9% are international. This is actually one of the prime areas of difference between the online poll and the survey taken during RealShare.

Judging by revenues, the shops were small, underscoring the fact that despite the ubiquitous presence of the bigger players, this industry is still made up largely of boutique operations. In fact, 63% of our respondents work for organizations whose revenues last year didn't break $26 million.

GATHERED IN ONE PLACE

The recent RealShare Investment & Finance Conference in San Diego was abuzz in interactivity. That extended far beyond the cocktail reception and the various networking breaks that are a favorite feature of all RealShare events. This time, an element of technology added some spice to the exchange.

The event, which drew some 225 attendees, was the first to highlight live, interactive polling throughout the day, with questions timed to the focus of the particular panels. Six questions were asked in total, each peeling back a different layer of the current state of investment.

How Would You Describe Your Current Investment Strategy? By far the majority of the assembled crowd, 59%, were focused more on acquisitions than sales, more than twice the 23% whose current strategy is dispositions. Only 18% had equal focus on both plays.

What Is Your Primary Investment Focus? A slim majority of attendees (32%) focused equally on core and secondary markets, just squeezing out those who played in both fields but with a prime focus on secondary-market appetite (29%). Tied with 13% of the vote each were those attendees who focused solely on core markets, secondary markets solely and core markets primarily.

What Product Types Are You Interested In? There was really no surprise, when breaking down the major food groups that Multifamily was the investment of choice for our attendees, garnering 44% of the votes. Retail came in a distant second at 17% while Industrial and Hotels tied at 13%. They were also the last of the double-digit vote-getters. Office got 9%, Healthcare got 4% and Student Housing did not rank at all.

What Is Your Field Of Concentration? A testament to the breadth of a typical RealShare crowd, 63% of our attendees work on a national scale, with 26% playing on a regional basis and 11% international.

As A Borrower, How Do You See Debt Availability Compared to 6 Months Ago? The credit situation is improving for the vast majority of our attendees, and 93% find it easier to borrower than at the start of the year. Only 7% think it's unchanged from six months ago. But . . .

What Is Your Assessment of Lending Terms Compared to 6 Months Ago? . . . an improvement in borrowing doesn't mean terms have changed, and 47% see the same parameters they met up with at the start of the year. Some 53% think terms are either much more or somewhat more attractive.