Some recent private chit-chat heard among a group of prominent real estate dealmakers:

  • “Land prices are out of reach.”
  • “I'm struggling with low yields.”
  • “Opportunities are harder to find.”
  • “You can't make the numbers work on (building) condos.”
  • “Not buying existing core assets.”
  • “Spread compression is too much.”
  • “It's insane pricing on industrial.”
  • “Underwriting is loosening.”
  • “It's a tremendous time to borrow.”
  • “Debt has never been cheaper.
  • “We're seeing limited or no call protection--loans will come back to you.”

Have you been hearing the same thing?

But then you read about the deals at “record” prices—mostly in the 24-hour markets as money keeps getting pushed out by institutional investors which need yield and foreign buyers who don't have anywhere else to put it.

Yes, you can borrow cheaply and lenders count on the security of core properties.

But even in Manhattan, overall office vacancy remains above 10% as new projects like One World Trade Center come on line and leech tenants out of last generation A-space.

So Houston is the place to invest, or should I say make deals, just as oil prices plunge—we know the story about how that city has diversified beyond big oil and gas. But the talk aside, energy prices need to rebound to sustain the boom in a classic hot growth town which has known (more than) its share of busts.

Driven by high stock prices, M&A activity reaches new peaks, but company consolidations inevitably lead to layoffs although the investment bankers and lawyers fatten their current bottom lines.

Suddenly Japan is back in recession and Europe totters on heading back over the edge. The British prime minister now warns of reversals. The BRICs fade and the U.S.'s lukewarm recovery, including virtually no wage growth and shrinking full-time work force, looks steamy by comparison. And low gasoline prices could be an early Christmas present for retailers who need a lift from penny-pinching consumers. A global panic attack would set in across world stock markets, if government bankers actually moved to raise interest rates. Thankfully inflation is not a problem, but that's because deflation in some parts of the world is more of a concern.

Under the circumstances, if I'm running money and I have a backlog of capital to put out, it's time to swallow harder. It's the point in the cycle when developers begin to buck-up their backers with optimistic talk about how they have the special site in the special submarket and acquisition execs convince themselves that cap rates can go lower, because of all the offshore money flowing into the market. And don't worry. The Keystone Pipeline will create lots of new jobs.

Where 2009 was the time to make deals of the century, today the odds increase for landing duds.

And you notice many of those 2009 buyers are selling out today. They're making good on realizing that 2009 promise while the going is still good.

So after the chit-chat, a real estate veteran comes up to me and ask,s “What should I do?”

“It's pretty obvious,” I said.

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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.

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