Browse Month: February 2011

One thing you can do….

When I was offered a ticket to attend the Chicago Humanities Festival appearance by Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau, I eagerly accepted.  As Chair of the Congressional Oversight Panel charged with investigating the financial bail-out and administering the Troubled Assets Relief Program (TARP), Ms. Warren has been smack dab in the middle of discourse on issues that directly impact both commercial and residential real estate.

Regardless of how you feel about the Consumer Financial Protection Bureau (and we welcome your thoughts in the comments below on this initiative), Ms. Warren has proven to be an engaging and passionate advocate who is not afraid to speak plainly to consumers, banks and businesses about ideas their supporting arguments.  Frankly, it was a lot fun to watch in person.

I was delighted when the audience got into the game and posed this question to Ms. Warren: “Please tell us one thing, just one thing, that everyone in the audience can do as soon as they leave here if we support your concepts?”  It was a ‘put me in coach’ kind of attitude and it felt very, very familiar because I hear it everyday from volunteers.

80,000 REALTORS® have identified themselves as commercial real estate professionals and there are a couple hundred thousand more that are conducting commercial real estate business in addition to their residential business.  We do not have the privilege of working with every member but I have also heard the question, “Please tell us one thing that we can do to positively impact the commercial real estate industry?”

Just one thing is very hard to choose (it was for Ms. Warren as well, she couldn’t help but give two suggestions!)  But here goes:   I would recommend that you update your NRDS record.  Here’s why:  NAR knows through statistical studies that almost a quarter of REALTORS® conducted a commercial real estate transaction in 2009 (see 2009 NAR Member Profile).  If you commit to telling us about your passions using your field of business codes, we promise to make sure that you know when there are calls to action on the issues you are passionate about, member benefits related to your passions and call upon you when you are needed as an expert on those passions.

It is so simple to do this one thing.  Log on to Realtor.org.  Click on My Account.  Log in and then update your preferences and your field of business code.  Simple but powerful.  Take control and let us know about your business and your passion – we already know they are one and the same!

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NAR Chief Economist Weighs In On Commercial Real Estate Survey

Goldman Sachs Headquarters, New York City

Fifty-one major economists predict that the US economy will grow markedly this year.  While predictions seem to vary in press reports, a recent survey conducted by the Wall Street Journal shows economists becoming more bullish.  Most suggest that neither unemployment, inflation nor state budget problems will halt growth.

A survey respondent, Goldman Sachs chief economist Jan Hatzius, has changed his predictions to a more favorable outlook in just a few months.  He answered 10 questions about the economy with yes/no answers with a “yes” to whether we’ll see a real recovery.  Hatzius says deleveraging will slow, and consumers will start to spend a larger portion of their incomes, which will lead to organic growth outside inventory changes and or fiscal policy.

Dr. Lawrence Yun, NAR chief economist says, “There is a tax incentive to spend this year from full business expensing rather than depreciating asset purchase, so we could get a quite a rush in spending as the year progresses.  However, companies are still worried about more burdensome and uncertain regulatory environment and a higher tax climate in upcoming years.”

The growth prediction, published in this week’s survey is a year-over-year increase in GDP of 3.5% by Q4, 2011.  Of course, unemployment impacts commercial real estate, and while its rate is expected to dip, it is not expected to drop enough to see office and retail occupancy rates become healthy by year end.

Yun said one big wildcard to the speed of economic recovery is when businesses will open their wallet.  “Big companies are flush with cash but have been just sitting on it rather than redeploying into the economy in terms of hiring or buying equipment and property,” he added.

Read more at BusinessInsider.com.

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More Recovery Indicators: CMBS Bonds Are Bouncing Back

Wall Street Sign. Author: Ramy Majouji
Image via Wikipedia

On the credit side of CRE we have more signs of a recovery that will be felt outside of the primary markets – and it’s about time.  Wall Street is reentering the market for commercial real estate, as Bloomberg reported today:

The rebound in commercial-mortgage backed securities is benefiting borrowers with smaller properties and in areas outside the biggest cities. CMBS issuers fare better in these markets because they can get the higher rates they need to cover the costs of packaging and selling loans. Institutions that keep mortgages on their balance sheets, including insurance companies and non-U.S. banks, focus on top-tier buildings in large metropolitan areas.

‘Smaller Assets’

“Loans from CMBS lenders are more often on smaller assets or Class B office properties,” said Ben Thypin, an analyst at Real Capital Analytics Inc., a commercial-property research company based in New York. “They haven’t been able to compete that well with insurance companies and international lenders in the office market on the highest-quality buildings.”

About 71 percent of commercial-property lending by insurance companies was done in primary markets in 2010, compared with 67 percent for foreign banks and 47 percent for CMBS lenders, according to Real Capital. About one-third of loans from CMBS firms were in tertiary markets, compared with 6.6 percent for insurance companies and 12 percent for non-U.S. banks, the data show.

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NAR Research Video: Commercial Market Recovery

Our quarterly market survey is out – and the news is good.  Our members are still going through a period of difficulty, but 4Q 2010 shows rising commercial sales volume, leasing activity is up 4% ad NAR members are indicating that business opportunities are up 2%.  Check out NAR Research’s video featuring economists Jed Smith and George Raku as they give their commercial market update.