{"id":1004020639,"date":"2010-06-01T12:02:27","date_gmt":"2010-06-01T20:02:27","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004020639"},"modified":"2022-12-09T02:29:14","modified_gmt":"2022-12-09T10:29:14","slug":"commercial-real-estate-a-market-of-ironies-2","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/commercial-real-estate-a-market-of-ironies-2\/","title":{"rendered":"Commercial Real Estate: A Market of Ironies"},"content":{"rendered":"<p>By Bob Bach, National Director of Market Analysis, Grubb &amp; Ellis Co.<\/p>\n<p><a class=\"highslide\" href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2010\/06\/Bach-cropped.jpg\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1004020640\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/commercial-real-estate-a-market-of-ironies-2\/bach-cropped\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2010\/06\/Bach-cropped.jpg\" data-orig-size=\"1473,1305\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;}\" data-image-title=\"Bach, cropped\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2010\/06\/Bach-cropped.jpg?w=1024\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2010\/06\/Bach-cropped.jpg\" alt=\"\" title=\"Bach, cropped\" width=\"150\" height=\"150\" class=\"alignright size-thumbnail wp-image-1004020640\" \/><\/a><\/p>\n<p>The commercial real estate investment market is dealing with two major ironies at this point in the cycle. Elizabeth Warren, the chair of the Congressional Oversight Panel reviewing the financial markets, noted in February that half of all commercial real estate loans will be under water by year-end. <\/p>\n<p>At the same time, there\u2019s too much capital, primarily equity but also debt, chasing too few deals, either core assets in primary markets at one end of the quality spectrum or deeply discounted REO and distressed assets at the other end. The pace of foreclosures has been sluggish because banks are working hard to keep properties in the hands of borrowers and off their REO roles, and also because it takes a long time to unwind CMBS loans, which were not designed to move in reverse easily. Given the elevated level of distress in the system, it seems highly incongruous that there\u2019s too much investment capital chasing too few opportunities, but that\u2019s where we are.<\/p>\n<p>The second irony is that commercial real estate investors are once again reaching for risk just as banks are shying away from risk due to fears over the potential restructuring of sovereign debt \u2013 Greece and Spain today, but the U.S. and UK tomorrow? In the last few months, low yields on cash have encouraged investors to assume more risk in search of higher returns across all asset classes. In commercial real estate, this trend is evident in investors\u2019 willingness to compete aggressively for core properties in primary markets, driving down cap rates. Perhaps the commercial real estate industry hasn\u2019t gotten the message yet that risk premiums are rising once again, or perhaps we\u2019re hoping that rising levels of risk aversion overseas won\u2019t have a big impact in the U.S. There is no way of knowing at this point whether financial contagion from European sovereign debt fears will push capital targeted for commercial real estate investments back to the sidelines. <\/p>\n<p>If I had to guess, I would say that the current episode of credit tightening will have a minor effect on commercial real estate investors in this country who, after all, are targeting two very select slices of the property markets with the least amount of risk \u2013 high quality and high distress. If eurozone countries follow through on their commitments for budget cuts and financial support, I think domestic commercial real estate investment markets will continue to attract capital at a decent pace.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The commercial real estate investment market is dealing with two major ironies at this point in the cycle.<\/p>\n","protected":false},"author":1395,"featured_media":1004020640,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1004020639","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.0 (Yoast SEO v28.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Commercial Real Estate: A Market of Ironies - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/commercial-real-estate-a-market-of-ironies-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commercial Real Estate: A Market of Ironies\" \/>\n<meta property=\"og:description\" content=\"The commercial real estate investment market is dealing with two major ironies at this point in the cycle.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/commercial-real-estate-a-market-of-ironies-2\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2010-06-01T20:02:27+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-09T10:29:14+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2010\/06\/Bach-cropped.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1473\" \/>\n\t<meta property=\"og:image:height\" content=\"1305\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Bob Bach\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/commercial-real-estate-a-market-of-ironies-2\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/commercial-real-estate-a-market-of-ironies-2\\\/\"},\"author\":{\"name\":\"Bob Bach\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#\\\/schema\\\/person\\\/b5d33e145e37b6c8b4d4ad3835a86ff6\"},\"headline\":\"Commercial Real Estate: A Market of Ironies\",\"datePublished\":\"2010-06-01T20:02:27+00:00\",\"dateModified\":\"2022-12-09T10:29:14+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/commercial-real-estate-a-market-of-ironies-2\\\/\"},\"wordCount\":432,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/commercial-real-estate-a-market-of-ironies-2\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/wp-content\\\/uploads\\\/sites\\\/46\\\/2010\\\/06\\\/Bach-cropped.jpg\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/commercial-real-estate-a-market-of-ironies-2\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/commercial-real-estate-a-market-of-ironies-2\\\/\",\"url\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/commercial-real-estate-a-market-of-ironies-2\\\/\",\"name\":\"Commercial Real Estate: A Market of Ironies - 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