October 21, 2010
\nBy Allison Landa, News Editor<\/p>\n
SAN FRANCISCO \u2013 We\u2019re not in a normal recovery. That\u2019s according to Alan Billingsley, the North American director and head of research at RREEF Alternative Investments. Billingsley, who spoke at the 2010 Commercial Real Estate Women (CREW) Network Convention & Marketplace at a session titled \u201cThe Long Work-Through: Real Estate Recovery in the Next Two Years.\u201d<\/p>\n
\u201cWe\u2019re in a soft patch,\u201d Billingsley said. \u201cWe\u2019ve been through the worst recession in my lifetime. \u2026. It was fueled by financial markets, and financial markets tend to be very slow to recover. Our expectations are a slow recovery.\u201d<\/p>\n
One major difference from typical recoveries comes in the fact that we\u2019re recovering in a global economy \u2013 which means the recovery is not relying on the United States as a driver.<\/p>\n
\u201cIn fact,\u201d Billingsley said, \u201cwe\u2019re not really particularly relying on the developed world. It\u2019s a very, very different environment out there. The growth that we\u2019re looking for is really at the global level and mostly from the global markets.\u201d<\/p>\n
Globally, he said, the latest economic data suggests that the recovery is weakening, with job growth continuing to be slow. That said, he added that looking at some of the indicators going forward, he and his colleagues are cautiously optimistic.<\/p>\n
When it comes to real estate, that recovery it showing itself unevenly throughout the U.S., with coastal markets targeted by foreign capital seeing the most rapid advances. Those tend to be the northeast and west coast regions. At the other extreme are late-recovery markets such as Southern California\u2019s Inland Empire, the San Francisco area\u2019s East Bay, Chicago, and Florida. <\/p>\n
Billingsley said that the recovery is being led by the multi-family sector.<\/p>\n
\u201cThe worst is past,\u201d he said. \u201cWe\u2019re going to be seeing very healthy rent growth.\u201d<\/p>\n
He characterized industrial real estate as a mixed sector partially dragged down by the retail market. However, he added that the heart of economic growth in this sector lies in land infill and business parks. \u201cWe\u2019re bullish,\u201d he said, \u201cbut steering clear of commodity.\u201d The sector is predicted to be weak through 2010, then recovery with an occupancy gain. <\/p>\n
Billingsley was less bullish on office properties, which he he described as a troubled sector, adding that shadow space adds to normal reported vacancy rates. \u201cIt\u2019s the most volatile and sensitive to recession,\u201d he said. \u201cStick to trophy market sectors: San Francisco, Seattle, New York, Boston.\u201d<\/p>\n
Finally he tackled the spector of retail, easily the hardest-hit sector during the recession. He said that the sector is grappling with unprecedented demand declines \u2013 but had some positive news. \u201cIt\u2019s a tale of two retail centers,\u201d he said. \u201cThere\u2019s the one where people want to be and then there are the (defunct) ones. \u2026 Retailers who are left have done a great job controlling their costs.\u201d<\/p>\n
Billingsley warned that government support is waning and it\u2019s time for the economy to stand on its own two \u2013 albeit shaky \u2013 feet. \u201cThe fiscal stimulus is running out,\u201d he said. \u201cWe\u2019re really at a point where the economy is going to have to do it on its own.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Billingsley, the North American director and head of research at RREEF Alternative Investments, spoke at the 2010 Commercial Real Estate Women Network Convention & Marketplace in San Francisco.<\/p>\n","protected":false},"author":936,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21825,21742],"tags":[],"class_list":["post-1004023922","post","type-post","status-publish","format-standard","hentry","category-finance","category-latest"],"acf":[],"yoast_head":"\n