The commercial real estate recoverythat’s underway took approximately less than 2 years because there’s much more of a rush to mark-to-market than in previous recoveries. There is also better information and research as well as more institutional influence in the market both by the public market REITs and by the private market pension funds. What this means is that we've gotten to a point where it's much more attractive to buy commercial real estate.
There is still some uncertainty where prices are still high, but there has been much more of a methodical effort to get the process right. The banks are doing the same because of the pressure from the regulatory agencies. Capital is very selective,and that’s a challenge, but it should be a challenge. There should not be the easy money that we saw in the peak of the first quarter of2007.
The re-pricing of rents has been as significant as the re-pricing of assets in sustaining this recovery. As challenges go, we are surprisingly less concerned about the next 2 to 3 years because the Federal Reserve Systemis providing tremendous liquidity and low interest rates to the market. The United States is becoming a favored nation again from a safe-haven standpoint because of the global crisis that's happening outside the country. Treasuries are now at an unheard of 3.2 percent, and we anticipate these rates will continue.
Commercial real estate is essentially poised between a bond and a stock. It's got the bond characteristics of leases and the stock equity characteristics of an asset changing in value. Over the long term,will it remain an important part of the investment dynamics of the marketplace? Has it earned its place as a viable asset class? Does it belong with investors at all levels? The answer is yes!
— Richard Juge, CCIM, SIOR, is the 2010 president of the CCIM Institute.