ATLANTA — InterFace Conference Group and Morris, Manning and Martin LLP hosted the Commercial Real Estate Investment & Finance 2012 conference yesterday at The Grand Hyatt in Atlanta. More than 400 attendees from around the country converged to discuss various aspects of finance and investment in the commercial markets. Below is a short summary of the conference with some key themes and quotes from each session. Stay tuned tomorrow for highlights from the second half of the Conference, and keep an eye on REBusinessOnline’s “Feature Article” section and France Media’s other newsletters (www.francemediainc.com/newsletters) for more in-depth coverage of each topic. Please click here for more information on the event and InterFace Conference Group.
Featured Speaker, Dr. Carl Hudson, Ph.D., director of the Center for Real Estate Analytics and Federal Reserve Board of Atlanta:
Dr. Hudson spoke about the key challenges and headwinds commercial real estate is facing. He said a lack of job growth, the refinancing gap and the concern about credit quality are the main factors stalling recovery. Also, a lack of consumer and business confidence is stalling growth. However, he said the commercial real estate market is not likely to affected as strongly due to these factors as the residential real estate market for two reasons: 1.) Commercial debt is $3.5 trillion versus $11 trillion in residential debt; and 2.) The large, systemically important banks are less exposed to the commercial real estate market.
State of the Market: What to Expect in 2012
As a whole, the speakers on this panel agreed that they are focusing on the challenges of leasing and buying space. A few panelists said their primary focus is on operational execution of creating value in the assets they acquire. Scott Sealy, chairman of the board of Seely & Co., said he was surprised that the deal volume has been as slow as it has been and that it has been hard to find properties that fit his company’s criteria. The panel also felt that looking ahead there will be more large pool transactions as opposed to individual sales. However, Mit Shah, managing principal and CEO of Noble Investment Group, said big pool sales don’t look attractive long-term, and the best opportunity to make money is one-off deals.
Debt Financing Is Back…For Some
The panel agreed that the multifamily market is definitely the strongest commercial sector. However, for a good asset in a big city, there are people who are willing to fight for it. The panelists said note sales are up, with most sales being more stabilized. Additionally, they are starting to see a number of sales where the purchaser is buying direct with no partner. For 2012, double digit growth is expected with multifamily leading the way.
Equity Investment Trends From Core to Distressed: Who is Buying & Investing, at What Rates and What Terms?
Although generally investors are primarily the same as before, they are looking for different things post-recession. There has been a shift toward safe, quality product where there is less risk, resulting in more income. Jim Meyer, managing director of Tishman Speyer Properties says his company has had a lot of success due to its operator skill sets, but that deals are still harder to make than before. Todd Frye, principal of Strategic Partners U.S. and CB Richard Ellis Investors, says he is starting to see some banks moving product but that there is a wide variety of sellers. Overall, the group’s concerns were government policy, the debt situation in Europe and tenant confidence.
Again, stay tuned to REBusinessOnline for more analysis tomorrow.
— Savannah Duncan