Cover STORY
No Money,
No Deals
The pipeline is clogged, and anxious players
are waiting for the capital to flow again
The bear market on Wall Street may be laying the groundwork for a bull run on distressed properties by deep-pocketed investors. The problem is, no one knows when
that may occur. Will it be in 2009, 2010 or 2011? Then again,
there are those who wonder whether the expected run is more
hype than fact.
That’s the mindset that has much of the real estate market frozen, making acquisitions a dicey and problematic process, both in
the past year, when it slowed dramatically, and moving forward.
Further complicating the picture is how and when government
bailout dollars will
By Greg Mellen reach the market, what
it will take to shake that
money out of financial institutions and how government policy will
develop with more sectors of the economy and citizenry clamoring
for relief.
Only one thing seems for sure. As Bette Davis would say, “Fasten
your seatbelts. It’s going to be a bumpy night.”
INVESTMENT OPPORTUNITIES?
Or as Dave Doupé, an international director at Jones Lang
LaSalle’s capital markets group working out of West Los Angeles, says, “There will be tremendous opportunities for skilled
investors, but it’s going to be a very chaotic time.”
While the worst may be over for the scuttled home market, it
could continue to drift slowly downward before climbing back.
More worrisome is the troubled outlook for commercial property.
Long thought to be a safe harbor in tough times, commercial real
estate appears to be teetering on the edge of an imminent fall.
“Right now, commercial property default rates are low,” Doupé
says. “But the writing is on the wall.”
Consider this chilling prediction from the Urban Land Institute
in its “Emerging Trends” report. “The credit crisis and ensuing recession promise to drag commercial real estate markets into a difficult period marked by value losses, rising foreclosures and reduced
property revenues. In 2009, expected total real estate private equity
investment returns will likely register in negative territory for the
