to arrive, although he acknowledges that
“in 2009 we could start closing some.”
He says he gets proposals from “people
trying to buy tracts of 20 or 30 houses,
or a group of foreclosures.” But he adds,
“those never come to fruition.”
“There are hedge funds getting together,” Benton says. “That money coming
to the market will help.”
Not everyone believes the hedge funds
will provide the capitalization many hope
will resuscitate the market. “We’ve heard
about estimates that there will be $800 billion on sidelines for real estate properties
and recapitalization deals,” Doupé says. But
he feels that number is greatly exaggerated,
possibly by 100%.
Doupé adds that much of that money is
in commitments from pension funds and
endowments and he believes many of these
funds and pensions that have been hard
hit and will pull those commitments. “We
think it’s more like $175 billion or $200
billion, and that’s not enough to solve the
problem,” Doupé says.
The ULI report agrees, saying, “Although
substantial vulture capital has been raised
to bottom-fish for distressed properties,
possibly cushioning against severe value
declines, real estate will continue ‘to starve’
until debt sources resume funding owners
and investors.”
Not everyone is running from the market.
At Lee and Associates, Benton’s creating a
group that is moving into the investment
arena. Benton says while Lee and Associates
is strong in leasing, sales is something new.
“Our office is solely involved in investment
sales,” he says.
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DEALS WILL GET DONE
Not all development and sale transactions
will stop in coming months. Projects with
environmental and social benefits that thus
qualify for government subsidies and tax
credits, particularly in urban settings, will
likely be able to proceed.
“Those projects that have a government
stamp of approval,” Hughes predicts will
get done. “Those are going to start to rise
to the fore as distinguished from traditional
projects,” he adds.
Also projects that revitalize infrastructure
should do well. “As the national emphasis is
drawn to the need to reestablish infrastructure, I think land-use policy and development will dovetail,” Hughes says.
And there are scattered deals being made
out there. For example, Voit Commercial
Brokerage has directed the sale of 33 buildings at Koll Center 3, a 188,374-square-foot,
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“Right now, commercial
property default rates
are low. But the writing
is on the wall.”
www.GlobeSt.com/industrial/01
DAVE DOUPÉ,
Jones Lang LaSalle
