The U.S. commercial real estate sector has marked another year of recovery in 2012. But as the year winds down, it is becoming clear that its climb back from the depths of the Great Recession will continue to be slow in the near term due to considerable economic uncertainty.
The investment community today is abuzz about consulting firms and potential conflicts of interests. Some argue that clients deserve the best, most independent, objective advice a consultant has to offer. These folks argue you simply can’t provide that kind of unbiased advice if you also are offering discretionary services.
Ronald Reagan once was asked if he trusted the Kremlin to comply with a nuclear anti-proliferation pact between the United States and Russia. “Our policy,” responded the president, “is to trust but verify.”
TheWall Street Journalrecently had a headline titled: Governance Grows Up. The underlying article reported that, despite a spate of recent cases involving certain boards of directors shirking their fiduciary responsibilities, in general the governance of public companies was steadily improving. I wondered if the same could be said of the management of institutional real estate investments? I fear the answer is: No!
How is the distribution of economic prosperity changing in the United States? The phrase “declining middle class” rolls right off the tongue, but like most catchphrases used by politicians and the media, it’s an oversimplification, masking the real trends.
The pace of economic recovery will be fastest in the job centers where businesses are constantly transforming what they make and how they make it.
I am going to provide you with a very quick take on the election and what it may mean for real estate in general and our preferred strategy: value-add multifamily.
The ballots have been cast, the confetti has fallen and the campaign commercials have ended, for now. Control of the presidency, the House of Representatives and the Senate did not change. And, as in most things in life, the implications for real estate are a mixed bag.
Outsized amounts of available capital, exceptionally low interest rates and the resulting low capitalization rates have put downward pressure on real estate returns in the United States — albeit to more rational and normalized levels, especially in the prime 24-hour gateway cities.