A longtime real estate expert gives his take during an industry event
Written by Lily Leung
Oct. 26, 2011
The commercial real estate market is going through a period of stagnation, with the apartment sector standing as the lone bright spot, said a veteran real estate analyst Wednesday at an industry gathering in Los Angeles.
"I think we're stuck," summarized Marcus & Millichap Real Estate Investment Services executive Hessam Nadji, who kicked off a market update session at the Urban Land Institute fall meeting.
The annual event brings together the who's who of the real estate industry, from researchers to mortgage bankers and multifamily investors.
The market pause is a result of good and bad conditions, said Nadji, who's often cited by several publications including The Wall Street Journal and Bloomberg/Businessweek.
The bad first: Home prices continue to slide across the country, the European economy is in turmoil and distressed homes sales continue to account for about 20-30 percent of all transactions.
The good, which often gets overlooked: Retails sales have rebounded, as well as corporate profits, which is important because they are the underpinning of investment and hiring. Still, even profitable companies are reserved about any "aggressive expansion," given market conditions, Nadji said.
Slice by slice, apartments have recovered quickly, while the office and retails sectors have reached their bottom, Nadji said.
Nadji predicts "a very gradual recovery" but says we won't see meaningful progress until after the presidential election. He added that the chances of the country falling into another recession within the next 12 months is 20-25 percent.
What could help the recovery along?
Some panelists at Wednesday's market update talk mentioned easing regulation that affects those in the real estate industry. They said we were once too lax and now are too strict.
Source: SignOnSanDiego
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