5 things to know about commercial real estate

Written by Lily Leung

Oct. 27, 2011

Civita, a new project in Mission Valley will feature a mix of condos and apartments. — John Gastaldo / Union-Tribune staff

I spent Wednesday at the Urban Land Institute fall meeting, a gathering of nearly 6,000 people in the real estate market, representing sectors that include land development, lending and planning.

Here are five must-know takeaway points from the convention, which covers housing but has a prominent commercial market slant. The weeklong function is being held at the Los Angeles Convention Center.

1) There's an air of uncertainty about the commercial market. Stephen Blank, senior fellow at the Urban Land Institute, used the word: "tenuous" or lacking in clarity. Part of that is due to erratic domestic policies, where U.S. government officials went from the "too big to fail" period of fall 2007 to current Dodd-Frank legislation that's "too big to read," Blank said.

2) Those in the commercial field feel over-regulated, impeding progress and growth, they say. Some suggested a more middle-of-the-road approach in financial rules. Mark Gibson, executive managing director of Dallas-based commercial real estate capital company Holliday Fenoglio Fowler, suggested the industry identify municipalities that are in the best spot to "enhance job growth."

3)Which takes us to the next point: employment. Blank, the ULI leader, said the key out of the country's real estate slump is job growth. Locally, certain sectors are showing stronger hiring potential than others. Among the in-demand jobs include nurses, internet developers and retail, show recent numbers from the state Employment Development Department. 

4) The overall commercial sector has been stagnant, but apartments are a bright spot. Rents are rising while vacancies are dropping, a scenario seen locally. Hessam Nadji, a veteran real estate analyst who's widely quoted, called retail the "dark horse" of the pack, with office and industrial at their bottoms.

5) Demographics will be very important in the coming years. The Social Security Administration says almost 80 million baby boomers will file for retirement benefits within the next two decades. Nadji says it will be important for industry people to pay attention to this group's needs and wants, as many plan to downsize and relocate. Another important demographic is what he calls the "echo boomers," also known as Generation Y. Both groups will represent great spending power.

Source: SignOnSanDiego