In Climate of Uncertainty, Investors Say DC Is the Place To Be
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(Mark Your Calendars: RealShare APARTMENTS East, February 15 in Washington DC)
WASHINGTON, DC—The nation's capital is still the place to be for investors looking for stability. That was the overall theme of an Investor Roundtable that took place immediately before Transwestern/Delta Associates' 15th annual Washington, DC Trendlines event, which took place here on Thursday evening. (Scroll Down for Slide Show.)
The roundtable, moderated by Real Estate Forum editor-in-chief Sule Aygoren Carranza and Transwestern SVP David Popp, brought together some of the region's top investors including: Jeanette Flory-Sagan, an SVP with Bentall Kennedy; BlackRock managing director John Lamb; Brian Fitzgerald, SVP and director with BPG Development Co.; Brookfield Properties SVP Jim Hedges; Invesco Real Estate director Todd Bassen; Robin Burke, SVP with KBS Realty Advisors; Craig Deitelzweig, head of the office division for Rockrose Development Corp.; JBG Cos. managing partner Matt Kelly; and Thomas Regnell, an SVP with WRIT.
While certainly topics of concern, the federal budget deficit and austerity measures, as well as the dysfunction on Capitol Hill, haven't impacted the local property market too much. What has been a bigger issue, the panelists concurred, is the feeling of uncertainty—global economic and political—that has permeated every facet of the market. In fact, on a scale of 1 to 10, most of the local experts put the budget problems and bipartisan bickering at a solid 5 for 2012.
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Subsequent years, however, are a different story; that’s when the dealmaking environment is expected the change—in what ways, though, depends on the direction of the economic and political environment.
For now, at least, DC properties are at the top of investors' wish lists. Well-located class A assets—particularly multifamily and transit-oriented development—will bring in any number of bids. The competition has pushed pricing so high that in some cases, ground-up development makes more sense. On the leasing side, shorter, more flexible leases have become the norm across most property types.
When asked if the class A sector, and the market as a whole, will see a slight exodus of investors seeking higher yields in other locations, the speakers overwhelmingly responded "no." Population and household growth, as well as an expansion of the health, tech and education fields, will keep the market steady, and investor interest strong. As KBS Realty’s Burke put it, investors "say they're going to go outside the market, but to this day, it's all just been a lot of talk, no action."
For more on the roundtable, keep an eye out for the February/March 2012 issue of Real Estate Forum.
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