MIAMI-The CRE Financial Council‘s January Conference 2013 kicked off in South Beach, Miami on Monday at the Lowe’s Miami Beach Hotel.
Committee meetings and forums marked much of the day but the panelists began sharing insights into the global economy that could impact commercial real estate financing during the afternoon sessions.
One panelist noted that the commercial real state industry is operating in an “artificial environment.” Zero interest rates are one example of that so-called artificial environment—and nobody knows what reality will look like when the dust settles.
“The closest example we have to what we’re facing right now is Japan in 2002, but Japan is not a relevant model,” one panelist said. “This environment won’t evaporate overnight. Slow growth and negative growth is expected.”
According to one presentation, capital goods orders peaked in Dec. 2011. Even if housing picks up at a rapid clip, one panelist said, it won’t make much impact on the economy.
“The labor market is still a drag and Federal Reserve polices have been contradictory,” one panelist said. But there is a bright side: market dynamics are rapidly shifting, as evidenced by the recent Fannie Mae and Freddie Mac settlements.
“The markets have been distorted,” one panelist said. “We’ve been in a slow growth phase and we’re heading into a slower growth phase.”