Blau claims there are "three major factors that were either acting upon the industry on Sept. 10 -- or had the potential to act upon the industry."

Those factors included the ongoing consolidation of commercial property ownership that according to Blau "emerged from the debt/equity/liquidity crisis of the early 90's and gave rise to the phenomenal growth of REITS." Blau notes that over the past decade REIT market capitalization has grown from $6 billion to more than $300 billion, constituting at least 30% of commercial properties in the US.

The second major factor, Blau says, was the REIT Modernization Act of 2000, which allows REITs to use taxable subsidiaries to create new third-party service ventures. That allows property owners to also own brokerage firms, he says.

Blau also says inclusion of REITs into the S&P 500 adds a liquidity to the market that had not previously been there before. Blau tells GlobeSt.com that investors interested in adding real estate to their portfolio will purchase REIT stock with its instant liquidity capabilities instead of purchasing actual real estate.

The results of those three factors, Blau says, is more and more properties-- especially institutional grade properties -- "are concentrated increasingly in fewer and fewer hands." Difficulties insuring commercial properties in the wake of Sept. 11 may hasten this reordering of property ownership, Blau adds. Smaller owners may be priced out of coverage with hefty premium increases for policies that now exclude terrorism-related losses, he believes. Also, 70% of reinsurance policies expire at the end of 2001, Blau adds, creating additional uncertainty.

"The point I am driving at," he says, "is that one of the consequences of Sept. 11 may very well be that more properties are going to be sold or upreited simply as a function of risk underwriting and insurance costs," Blau says.