The theme of the afternoon conference could have been "the more things stay the same, the more things change," as heavy-hitters compared notes on the impact of the continued record capital flows into the market. On the panel were John Buza of Morgan Stanley, Steve Cordes of ING Clarion, Tom Garbutt of TIAA-CREF; Bill Rogalla of KBS Realty Advisors, Preston Sargent of Kennedy Associates and Jim Walsh of JP Morgan. The session was moderated by Michael Desiato, group publisher and editorial director of Real Estate Media, and Transwestern investment services executive managing director Steve Pumper.

An in-depth report on the conference will appear in the February 2007 issue of Real Estate Forum, but highlights of the discussion included a review of exactly who is generating all of this incoming capital. Sargent confessed that in a 2006 list of 19 sales, "I had never heard of at least half of the buyers before," referring to the growing stack of offshore money. Research quoted by Pumper reveals that this year, 80% of CBD purchases were made by foreign investors.

The foreign influx will continue unabated, the panelists agreed. "Until someone can compete with real estate's yields," Buza stated, "this is the place to be."

The shifting profile has caused a shift in response, and the panelists agreed that their operations are changing to encompass a widening investor universe. "A few years ago, we started to organize funds to take in foreign money," reported Walsh. "It added overhead and cost but opened our doors to hundreds of millions of dollars in capital."

Not all of the shifts were related specifically to offshore investors. Buza is feeling the pressure of the capital influx: "It's nirvana," he said. "It's so much easier to sell. But on the acquisition side, life is tough."

Sargent said his firm always looks to ensure that downside risk doesn't overshadow upside potential, which lead into a discussion of the consolidation trend. Cordes responded with concern that sales, such as EOP's recent $36-billion buy-out by Blackstone, are "priced to perfection."

Buza countered that once you remove such charges as the ongoing cost of Sarbanes-Oxley and look at the potential yield, the deal "is pretty attractive."