The event was the Transwestern/Real Estate Forum EleventhInstitutional Investor Symposium. Real Estate Forum ispublished by Real Estate Media, which also publishesGlobeSt.com.

|

Participants on the panel included Randy Mundt of Principal RealEstate Investors, Joseph Bonner of Prudential, Trevor Michael ofTIAA-CREF, Steve Wallace of Cornerstone Advisors, Robert Merck ofMetLife and Tom Zale of Northwestern Mutual. The session wasmoderated by Michael Desiato, group publisher and editorialdirector of Real Estate Media, and Transwestern investment servicesexecutive managing director Steve Pumper.

|

The afternoon's conversation will be featured as the cover storyfor the August issue of Real Estate Forum.

|

Panelists Bonner and Wallace both noted that the real estateindustry is a cyclical one--and the current phase has been verygood for a longer stretch than previously imagined. Still, mostagreed with Merck's comment that, despite the length of the currentcycle, the industry's fundamentals remain strong. In fact, headded, that the capital markets had gotten a touch over exuberantand it is good to see some pull back by underwriters and the ratingagencies.

|

Pricing and interest rates, though, have clearly been in changemode over the last few months. Wallace said the REIT markets haveseen adjustments, for instance, and no one expects to see cap ratesrise to 9% to 10% again. Still, Wallace insisted, "it's too earlyto call it a game. Right now at this stage I think you can convinceyourself that [the market] is whatever you want it to be."

|

In this environment, firms are plowing ahead with alreadyestablished investment strategies. Development is a growinginterest among many of the firms, which see it adding greaterrelative value to a portfolio compared to acquisition. "We are at apoint in the real estate cycle where we want to develop some landwe have banked," Michael said. Green building, as well, is astrategy of increasing importance, most agreed, despite the higherinitial development costs. Zale, for instance, reported that theadditional costs to develop a LEED certified multifamily propertyin Battery Park was some 15%, "which is quite meaningful." Still,though, he added, the rent premium and other cost efficiencies willlikely make up the difference.

|

There is also the competitive differentiator factor to consider,Mundt said. "In the long run, buildings that are not green will beat a disadvantage." Principal is embracing the standards for avariety of reasons that range from good citizenship to long-termplanning. "We want to have the widest possible universe oftenants."

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.