Last year in Emerging Trends, we predicted that thereal estate jobs picture would change dramatically. Acquisitionsand investment bankers would be out, asset managers and workoutspecialists would be in. Clearly the transactions specialists havebeen hurting big time with generally gridlocked markets, thanks tolittle financing to grease dealmaking and expectations for lowerpricing that sellers are not yet motivated to meet. Leasing andasset managers also have been kept busy trying to squeeze as muchoperating income out of properties in the face of potentiallydeclining NOI (operating income) numbers. What's been moresurprising has been the relative lack of workout activity -- infact defaults and delinquencies have stayed very low.
This picture may be changing. Banks and other lenders have beenbending over backwards to give borrowers some leeway, and keep anymore nasty loan problems off their plates. But regulators arestarting to crack down and bankers want to clear their balancesheets of problems as soon as possible so they can get back inbusiness sometime next year. It's time to clear the decks, becausethe economic uncertainty gives little hope that borrowers will berescued by increasing demand trends. Finally the lending communityis stepping up hiring of workout specialists in a clear sign thetide on problem loans is turning. "It's not glamorous work, butyou'll learn more about real estate doing workouts in 18 monthsthan you have doing acquisitions for ten years," says a leadingheadhunter, who notes that everyone will continue to make less nextyear.
So watch as banks move to cut their losses. Expect morecontention between lenders and borrowers to surface, and some roughheadlines. But the good news is there is one growing sector in thereal estate business.
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