Following the morning sessions where virtually all panelists said that although headwinds remain to be reckoned with, the evidence of recovery keeps piling up, experts noted that values are starting to recover, and if you aren't getting back in the game, your business model should be questioned. During Renard's panel, experts such as Christopher Chee, managing director of Blackstone, agreed that things are starting to pick up. "After waiting on the sidelines for about two years, just over the past two months, we have invested lots of money," Chee said. "I think most of the opportunities in our pipeline are not surprisingly through debt."

Like Chee, Wiliam Lindsay, partner of PCCP LLC, said the action is in debt. "There is going to be a lot of consolidation in the investment management business and we want to be in the front of that," he said. "We can recapitalize deals and we know how to do it."

When Renard asked if there will be a lot of distressed opportunities going forward, Lindsay said that "there has got to be." He said that "distressed is leaking out slowly right now. It feels like there is a lot of capital on the sidelines." He pointed out that the banks are working through these assets, and that there will be more flow in the pipeline. "2010 will be better than 2009 in terms of deals, but not by much."

There is a new group of investors out there, said Wayne Corner, managing director of JP Morgan Asset Management. "There are private firms, and some large institutions," he said, "and, we have seen a lot of money coming in from Asia, which will compete with US institutions over the next year." He added that the number of deals that are in the pipeline and that have transacted recently, along with the pricing that has occurred "suggests that we are back on the way up."

Joseph Russell Jr., president and CEO of PS Business Parks, was a little hesitant to spout optimism. "We are all dealing with huge unemployment numbers that don't seem to be correcting themselves, and if you are really owning and operating real estate, you aren't seeing any positive trends that will hit soon," he said. He pointed to rents being down and concessions on many product types escalating up, as evidence that things could linger in a bad way for quite some time. "I have never seen so many multiple negative drivers in a market." However, Russell noted that patience is key. "You have to be patient and continue to invest in markets that have very deeply broad based economic environments."

During the Q&A lightening round, a large concern of Tim Ballard, co-founder, president and CIO of Buchanan Street Partners, was whether or not the government decided it needs to continue to help; a comment that was echoed by other panels throughout the day.

For example, during the "Industry Leaders-Onward and Upward" panel, Jeff DeBoer, president and CEO of the Real Estate Roundtable, questioned if Washington "get's it." DeBoer explained that "When this thing started, the unelected part of Washington—who in many respects sort of got it in terms of distress in our industry—sensed that there were problems. Now, that part of Washington is sort of saying 'we're done.'" He continued to explain that now, the other part of Washington "get's it" and is hungry now for policy prescriptions to "deal with it." Unfortunately, he said that the "We sort of have paralysis in the policy side of the world... It is a multi-dimensional chess game out there."

When the Industry Leaders panel moderator, Lew Feldman, a partner of Goodwin Procter LLP, asked if we had reached the point to dive back into the real estate aquarium, panelist Christopher Peatross, president and CEO of Equity Office, said that in general, it isn't great out there today, but that in the past week, he has seen some really good progress occurring. "It started in New York, where they are literally seeing competition for space," he said. "New York is seeing things bottom out as far as rental rates, and it is refreshing to hear that." He also pointed out that Boston is starting to pick up. "We have hit bottom in many of our markets, and we are seeing positive net absorption in Northern California and flat/slightly positive net absorption in West Los Angeles … Things are starting to pick up."

As far as asset classes that appeal, Michael Van Konynenburg, president of Eastdil Secured, said that industrial has the "biggest investor demand followed by leased out office." Retail, he said, is picking up a bit, and then hotels are last due to the disconnect on pricing. "Yes, we have a lot of issues still out there, but it doesn't feel like it will overwhelm the system like it would six months ago."

Instant Insights /

Expert: It's Refreshing to See Some Bottoming Out

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