ONTARIO, CA-Reports of recovery are surfacing throughout thecommercial real estate industry, but the optimism they generate istempered by fears of a double-dip recession and concern that thecomeback won't really gain momentum without new job creation. Thesewere some of the main messages presented Wednesday at a mid-yearreview and panel discussion presented by the Inland Empire Chapterof Naiop. The event, at the Ontario Convention Center, included akeynote by Roger Staubach, executive chairman of Jones LangLaSalle.

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The panelists generally agreed that conditions have improved intheir respective corners of the commercial real estate world, whichincluded development, investing, logistics, a new non-traded REITand investment advisory services. Case in point: EVP and COOAnthony Chiarello of NYK Logistics Inc.―one of theworld's largest logistics companies―said that NYK is nowhiring but was cutting staff by 15% about 18 months ago. Presidentand CEO Stephen Hopkins of Irvine-based Hopkins Real Estate Groupobserved that the mood at this year's annual ICSC (InternationalCouncil of Shopping Centers) spring convention in Las Vegas wasdecidedly more upbeat than it was last year. "Things are startingto percolate a little bit more," Hopkins said.

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CEO Dwight Merriman of Denver-based Industrial Income Trust, arecently formed non-traded REIT that aims to raise $2 billion, saidthat his company sees opportunities in the current market to buyindustrial properties in top US markets. At the same time, Merrimanhit on a theme that is recurrent these days in discussions aboutbuying opportunities: "It doesn't appear to me that we will havethe same types of buying opportunities today as we did in themid-1990s," he said. His remark was a reference to the 1990srecession, when the federal government formed the Resolution TrustCorp. to dispose of thousands of assets held by failed savings andloans. Today, by contrast, distressed assets are selling at a muchslower pace as lenders, thus far, have delayed taking the assets tothe market.

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Principal Phil Belling of Irvine-based LBA Realty also citedimproving conditions over the past 18 months, saying that, "It'sstill a challenging environment, but there is less fear." Bellingsaid that with no new supply coming onto the market because of thelack of new construction, industrial landlords should benefit asconditions improve and demand increases commensurately.

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Despite their consensus that conditions have improved in thepast year or so, the Naiop panelists mentioned concerns like thefear of a double-dip recession and the need for job creation to addmomentum to the recovery. Although most said that they doubt thatthe economy is headed for a double dip, and while Grubb & Elliseconomist Robert Bach said that most economists agree with thatassessment, they said that the double dip still remains apossibility.

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Bach said that one of his concerns is that the recovery will bejobless, pointing out that the term "jobless recovery" is ofrelatively recent vintage―from the last couple ofrecessions. What's troubling, Bach said, is that the period ofjoblessness seems to grow longer with each successiverecession.

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Bach also pointed out that tenants need to start signing largerand longer-term leases and rental rates need to recover before wecan be sure that a recovery has a strong footing. "The hallmark ofthe recovery will be when lease terms get longer and average leasesize increases," he said.

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Another of Bach's concerns is the federal government's debt,although he said he is more concerned about the impact of legacyprograms like Social Security and Medicare than the debt that thegovernment incurred for the federal economic stimulus package. Thelegacy programs have a greater long-term impact, he said.

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Despite some of his concerns about the overall economy, Bachsaid he is confident that Southern California and the Inland Empirewill recover, as they have in the past. Others echoed thesentiment, including keynote speaker Staubach, who said thatCalifornia "always seems to come back." Staubach pointed out thatconditions have appeared pretty dire in past downturns both inSouthern California and in the Dallas market where he is based, butboth have always recovered.

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Drawing on his career as a quarterback for the Dallas Cowboys,Staubach drew parallels between success in sports and in business,pointing out that having the right people does not in and of itselfensure success, especially in times of adversity. The key is havingthose people pulling together, he said, explaining how that kind ofeffort can overcome obstacles in both fields. "Adversity revealsgenius," he said, "and prosperity conceals it."

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