Six months ago, Marcus & Millichap Real Estate Investment Services managing director Alan Pontius summed up the 2011 outlook in the pages of DAI, noting that “investors will likely move down the quality spectrum as premium property returns dip and the cap rate/interest rate gap, along with locking in cheap debt ahead of rent growth, provide a safety net. Financing will ease further, but tight underwriting is here to stay, even as the commercial mortgage-backed securities market expands and banks become more willing to lend.”

With the year at its midpoint, the Encino, CA-based Pontius’ forecast has proven accurate; however, new dynamics have come into play over the past several months. Ranging from the reemergence of private equity to proposed accounting changes that may compel banks to clear more troubled assets off their books, these factors could make a difference in who’s buying and what’s for sale over the next several months. We talked with our editorial advisors to track the shifts we face.

“You’re seeing a recovery in equity raises in the fund markets as limited partnerships come back strong into core but now are also moving into opportunistic,” Mark Grinis, distress service group leader at Ernst & Young, tells DAI. “You’re seeing lots of equity capital being raised, and a recovering CMBS market means that the equity and the debt are fixing themselves. That certainly will be healthy for a more dynamic transaction market.”

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