NEW YORK CITY—Some five years after the US economy began to rebound from the global credit crisis, the landscape of opportunities has been shaped by the rate at which that revitalization has occurred. “The interesting thing about where we are in the economic expansion—and it's no longer a recovery at this point, it's an expansion—is the gradual pace of it relative to previous expansions,” Lee Menifee, head of Americas
investment research at Prudential Real Estate Investors, during Thursday's webinar presented jointly by Prudential and GlobeSt.com. He noted that what were headwinds facing the economy have since become tailwinds.

And while the slow pace has been disconcertingly out of line with expectations, there have been upsides, Menifee pointed out. One is that the gradual uptick means there hasn't been the buildup of “excesses” that in the past have brought such growth periods to an end. Moreover, the expansion is now broadening beyond the top cities. The slow pace has also aided the housing market, and now business investment, long a keenly felt absence, is now kicking in.

“We see a broadened opportunity set, with more markets to invest in, more property subtypes to look at and we're increasingly comfortable taking vacancy risk.” Menifee said. At the same time, he added, “We're increasingly focused on the quality and resiliency of the income stream, because that's really the predictable part of real estate.” 

Setting the stage for a panel discussion among his colleagues on the Prudential Mortgage Capital Co. side, Menifee summed up, “We don't understand exactly where we are in the current real estate cycle. But we do understand what's going to provide us with the best growth opportunity as well as the best downside protection if something happens with the US economy.”

Proceeding from the theme “How Real Estate Lenders Compete—and Win—in the Strengthening Market,” the discussion moderated by PMCC managing director Marcia Diaz covered the full spectrum of the capital markets environment. PMCC managing directors Paige Hood, Richard Flohr and Mike McRoberts surveyed the landscape from the standpoint of, respectively, life companies, CMBS and agency lenders.

For PMCC and other life companies, “The market has definitely become more competitive, this year in particular but over the past two years, which has made the job more challenging,” said Hood. “But in general, the life companies are doing as much if not more business as they did the year before.” Flohr and McRoberts had plenty to say about their own lending sectors, and the hour-long webinar is available on demand through Feb. 19, 2015. To register, click here.