Self-storage REITs are forecasted to remain strong this year, while hotels and the sublease market will be the hardest impacted sector. General REIT interest continues to remain high within the pension fund community. "Companies that were hesitant the last 30 years are now jumping into the REIT market," claimed Theodore R. Bigman, managing director, Morgan Stanley Dean Witter Advisors.
The New York market will stay strong, due to market diversity. Washington, DC is predicted to be among the strongest for similar reasons, while San Francisco and LA will continue to suffer from tenant losses following the dot-com bust. Both the Santa Monica and Chicago vacancy rates are predicted to stabilize this year.
According to Steve Wechsler, senior managing director for Tishman Speyer Properties, hesitancy in making real estate decisions in a soft economy is a fear-factor across all REIT sectors. "There is no tenant demand right now, and that is the key focus of our concerns," he said. But despite the poor NAREIT performance index forecasted for this year, Wechsler predicted recovery for the New York market in mid-2003, conditional on long-term management and lease renewals.
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