Certainy is Keyword Among CRE Pros

MIAMI-Although paralysis by analysis is not completely out of the 2013 picture, the sentiment of certainty is more common. As Ray Cirz, CEO and chairman at Miami-based Integra Realty Resources, sees it, commercial real estate players may not like all the factors but the dust is more settled than last year.

“We know the political environment, at least for the next couple years. We know taxes are going up and we see slow but gradual improvement in employment and low interest rates,” Cirz says. “Return expectations have also moderated. This has created an environment where investors are willing to commit to real estate overall.”

Cohen is looking for bumps in the road, but says Kimco is cautiously optimistic about what 2013 brings. He points to improving capital markets, recovering (and even increasing) housing prices, declining foreclosure rates, and improved bank balance sheets. “There is a significant build up in deposits at the major banks and a thirst for yield,” he says. “The real estate sector provides pretty good yield, especially when you look at it relative to where a 10-year Treasury is at 2%. If you're buying high-quality assets at 6%, that spread is pretty favorable.”

Mark Rose, CEO of Avison Young, is also bullish on 2013. North American and world economies will face challenges in 2013, he says, but if the pundits are correct, we will address these issues and move past stagnation and government paralysis and exit 2013 with more clarity and the momentum to invest and grow.

“What we are recommending to clients is clear and consistent: focus on building capital positions in 2013, perhaps selling non-strategic assets to fund a war chest, and arrange for access to additional debt and equity, as 2014 appears bright,” he advises. “Continue to execute on current plans in 2013 as the environment is likely to remain stable. Re-balance investment portfolios according to a five-year strategy horizon and adjust your corporate real estate occupancy.”