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CHICAGO-Investing in commercial real estate was tough before Sept. 11. While the terrorist attacks on the US made making deals tougher, there are still opportunities to be had, a panel told the National Association of Industrial and Office Properties conference.

“Today’s challenge will be for all of us to accept the fact we have to move from Easy Street to the Eisenhower Expressway at 5:30,” says Gary Kachadurian of RREEF Funds. He adds many aspects of the real estate business, particularly property management and financing, have become more difficult. However, he adds, “There could be some real good opportunities out there.” Those could include multifamily rental restorations, says Kachadurian, whose firm has closed $600 million worth of deals in that market segment.

Benjamin G. Gifford, managing director of JP Morgan Fleming Asset Management, notes supply and demand “are in pretty good shape,” even in the office sector, where 12% vacancy rates are considered equilibrium. “We as investors have a phenomenal opportunity to buy properties at fantastic returns at interest rates that are unprecedented,” Gifford adds.

The tricky part, however, is taking advantage of that buying opportunity. Gifford already sees one effect of Sept. 11 putting a crimp on deals. “Unfortunately, the bid-ask spread got wider,” he notes. “The stock line is, it’s too late to sell and too early to buy.”

“The bid-ask spread has got to narrow,” adds Ray H. D’Ardenne, head of real estate for Lend Lease Real Estate Investments, Inc. “There’s no sense of urgency…Quite frankly, the ask side of the equation will break more easily.”

While D’Ardenne is not excited about the prospects for neighborhood shopping centers now, Heitman Capital Management Corp. president and CEO Mary Ludgin says demographics might make some attractive. “There will be some dark days over the next 12 months,” Ludgin cautions. “But if you buy into an affluent submarket, those were the areas that were best coming out of the last downturn.”

Industrial is one sector D’Ardenne expects to be a “big winner,” as tenants move quickly from just-in-time delivery to “just-in-case.” He adds his company likely will not do any new developments such as its 1 N. Wacker Dr. project, opting instead for value-added opportunities because of their better returns.

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