X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

CHICAGO-Best bets for an otherwise risky 2003 are warehouses, especially those with high ceilings located in large distribution centers or low-ceiling structures in regional distribution centers, according to a forecast by Lend Lease Real Estate Investments, Inc. and PriceWaterhouseCoopers. The report, based on interviews with more than 170 industry experts, was unveiled Monday at the commercial/multifamily forum held at the annual Mortgage Bankers Association of America convention.

The top 10 markets, according to the “Emerging Trends in Real Estate” report, are Washington, DC; New York, Los Angeles, San Diego, Chicago, Boston, Miami, San Francisco, Seattle and for the first time, Philadelphia.

Although PriceWaterhouseCoopers research group director Peter F. Korpacz rates warehouses as a best bet, those surveyed chose multifamily rental properties as the favored property type, ahead of industrial property and community shopping centers.

Korpacz suggests now would be a good time to hold multifamily rental property, rather than be a buyer, as returns are on a downward trend since 2000. Also, a pruning of grocery-anchored retail assets may be in order, says the former appraiser, as they have become too pricey and somewhat perilous with the emergence of retailer Wal-Mart into the food store arena.

No to moderate growth was foreseen by 95% of those who responded to the survey, says Lend Lease principal Jonathan D. Miller. “There’s no new ‘new thing’ to drive capital spending, in our interviewees’ view,” Miller says. While corporations tightening belts, consumers may be stressed out. “At some point, consumers have to get exhausted and back off,” he adds.

While borrowing is another of Kopacz’s best bets, that window provides a mixed view. “Our interviewees think capital will be ample from all of our sources, and we’ll have to see about that,” Miller says.

Along with capital flowing in from the stock market, low interest rates have searched as a crutch propping up commercial real estate market, Miller says. However, the survey reveals fear of an uptick, he adds. On the other hand, lower interest rates would likely signal a worsening economy.

The limited opportunity plays include buying into markets that went bust after the tech boom, Korpacz says, and class-B malls. “You have to have a strategy to improve the mall, as well as an exit strategy,” he cautions.

Contrarian plays include full-service hotels and suburban office assets in 24-hour “edge cities.”

To be avoided, Korpacz suggests, include generic suburban office properties, limited-service hotels, properties in “9-to-5″ Downtowns as well as development.

“Who would develop anything in the next 12 to 18 months,” Korpacz asks. “It doesn’t make sense.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.