ULI Finds Flood of Capital is Key to Market Strength

Sean Ryan is associate editor of Real Estate New Jersey.

NEWARK-The near future for real estate will have its hurdles, but “as long as capital keeps flowing, everything will be all right,” said Steve Blank, senior research fellow, finance, for the Urban Land Institute. ULI’s 2006 Emerging Trends in Real Estate report points to a record-high sell point (8.24 out of 10) and a record-low buy point (4.56) this year.

Interest rates are sure to rise, leading to lower returns on investments. “I say this every year: this is the last time to lock in low interest rates. And this year I might be right!” Blank joked.

Overall, ULI recommends to sell commodity office space and retail buildings, and to either sell or hold apartments. Full-service hotels are a hold, since many have been taken off the market for condo conversions in larger markets, and warehouses are a hold, especially in distribution hubs like New Jersey.

On the development end, infill housing, age-restricted communities and resorts/second homes are recommended for builders. The vacancy rates of other types of real estate don’t warrant new construction, the report says.

Money is still prevalent. “In terms of capital, we’ve taken out the word ‘flow’ and put in the word ‘flood’,” Blank said. In addition to domestic investors, more money will be coming in from overseas, with mainland China a huge source of probable financing.