If numbers can be believed, this industry isn’t flinching. We asked our readers a year ago to characterize their investment strategies for the coming year. And we asked them again last week. A year ago, 51% said Buy, and 27% said Hold. Some 22% were planning to Sell. Today, the numbers have shifted little, and the percents come in at 54, 34 and 12, respectively, with Sell taking the biggest hit and more respondents shifting to a Hold position. We talked with Commentator Earl E. Webb, CEO of capital markets at Jones Lang LaSalle, before the survey launched, but he predicted the directions with a good degree of accuracy. And then he went on to justify his predictions:

“If I were to guess, I would predict that 40% would say Buy, 40% Hold and maybe 20% Sell. But my word for 2008 is rationalize. If I’m a perspective buyer, I must rationalize the fact that I need to buy as the debt markets allow me to buy. If I am a seller, I need to rationalize the fact that financing for the buyers of my properties is now constrained relative to where it was a year ago. That’ll impact pricing for the foreseeable future. If I’m an owner and I bought at or near the top of the curve, I’m probably going to be a holder.

“If, however, I bought four or five years ago, and I built up a nice gain in the property by adding value in one way or another, a 25- to 50-basis-point increase in cap rates isn’t going to erode the built-in value creation by that much. Therefore, I might sell because I need to monetize assets and I need to redeploy. I might have looked at the debt and equity securities that seem to be undervalued, and maybe there’s a play there, and maybe in certain markets that might be oversold. I want to free up some capital to do that. That’s why to me it’s a rationalization process on the part of the investor community.

“The day of the declining cap rate making everyone feel real good about themselves is over, at least for the time being. Now, we’re back to the blocking and tackling of real estate, and investors are going to have to bring more than just money to the table. They’re going to have to bring expertise and market knowledge and creative financing and capital solutions and marry those to drive value.

“What’s nice is that the fundamentals are still reasonably strong. Even with some retrenching in some corporate circles, corporate balance sheets are strong, and despite a mediocre economic environment, we’re seeing corporate clients who are still aggressively pursuing occupancy solutions and consolidation and expansion strategies.”

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?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dig Deeper


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 © 2024 ALM Global, LLC. All Rights Reserved.