Great Cliffs Notes of what is affecting CRE

Real Estate Center Chief Economist Dr. Mark Dotzour reported after serving on an economic panel at the ninth annual Real Estate Mezzanine Loans and Distressed Debt conference Wednesday in New York City.

Among those factors:

• Banks are hesitant to sell distressed real estate assets.
• Many loans are going to special servicers and are likely to overwhelm them with volume in 2010.
• The new commercial real estate lending model for 2009 and 2010 is a 50–60 percent loan from a life insurance company for larger deals and possibly from commercial banks for smaller deals.
• Real estate investment trusts (REITs) are raising a "war chest" of money to purchase distressed real estate by buying troubled loans.
• The country may be another year away from the end of the "perfect storm" of commercial real estate caused by rising cap rates, falling rents, negative job growth, high tenant finish costs and lack of available financing.

"Hotels, condos, suburban office and land development are currently areas where investors are afraid to go," Dotzour said. "Bold investors will make a lot of money in the future if they can buy these properties at the right price."

Our job now is to create bold investors, by arming them with the best information -and putting them in position to pull the trigger.