Conference Attendees: Real Estate Market Still Looks Good

WASHINGTON, DC–Barring major catastrophes or earth-shattering events, the real estate market continues to look good for the next 12 to 18 months. That seems to be the conclusion of about 100 lenders, developers and commercial real estate specialists who attended the National Association of Industrial and Office Properties capital markets update and outlook conference at the Willard International Continental Washington here.

“The crystal ball was fairly positive from the capital markets perspective,” says Bob Moody, a Denver-based commercial lender and chair of the NAIOP seminar education committee. “And that’s across the entire country. There are no areas red-lined or suspect. Some areas, the big five, are stronger than other areas. Having said that, there are other opportunities in other areas for possibly less than the very large pension funds.”

The big five represents major real estate markets throughout the nation–San Francisco, Chicago, Washington DC, New York and Boston. Besides the capital markets, the closure of so many dot-coms doesn’t seem to have had a significant impact on the market, according to Laurie Root, vice president of education for NAIOP.

“The consensus by lenders is that dot-coms are closing down and lenders are becoming much more judicial in evaluating these companies,” Root states. “Having said that, conference panelist Phil Meany notes that, “we are talking about vacancy rates that have doubled in the Washington, DC area, but the percentages are minute. It tripled in the Silicon Valley, also very minute. Although there is a lot of discussion about new tech company fallout, it is not having as much of an affect on the market as some people perceive. There’s a lot of positioning and some are being bought out by Fortune 500 companies. Then they get credit and financial stability to make deals and make space.”

The fundamentals of the market are still strong, Moody says. Rental rates are still rising and the dot-com funding flurry from Wall Street is in the past. “Capital is readily available for well-conceived projects today,” he concludes.