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Laub: Commercial Real Estate Prices Close to “Bottom”

January 20, 2010

Kenneth Laub, CEO of Kenneth D Laub & Co., a New York real estate advisor was on Bloomberg. He provided a pretty clear analysis of what’s going on, and that is prices are tied directly to a stabilization in unemployment. He also did a good job of indicating that some of the most troubled assets are in the hands of some of the same people who have raised the most amounts of cash.

That said, the bottom line at this point in the market is that stabilization leads to certainty, and certainty leads you to capital. When you can’t predict vacancy or rents, then your financial models become vulnerable. Just look at the models of even 18 months ago to see how upside down some of those are. Once investors can rely on the metrics they use with increased confidence, that will allow capital to flow in behind them.

That doesn’t mean prices are going to take off in any way similar to what we saw a few years ago, but we should either form a bottom and possibly even come off those bottoms.

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Categories: Commercial Finance and Lending | Commercial Real Estate Investing
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joshua January 21, 2010

so we have not seen the tip of the ice berg but were close to stabilisation. interesting. i get what hes saying, i generally feel the same way. so much stuff will continue to fail until employment returns. which is going to take a while. and i dont see how prices and fall "too much" further. so, fun couple years were gonna have.

Square Feet January 21, 2010

Yup, good chance we're in for an L-shaped recovery. Right now we're dealing with unemployment, tenant strength, and falling rents. Pretty soon we'll have to deal with interest rates – which will throw another shrimp onto the barbie!

joshua January 22, 2010

yeah, im somewhat worried about interest rates too. but the gubmint has good reason to depress them. it appears this will be a drawn out scenario due to the employment issue.

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