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January 12, 2011 

Don’t miss the MillerQA seminar: Understanding the Housing Market, 4Q2010 with Jonathan Miller. Insights on the latest housing results nationally and regionally, plus attorney Steven Wagner on the legal issues impacting housing. Jan. 19, 4-7:15 PM, Grolier Club, 47 E. 60th. Register here.

Did you trudge into the office today? Stay home to build a snowman with the kids? Send us your snow pics and stories for tomorrow’s issue! In the meantime, we’ll warm you up with bullish industry forecasts we heard across the board yesterday.
Monday Properties prez Anthony Westreich, Sterling American Property co-CEO Michael Katz, and Cushman & Wakefield’s Janice Stanton
Our first stop was the Foundation for Accounting Education’s real estate conference at the Marriott Marquis, where we snapped the CEO panel: Monday Properties prez Anthony Westreich, Sterling American Property co-CEO Michael Katz, and Cushman & Wakefield’s Janice Stanton (wearing her Bruce Mosler hat). Michael says we’ve hit bottom and the only way to go is up. Money will burn a hole in your pocket if you don’t invest, and job losses have stopped, encouraging people to sign office leases, establishing rents and values. Janice says last year was the return of the mega deal, with 16 global deals worth $1B or more, including Google’s $1.8B purchase of 111 Eighth. She expects investment volumes to increase another 50% this year.
The Quest Org's Michael Rosenblatt, Monday Properties prez Anthony Westreich, Sterling American Property co-CEO Michael Katz, Cushman & Wakefield’s Janice Stanton, and Sterling's Daniel Rosenberg
Moderator Michael Rosenblatt of The Quest Org and FAE committee chair Daniel Rosenberg of Sterling American Property join the speakers. The industry has raised so much opportunistic money and it’s “use it or lose it” time, Janice says, but she’s concerned about the “bar effect” (everything looks good at 2 am). Anthony says these types of transactions could cause a false- positive environment that brings too much investment demand—it’s difficult to be a buyer in an overheated environment. But there’s very limited development, and the office sector experienced a huge rental spike in the past quarter, he says. With decreasing concessions and vacancies, we’re heading back to a landlord’s market. He’s bullish about future office demand, and predicts further rent increases.
Appraisers and Planners’ Ruth Agnese and Deutsche Bank's Alex Hesterberg
We then dropped by Club 101 for the local Appraisal Institute and Counselors of Real Estate chapters' annual economic forecast luncheon. Before the presentation, Appraisers and Planners’ Ruth Agnese had a special recognition for Deutsche Bank’s Alex Hesterberg—the Appraisal Institute’s first-ever national lifetime achievement award, which she accepted on his behalf during AI’s annual meeting in Miami Beach. Ruth and industry colleagues, such as Cushman & Wakefield’s Brian Corcoran and Argus Software’s Bruce Kellogg, shared touching, often humorous anecdotes about Alex, praising him for his dedication, service, tenacity, and high ethical standards over his career. The humbled Alex responded, “Each and every one of you take a little piece of this... but I did get it, and I’ll keep it.”
Groton Analytics' Anne Covell, Greenwich Realty Advisors' Howeard Gelbtuch, Moody's Economy.com's Mark Zandi, and Metropoltian Valuation Services' Stephen Schleider
Groton Analytics principal Anne Covell and Moody’s Economy.com chief economist Mark Zandi then brought an extra dose of positivity to the event with their forecasts (here, Anne and Mark, second from right, join Greenwich Realty Advisors’ Howard Gelbtuch and Metropolitan Valuation Services' Steven Schleider.) In NYC, jobs have begun to recover, and overall, we didn’t lose as many as 2001’s recession, Anne points out. Rents are heading back up, with Midtown Class-A rents now over $70/SF. Eight million SF of new office space is underway or planned for the next two years. Even so, we’ll continue to see rents rise and vacancies drop below 10% by ‘13. Last year, NYC also saw its highest number of tourists ever—48.7M—which hopefully will bode well for the 15k hotel rooms proposed or planned over the next three years.
Moody’s Economy.com chief economist Mark Zandi
Mark, fresh off of delivering another forecast that morning to ULI New York, opened by saying he was more optimistic than most economists. Why? US businesses are in good shape, with profits surging. This should be followed by jobs, he notes. Households are deleveraging, which is turning the credit cycle. The banking system is profitable again; it's looking for lending opportunities and the credit spigot is opening. Pent-up demand for goods and services is developing, and monetary and fiscal policy response has been successful and will remain aggressive. He did, however, express concern for the continuing foreclosure crisis, a European debt problem threatening to boil over, and uncertainty over China.
GE Real Estate's Kathleen Cary, Crowell & Moring's Barbara Champoux, Alix Partners' Dennis Yeskey, and Marcus & Millichap's Karen Dome
And yesterday evening, Alix Partners senior advisor Dennis Yeskey made his sixth annual appearance at NYCREW’s forecast event, where we snapped him with GE Real Estate’s Kathleen Carey, Crowell & Moring’s Barbara Champoux, and Marcus & Millichap’s Karen Dome in Crowell’s Madison Ave offices. This has been Dennis’ fifth career downturn, and he opened with good news—this economic recovery is slightly ahead of the past three recessions. Although ’09 was not a good year, this recession was “a crisis that was a non-crisis.” We didn’t experience the expected massive sell-offs, workouts, and bankruptcies. And unlike the early ‘90s (when “you never told people you were in real estate”), our industry was the caboose at the end of the train.
Alix Partners senior advisor Dennis Yeskey
So don’t expect a double dip—just a long, slow, and bumpy jobless recovery, Dennis says. The past five downturns also didn’t have as much capital on the sidelines, which totals $1.1 trillion, from private investors, pension funds, foreign investors, life companies, REOs, and public REITs. Values are recovering quickly for select properties and markets, particularly Class-A apartments, CBD office space, and some hotels and retail. He was particularly bullish on NYC and DC. On the bottom of his list? Land, Class-B and C apartment buildings, gaming and related hospitality, resorts, second homes, and suburban offices. Overall, the economy is switching back to a normal recovery, and he’s been more optimistic these past six months. “Commercial real estate is still attractive,” he says.
Hey, industry Sam Champions and Al Rokers—what’s in your forecast? Tell amanda@bisnow.com
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