Real Estate Expert: Be Patient and Build Liquidity

Article excerpt

Real estate developers in Oklahoma and nationwide can take some comfort in the apparent trend of economic stabilization, Urban Land Institute fellow Stephen Blank said, but demand hasn't matched available capital yet.

So be patient and build liquidity, he told attendees at the Commercial Real Estate Council's annual forecast conference in downtown Oklahoma City.

"For 2012, the industry will face a continuation of what amounts to be a long grind, where returns for the best properties level off, and commodity real estate continues in a limbo-like world of nonrecovery," he said. "We have been saying for several years that this recovery would not be easy, and in fact, it looks more like an endurance contest."

Blank visited from New Jersey, where he works as a researcher on the popular Emerging Trends industry forecast report series. His presentation was succeeded by Mark Beffort, president and CEO of Grubb & Ellis Levy Beffort, who shared his ideas on the local market.

Both men said Oklahoma City is on the cusp of national recognition, and the only reason to fall short of the top market lists is a matter of perception. Neither Beffort nor Blank offered any ideas on how to break through.

The current economic recovery isn't following the model of typical past recoveries in the United States, as more businesses are finding ways to use less space and reduce their overhead, Blank said. Investment capital hasn't been making its way into real estate, except for the multi-unit housing apartment sector. And related to that, Blank said he expects that once home sales start to pick up, the trend will be for houses to be turned into rental units.

"For real estate investors, it means declining return expectations," he said. "How much you make going forward will depend on when, and where, you've invested. If you invested in 2009 and 2010, when we said you should have, in the prime gateway markets, where we said you should have, it's time to take some chips off the table. …