Newspaper article THE JOURNAL RECORD

Oil Patch Cities Least `Bullish' for Investment in Real Estate

Newspaper article THE JOURNAL RECORD

Oil Patch Cities Least `Bullish' for Investment in Real Estate

Article excerpt

CHICAGO (AP) - Oklahoma City, Houston, Dallas, Denver and several other "oil-patch cities," including Tulsa and New Orleans, are considered the least bullish places to invest in real estate, according to an annual, national survey of real estate trends.

Meanwhile, tax reform and an ""orgy of overbuilding'' will result in a major shakeout next year in some segments of the U.S. real estate industry, already undergoing some of its toughest times since World War II, the survey concluded.

""We think 1987 will be a time of sorting out, with a lot of experimentation and new products to attract investors,'' said Leanne Lachman, president of Real Estate Research Corp., and co-author, with Richard Kateley, of ""Emerging Trends in Real Estate'' an influential survey published annually since 1979.

""We think next year is an important time to be prudent,'' she added.

The survey, based on interviews with more than 100 real estate investors, lenders, syndicators and developers, predicted real estate values on the whole would remain steady.

It called single-family housing the industry's best potential investment for 1987, followed by the market for industrial and retail projects. The office and hotel markets, already staggering from low occupancy rates and overbuilding because of the favorable tax policies of the past, will suffer much of the decline in the industry in 1987 and the near-term.

Also headed for problems are mid-sized buildings of ""average and below-average quality'' that were financed by tax-sheltered syndications that lost much of their attractiveness in the newly passedtax-reform package. Such properties could decline in value by as much as 20 percent, the survey said.

It also concluded that between 3 percent and 4 percent of commercial real estate already is in ""genuine difficulty,'' and among investment-grade properties, the figure climbs to 6 percent.

Asked what constituted genuine difficulty, Lachman replied, ""It's a judgment call. …

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