December 11, 2017
Connect Westside Los Angeles is just around the corner on Dec. 13th. One of the conference discussions will delve into 2018’s financial outlook. Now that we are one year into the Trump presidency, financiers will dive into where we are and what that means for the world of CRE investment and financing. Leading into the event, panelist Gary Tenzer from George Smith Partners, shared insights into key trends driving the market, factors affecting decisions and hot product types in our latest 3 CRE Q&A.
Q: What are the big trends driving the market?
A: Low interest rates, abundance of capital, lower return expectations (especially in core/gateway markets), and changing retail dynamics due to cyber-shopping (more experiential, smaller spaces).
Q: How are interest rates, economic conditions or White House administration or other factors playing out in the CRE sector?
A: Low rates push up asset values, “Goldilocks” scenario of full employment and negligible inflation is creating an atmosphere of surging fundamentals (office occupancy, multifamily occupancy and rent increases, hotel occupancy as tourism is high, etc.) coupled with low cost of capital is pushing valuations. Potential Dodd Frank deregulation may increase small and regional bank lending. Proposed tax cut contains special provisions favorable to CRE.
Q: Will capital be available in 2018 and for what types of projects?
A: Yes, I believe that capital will be abundant in 2018, pending no “black swan” events. Capital will be available for all asset classes; however, some lenders are pulling back on heavily-built areas such as DTLA and Hollywood, until they see the current generation of new construction be absorbed.
For comments, questions or concerns, please contact Dennis Kaiser