Commercial real estate remains strong in many areas of the country, and even in metros seeing a slowdown, it’s often considered “an opportunity” rather than “a catastrophe.”
NEW YORK – American humorist Mark Twain is quoted as saying, “The reports of my death are greatly exaggerated.” The actual statement was that “the report of my death was an exaggeration,” but the meaning remains the same. Is the impact of multiple bank collapses having an effect on the commercial real estate (CRE) sector?
If you’ve spent any time reading the news in the past week, you’d think it was time to start planning a nationwide CRE funeral. Some examples:
- CNBC: BofA’s Hartnett Sees Commercial Real Estate as the ‘Next Shoe to Drop’
- CNN: Economists Are Growing Concerned About the $20 Trillion Commercial Real Estate (CRE) Industry
- Yahoo Finance: Commercial Real Estate Is in Trouble. A Banking Crisis Will Make it Worse
- Markets Insider: Commercial Real Estate is the Next Shoe To Drop For Regional Banks and the Stock Market
- Wall Street Journal: Commercial Property Debt Creates More Bank Worries
- Washington Post: Commercial Real Estate Could Become a Problem for Midsize Banks
One investor’s peril could be another’s opportunity. Benzinga has talked to numerous real estate investment trust principals and other investors who say that not only is the current crisis a regional one, but that it has made for some good buying opportunities.
One is Eric Brody, the founder and Principal at New York City-based ANAX and ANAX Ventures, a real estate developer and lender providing capital to distressed real estate projects. In an extended interview with Benzinga, Brody said that the media is wrong to paint such dark broad-based brush strokes on the state of the CRE market. The multi-family sector is “still coming out of a COVID coma” and new construction is “slower than 50 years ago,” he said.
“What is one of the basic tenants of real estate? Location, location, location, and hyper-local markets. Now you have the mainstream media making projections based on a macro scale,” Brody said. “Especially that 20 trillion headline (CNN). It’s too tremendous a statement. It’s clickbait. They should be asking, what asset class in what market and how did they structure the deal?”
Brody, who is also the host of the Real Tech Talk Podcast and TheRealDeal’s The Blue Print, admits he doesn’t suffer from a lack of opinions. But his main concern today is that the CRE market is being judged on a national scale when specific regions of the country are performing well.
He also objects to the fact that while construction has undoubtedly slowed, there’s a lot going up right now, and funding is not going to prove to be a stopping point because the values are still there.
“No one views a half building as 50% of the total value. There’s a lot of stuff under construction right now, and they are moving forward.”
As for investors, at least from his New York vantage point, Brady says the environment is great for some. “It’s an incredible moment in time if you have the capital and the expertise” to invest in CRE.
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