CBRE: All That Real Estate Money Out There Waiting... 7 comments
-
Font Size:
-
Print
- TweetThis
The weak economy and subsequently lower leasing activity reduced commercial real estate brokerage firm CB Richard Ellis Group's income by 65%. Yet CBRE is forecasting an uptick-- and soon.
Despite the difficult economic situation worldwide, CBRE (CBF) sees enormous sums of pent up money looking for an investment to park in. These and other trends noted from CBRE's Q308 conference call:
A troubled U.S. market:
In the US, several well-capitalized vendors have suspended their real estate programs for remainder of the year, those who remain in the market, including some life insurance companies, private equity funds and Fannie (FNM) and Freddie (FRE) for multi-family have sharply tightened terms.
Investment activity across Europe remained muted in the third quarter especially in the UK, France and Germany. By contrast, third quarter activity was most robust in some of the Nordic and central and eastern European markets… The business global uncertainty is now adversely impacting tenant demand in Asia Pacific.
We have eliminated $190 million of permanent run rate expenses. [Through] staff reductions and associated compensation expense savings of approximately $100 million. [The other] $90 million in savings will be realized from cuts in business promotion and advertising, travel and entertainment, and office operations costs.
Outsourcing accelerates in bad time... The impact on the outsourcing revenues based on poor times in the marketplace… tends to be far outweighed by the expansion of the outsourcing business.
Despite all this, the outlook is positive:We are looking right now at account opportunities that are larger and more encompassing than anything we've seen in our business ever. We are seeing very, very large multinational corporations, who never considered outsourcing before, consider it now… It is an obvious easily quantifiable way to reduce tens of millions of dollars of operating expense.
Transaction velocity in our investment property sales business could pickup, in the relative near-term… The current low level of transaction activity is about double the lowest trough we've ever recorded in our business. Owners are beginning to capitulate… The global leasing businesses [are] supported by strong fundamentals.
The amount of equity that's been raised for commercial real estate this year is well north of $100 billion and some numbers have it north of $300 billion. And most of that money has not been deployed... There is a mountain of equity, sitting out there in investment manager's hands, that needs to get deployed.
Related Articles
|
Find People on SA
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largest
increase in followers
in the last 7 days-
1
David Fry
-
2
Bill Gross
-
3
Philip Davis
-
4
Tyler Durden
-
5
TraderMark
Fastest Climbers » -
1
-
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 7 comments:
Sooner or later we are going to hear slightly different tune.
If the automakers get bailed out, you can be sure the real estate industry with it's mighty force all over the country will demand a bailout for themselves.
You will see crying babies and 85 year old realtors on TV making their case for government money for realtors, developers and managers.
Most likely, our new leader and congress / senate will buy the office buildings and condo towers for their social agenda.
Are we there yet? Are we there yet?
Learn about credit, not stocks.
What else are the pundits and "experts" suppose to say about their industry?
"NAH ... this industry is a corpse for the next ten years don't bother! In fact here move out of the way I need to put up this yellow tape around here ... its now a CRIME SCENE!!! H ... Hey H ... can I borrow your shades for a sec this glare off Paulson's forehead is blinding me! God man, have the decency to wear a hat in public!"
Beyond the money loaned that was never "printed", what about the guy that bought a home for $50k and never moved, watched it go to $600k and it has now dropped to $400k. No money ever entered or left the market beyond his original $50k. Likewise with stocks or any other commodity that never traded hands turing a runup and turndown.