COMMERCIAL AND RESIDENTIAL REAL ESTATE FORECAST DRAWS HUGE CROWD

More than 250 of the top business leaders in commercial real estate met last week to hear the Voit Real Estate Services’ Commercial Real Estate Forecast at the Pacific Club. The top-notch panel included keynote speaker Dr. Christopher Thornberg of Beacon Economics, residential guru John McMonigle of the McMonigle Group, Robert D. Voit, president of Voit Real Estate Services, and Ken Gaitan, head of Bank of America’s OREO West.

Forecast chair Kurt Strasmann, managing partner for Voit’s Orange County region, noted that “Though there are mixed indicators in the economy, business is getting used to this new environment. They are starting to make short-term decisions, which will lead to long-term decisions. As the leader in market research for Orange County, Voit uses multiple indices to determine our current situation and to understand the coming months. We see 2010 as a settling out year in which business will move forward in this new reality.”

The economist Thornberg projected that the government will shortly announce that the recession officially ended in September of 2009. However, he was quick to point out that the economy is being propped up by federal fiscal intervention, and that housing, consumer spending and the labor market are still not faring well.

“California does very well during good times and very poorly during tough times,” he said. “California is overexposed to this cyclical economy because we are real estate and export intensive. We sell capital goods and high-tech to other states that are suffering.”

Thornberg noted that going forward, while no one can predict the exact outcome, the shape of the recovery will be dictated by government policy. He voiced concerns about the current environment of controlled low interest rates. He noted that when interest rates begins to rise, inflation is likely to follow – but pointed out that inflation will aide many real estate owners who are currently upside down on their investments by increasing the value of their properties.

For commercial real estate, Mr. Voit said that while values are plummeting and investment sales transactions are down more than 75 percent from the top of the market, “we do see the pent-up demand in commercial real estate generating a great deal of velocity in short-term lease activity.”

“We are making a large investment in our platform, which we realize is quite countercyclical in the commercial real estate industry, because we are cautiously optimistic and I want our team ready to handle the real estate needs this pent-up demand is generating, both in the traditional market, and in distressed activities. In fact, we are seeing signs that buyers and sellers will soon be comfortable that the price is being re-set by per-square-foot values,” Voit said.

On REO properties, Bank of America’s Gaitan reported that when they are selling premium properties, institutional buyers are coming back into the market and bidding these properties up above the opening price.

Gaitan also agreed with Mr. Voit that when prospective buyers see opportunities to purchase quality properties at 50 percent of replacement cost, they are comfortable that it is sensible to invest.

Voit Real Estate Services is one of the largest privately owned, debt-free commercial real estate services firms serving both institutional and private clients in the Western United States. With offices in California, Nevada and Arizona, Voit Real Estates Services can scale asset management, property management, market research, property leasing and sales, financial underwriting, construction and development services to its clients’ individual needs in any market. The firm’s nearly four decades of real estate ownership experience, combined with its asset management platform, provides clients with strategic alternatives, which allow owners of distressed real estate assets to maximize proceeds while minimizing risk.

Voit Real Estate Services was founded in 1971 by Robert D. Voit, who continues to lead the firm. Known for its personal, nimble and responsive service culture, Voit Real Estate Services has developed, acquired or managed more than 40 million square feet of commercial real estate and transacted sales and leases valued in excess of $25 billion. Additional company information is available at www.voitco.com.