Real Estate Forum interviewed Manatt's Tom Muller and Michael Polentz, co-chairs of the firm's Real Estate and Land Use practice, for an article on expected real estate trends in 2015.
As reported by Real Estate Forum, the investor landscape - and the capital markets - continue to evolve. In 2015, investors are looking at the commercial real estate market through a different lens.
Muller said he expects to see large institutional clients focus more on higher-quality assets with longer-term holds, especially in light of a probable credit crunch in 2016 or 2017 when the high volume of 10-year real estate and corporate loans made before the Great Recession come due. He explained, "One additional possibility is that as the Fed eventually backs away from its low-interest rate policies, yield-seeking investors may begin to diversify away from real estate, which has been a good substitute for yield instruments in a world in which they yield less than the inflation rate."
Polentz told Real Estate Forum that investors should look for high-quality assets in 2015, but be prepared to move very quickly as opportunities arise. Be prepared to pay higher prices based on lower cap rates for most assets in core markets and expect that any asset you target will have multiple suitors. "Have a long-term perspective," said Polentz. "We're no longer at the point in the economy where quick flips at an impressive profit can be expected."