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Monday, April 28, 2008

Where is the RE Bottom: Zell says Commercial WIll be Fine

by Calculated Risk on 4/28/2008 12:52:00 PM

Sam Zell started by saying we need to separate commercial from residential. Commercial will be fine in his view (not my view). Also Zell thinks losses are overstated for investment banks and CDOs.

Update: Zell isn't talking about new construction (CRE), rather he is talking about prices for existing CRE. He feels there is too much global demand ("liquidity") for prices to fall too far - especially for Class-A buildings.

Brian Fabbri, Chief U.S. Economist for North America, BNP Paribas: Builders still overbuilding. Prices still too high. Recession started in December, recession will last year. Housing may bottom well into 2009.

Michael Van Konynenburg, President, Eastdil Secured, CMBS OK unless credit crunch lasts until 2010. Then there could be a huge problem with significant CMBS needing to be refi'd.

Unfortunately most of the discussion is on general economics, and not real estate.

I'll have some quotes later - I believe there was complete agreement that the economy is currently in recession. Those tht commented on the recession (Fabbri especially) seemed to feel the recession started in December 2007, and would last all through 2008 - and the stimulus plan wouldn't help much.