Anyone active in the real estate industry over the last few decades, has seen a few cycles, some hot product types, innovative financing techniques, and best-practice progressions such as green technologies and LEED techniques. And of course, the swing from “normal” debt/equity leveraging, to high leveraging, to the current conservative leveraging of properties.
In all this, we seem to be situated in a golden age of “feasibility,” where real estate “triage” requires careful attention to the possible in workout situations, and investors in projects focus on local market basics (supply, demand, buyers, customers, tenant mix, co-tenancies, pricing) as they evaluate new investment.
This is a great sensibility for the real estate industry, and hopefully not short-lived once the pain subsides and property product markets return to health. Certainly only the strong players, and the smart players, will survive this downturn. If capital investment in real estate stays with conservative leveraging, it will leave an industry for the professionals to prosper in, a place a little more difficult for the “fast buck” operators to play in.
We’ll see.
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