TUESDAY, JANUARY 19, 2010

U.S. to follow Asia, Europe in commercial real estate recovery

by Paula Widholm
Chicago

Bruce Miller, head of the Chicago Capital Markets Group of Jones Lang LaSalle, kicked off the event on January 19.

More than 900 commercial real estate professionals packed into the Marriott in Chicago.

The Dobbins Group was one of dozens of vendors out in support of the event.

Recovery from the "unprecedented crash in the global commercial real estate market" has already begun in Asia, it's in its infancy in Europe, and it will come next to the United States, according to Bruce Miller, head of the Chicago Capital Markets Group of Jones Lang LaSalle. He addressed more than 900 attendees at the 8th Annual Commercial Real Estate Forecast Conference today at the Marriott Hotel in downtown Chicago.

Miller also noted that investment sales was the first to head into the real estate downturn, and it would also be the first to head into recovery. "Real estate investment sales will lead us out, followed by real estate fundamentals," he said. "In 2010, there is abundant equity looking to be placed in real estate and trying to time the bottom."

The Chicago area lost 65,000 jobs in 2009, and is expected to lose another 60,000, according to Elaine Melonides of Jones Lang LaSalle. However, Miller predicted that 2010 would be the bottom for commercial real estate values locally, and that the Chicago area would experience significant job growth in 2012 and 2013. "2010 and 2011 is an opportunity to make investments, find jobs and seek wealth creation," Miller said.

Andy James, partner with DP Partners, said his firm is focusing on where the opportunities are: food and beverage, and healthcare. He also agreed that there is "money on the sidelines."

William Rolander, vice president and senior leasing broker at The John Buck Company, said it's an excellent time to buy.

The underwriting formula at Brennan Investment Group includes location, function, discount to replacement costs, and income in place. The "sweet spot" for industrial acquisitions is in the $2 million to $20 million range, according to Michael Brennan, who, prior to co-founding his own investment company, co-founded First Industrial Realty Trust and served there as president and CEO until late 2008. Brennan added that there is $180 billion under water in maturities that would have implications for values and rents.

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