Emerging Trends Survey Says Financing Will Get Easier For Some
- Oct 20, 2010
If you have cash, you can invest. That’s according to the Urban Land Institute and PriceWaterhouseCoopers’ annual Emerging Trends report, which takes as its base 275 face-to-face interviews with and 600 surveys of those in the commercial real estate industry. (Find more insights on Emerging Trends on CPE TV: Emerging Trends: The Era of Less)
The report found that investors with cash and credit will be more likely to obtain financing. “Investors with capital have got a lot of options,” Urban Land Institute senior resident fellow Stephen Blank said during a webcast announcing the survey results. “The debt side remains more of an issue.”
While last year’s survey showed an all-time low for sales, Blank said, this year’s forecast shows a particularly promising picture, particularly in the spring. “As we predicted last year, investors and lenders concentrate on the best properties in the best markets,” he said. “We see a sharp divide between the haves and the many more have-not investors. … The haves have cash and credit, the have-nots simply don’t.”
Debt markets are starting to open, the survey finds, and that trend is predicted to continue in 2011 and 2012. However, the lack of parity between the haves and have-nots shows itself in this equation as well. Properties with stronger cash flow have better prospects of getting financing.
Blank put it bluntly: “If you have a trophy property, lenders will come after you,” he said. “If you have a dog, you’re going to get foreclosed.”
According to the survey’s respondents, though, there is a severe lack of capital no matter which way you slice it. Nearly half – 46 percent – said the market is substantially undersupplied, while 32.8 percent said it is moderately undersupplied. The capital markets were said to be in balance by 13.7 percent of respondents, while 5.7 percent said that they were moderately oversupplied.