Posted on August 2, 2017
NAIOP asked some of the Research Foundation’s Distinguished Fellows, the nation’s foremost commercial real estate, economic and public policy experts in academia: What makes this CRE cycle different?
Mark Eppli
Secretary/Treasurer, NAIOP Research Foundation
Founder and CEO, Agracel, Inc.
“Commercial real estate debt levels, debt growth, and underwriting discipline. Since 2009 (the last peak), commercial real estate debt levels grew at 1.4 percent annual rate and over the last five years (the last trough) have grown at a 5.2 percent annual rate. The same statistics eight and five years before 2009 were over 10 percent, well outpacing inflation. Additionally, as CMBS lenders are net negative lenders (i.e. more loans coming due than new loans), commercial banks are more important in this cycle and since Q4 2015 have been tightening their lending standards. All mortgage debt (including single-family) outstanding remains below 2009 levels. So what makes this cycle different, reasonable mortgage lending growth and better mortgage debt discipline, will make for a longer development cycle.”
Mark Stapp
Executive Director, Master of Real Estate Development
W.P. Carey School of Business, Arizona State University
“Although there is a lot of capital in the market, lending is more constrained and socioeconomic conditions have altered demand. We have had the confluence of technology on how we live, especially mobile connectivity, coupled with two big shifts in demographics, the continued impact of two longest wars in our history and continuing significant negative effects of the recession. The result is a slow and steady recovery and growth rather than a rapid recovery.”