News

San Diego Metropolitan- October 15, 2008

October 16, 2008

Daily Business Report

October 15, 2008

UNCERTAIN REAL ESTATE OUTLOOK

The financial outlook in the real estate community is volatile and uncertain with problems that are likely going to persist, concluded panelists at forum presented by the ULI San Diego/Tijuana Council.

Entitled “Real Estate Capital Markets: What’s the End Game?” yesterday's presentation featured Don Ankeny, president and CEO of Westcore Properties; Sean Flannery, managing director of the San Francisco office of Real Estate Merchant Banking; and Rajiv Patel, managing director of Spear Street Capital. The panel was moderated by Richard Green, director of the USC’ Lusk Center for Real Estate.

“The road ahead is going to be very volatile and very difficult,” says Patel. “The reality is that we are in for a tricky road ahead.”

Like Patel, Flannery says the volatility in the market leaves many with doubts on the country’s economy. “It is hard to have any significant long-term confidence with the markets current volatility,” he says.

When discussing the country’s bailout plan, Ankeny sees it as a step in the right direction. “I think that the coordinated efforts of the different governments to inject capital into the markets is a good thing,” he says. “But in general I don’t feel good.”

The panelists also discussed the commercial market in San Diego , stating that times are tough for many companies. “Our office tenants are looking at giving back space, laying off people,” Ankeny says. “The economic prospects for corporate are not good right now.”

Patel says business conditions are not good. “There is a lot of speculation about where the commercial market is going,” he says. “But what is getting lost in this is that there is a tremendous fundamental slowdown.”

With companies and individuals experiencing tough financial times, Ankeny says the financial crisis should not be entirely blamed on Wall Street, noting that many factors contributed to the financial fall out. “Everyone likes to point to the Wall Street greed, but we need to look at our whole country,” he says. “We have lived in an over leveraged environment. We are living in houses we can’t afford and taking vacations that we can’t afford.”

California itself will also be especially hit hard in the coming years, the panelists note. “Not only is California expensive to live here, but you have what I would characterize as a dysfunctional legislation, all those thing together and we will be hit hard,” Patel says.

Yet Flannery notes California may offer some glimpses of hope. “ California has some of the most opportunities across the country and some of the biggest problems, but I still think there are more opportunities when there is volatility,” he says. “There is a silver lining. The capital is out there. Things are just going to have to be structured differently.”

-- Lisa Kovach