Real estate industry executives who appeared on a panel at BOMA's annual convention last month in Chicago were unable to offer hope for a quick turnaround in the moribund commercial office leasing environment. Stephen Quazzo, CEO of Transwestern Investments Co., cited the underlying problem: Corporate America is unable to forecast when its businesses will recover.
Philip Cyburt, president of Boeing Realty Co., the real estate arm of the aerospace manufacturer, said real estate activity has been stymied because corporations "don't know where the bottom" of the current business cycle will be, and are postponing capital spending decisions.
Quazzo forecasts two to three years of slow growth in the development and leasing of office buildings. Stephen Budorick, senior vice president with developer Trizec Properties, saw "No relief for four to six quarters."
Bruce Mosler, president of U.S. operations for broker Cushman & Wakefield Inc., said an apparent post-9/11 recovery of the U.S. economy was derailed by the accounting scandals that began with Enron. "We probably have not seen the bottom" of the business cycle, he said.
On a more positive note, Mosler said low interest rates are providing both buyers and sellers "with a lot of latitude" in property transactions. "Fundamentals are still sound in most markets," he declared. Mosler said the glut of sublease space must be worked off before a recovery can be expected in the direct market. He predicted that Arthur Andersen's 600,000 square feet of well-located New York City office space will not go begging.
Quazzo said a positive factor for real estate investment is the flight of capital from stocks to hard assets.
