Senate Real Estate Caucus Co-chairs Cardin and Isakson discuss recovery strategies and priorities
WASHINGTON, DC – March 21, 2011 – (RealEstateRama) — The Building Owners and Managers Association (BOMA) International, in conjunction with the Congressional Real Estate Caucus and the National Real Estate Organizations (NREO), hosted a “State of the Real Estate Industry” luncheon briefing on Capitol Hill on March 17. Senate Real Estate Caucus Co–chairs Sens. Ben Cardin (D–Md.) and Johnny Isakson (R–Ga.) kicked off the briefing, which also featured three speakers who covered the current state of both the residential and commercial markets. The residential overview was given by Lawrence Yun, chief economist for the National Association of REALTORS®, while the commercial outlook was presented by James Woodwell, vice president of Commercial Real Estate Research with the Mortgage Bankers Association (MBA), and Lisa Pendergast, managing director, CMBS Strategy & Risk with Jefferies & Company, Inc. The briefing was designed to give Senate staff a perspective of each segment’s recent history, current market conditions and what to expect for the future.
“BOMA International was honored to host this important briefing by the Congressional Real Estate Caucus and the National Real Estate Organizations,” remarked Henry Chamberlain, CAE, APR, president and chief operating officer, BOMA International, and moderator of the briefing. “The briefings from Senators Cardin and Isakson, along with the economists and experts from both commercial and residential real estate, looked at the correlation of a strong real estate industry and a healthy economy and provided insight on strategies and goals as we work toward recovery.”
Highlights from the briefing include:
Sen. Isakson told attendees that there is more and more anecdotal evidence to back the steady, though slow, recovery of real estate. He also spoke on the future of home mortgage loan buyers Fannie Mae and Freddie Mac, saying, “We have to unwind Freddie and Fannie but we also have to replace them, otherwise there will be too much stress on FHA [Federal Housing Administration] … and we won’t be able to have a vibrant real estate market.”
Sen. Cardin spoke about the impact real estate has on the U.S. economy. “It’s not just the direct jobs, but the indirect jobs,” Cardin noted. “When real estate isn’t doing well, the economy isn’t doing well.” Cardin stressed the need to help small businesses as a means to jumpstart recovery, for both political parties to work together to create a credible plan to deal with the staggering national debt, and to reform tax laws.
Economist Lawrence Yun told attendees that while closing home sales have improved, pending sales are not as strong. Said Yun, “Buyers are not responding to affordability [home prices and lower interest rates] because of very tight underwriting.” Yun predicted no meaningful change in home values over the next two years, but expects the housing market to improve as the job market improves.
James Woodwell discussed how significant jobs losses and declines in retail sales experienced during the recession had an impact on commercial real estate, noting that vacancy rates have peaked across most property types, exceeding the highs of the early 1990s. Woodwell also explained that while originations were pushed downward by lackluster demand as well as by the recession and the overall credit crunch, originations began to show growth in 2010.
Lisa Pendergast explained that while there is tremendous concern about the “wall of debt coming due,” in commercial real estate, much of the debt originated in a more conservative environment 10 years ago and therefore should find refinancing in the current environment. On the flip side, loans coming due that originated five or six years ago will most likely experience an equity gap, where the only options may be default or injection of capital.
BOMA International, in coordination with the other members of NREO, will be providing additional briefings and other educational forums to Capitol Hill legislators and staff throughout the 112th Congress. Members of NREO include: Associated General Contractors, American Hotel & Lodging Association, American Institute of Architects, American Land Title Association, American Resort Development Association, Appraisal Institute, Building Owners & Managers Association (BOMA) International, CRE Finance Council, International Council of Shopping Centers, Manufactured Housing Institute, Mortgage Bankers Association, NAIOP – Commercial Real Estate Development Association, National Apartment Association, National Association of Home Builders, National Multi Housing Council, National Association of Real Estate Investment Managers, National Association of Real Estate Investment Trusts, National Association of REALTORS®, The Real Estate Roundtable.
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About BOMA International
The Building Owners and Managers Association (BOMA) International is an international federation of more than 100 local associations and affiliated organizations. Founded in 1907, its 16,500-plus members own or manage more than nine billion square feet of commercial properties. BOMA International’s mission is to enhance the human, intellectual and physical assets of the commercial real estate industry through advocacy, education, research, standards and information. On the web at www.boma.org.
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