So, what would you like to hear first . . . the good news or the bad news? Let’s start with the good. Real Capital Analytics reports
a 12 percent year-over-year increase in what it terms
In addition, in a recent Investment Sentiment Survey published
by Real Estate Forum, a whopping 65 percent of the nearly 400
investor respondents reported that their current strategy favors
acquisitions. Only 13 percent said their balance sheets show
Now for the bad news. We might be headed for another downturn,
and the frustrating truth is that it is out of our hands. This won’t
be a case, as has happened in the past, where commercial
real estate practitioners can take part of the blame. We aren’t
overbuilding or blithely signing off on ridiculous loans. The
slow pace of the recovery hasn’t given us opportunity to screw
things up on our own.
Nope. If there is going to be another crash, it will come at the
hands of our elected representatives, who seem incapable of
moving forward on anything that doesn’t smack of self-interest.
So focused are they on spitting contests that I believe they have
turned their backs totally on the public good.
The recent so-called partial shutdown of the government is
expected to have little serious impact beyond slowing the
already slow economic recovery and hobbling regions that rely
heavily on the government for business.
But the shutdown is merely the appetizer, an exercise in how
much both parties can embarrass themselves in the media.
The main course is the debt ceiling. The only question seems
to be whether Congress, rightfully red-faced over its shameful
shutdown shenanigans, will play nicely or dig their heels in
further. Guess which one I am voting for.
(And don't be fooled by the recent compromise vote that
supposedly resolved both issues. All that did was promise that
the arguing would pick up again come January.)
And if I am right, then you can kiss the above RCA statistics
good-bye as investors retreat in droves, the stock market freezes
in place, and we careen headlong into another recession.
The saddest fact is that there is nothing new here. We’ve seen it
all before from this anti-business administration and an almost
criminally out-of-touch Congress. We’ve certainly seen the
debt-ceiling drama before, played out until the last hour in just
another in the recurring games of Congressional brinksmanship.
And if history tells us anything, there’s one thing the Keystone
Cops . . . ahem, I mean our elected representatives . . . have
mastered, and that’s the art of brinksmanship, which, by the
way, is defined as pushing a dangerous situation to the very
verge of disaster in order to achieve an advantageous outcome.
As you can tell, and as I mentioned when I had the honor of
keynoting the SIOR conference in Palm Springs earlier this
year, I dislike and distrust all of our elected officials, and I paint
members of both parties with the same broad, disillusioned
brush. I find myself voting not so much for someone I believe
in but rather the person I feel will do the least damage. It’s a
horrible way to vote, and it speaks to a horrible state of political
affairs in the country today, because I know I am not alone.
It’s a sad fact that the “advantageous outcome” of all this
brinksmanship goes to either one political faction or the other.
Neither you nor I factor into that equation.
We can only hope that reason enters into the debt debate and
nothing more dire results, that the current political unpleasantness
will end up more of a speed bump than a stop sign.
If that is true, we will take the hit and trudge on. While we, as an
industry fret over changes in cap rates and interest rates (which
have remained in the basement for an unnaturally long time),
the upward trajectory of our industry should continue, unless
the economy derails of course.
If we have reason for optimism, it is coming from within an
increasingly vibrant industry. It’s just a shame that the folks in
D.C are too self-absorbed to support it as they should.
So, what are your thoughts? I’d like to hear from you at salustri@
SAME OLD TUG OF WAR
BY JOHN SALUSTRI
JOHN SALUSTRI has been among
the most recognized journalists in
commercial real estate for the last
25 years, as Editor of Real Estate
Forum and as editor of GlobeSt.
com. John is currently engaged
in freelance writing assignments.
He may be reached at salustri@
optonline.net or 917-912-0038.
ABOUT THE AUTHOR