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CRE Providing Foundation in Uncertain World

Commercial real estate may provide a foundation for educated investors seeking to balance portfolio risk during these uncertain times, as stated in Expectations & Market Realities in Real Estate 2012—New Foundations in an Uncertain World,, a new annual report published jointly by Real Estate Research Corporation (RERC), Deloitte, and the National Association of REALTORS® (NAR).

Shelter from the Storm

With weak business and consumer confidence, investors are increasingly turning to the relative safety of commercial real estate, as outlined by RERC's Ken Riggs in the January/February 2012 feature article for Commercial Investment Real Estate magazine. In "Shelter from the Storm," Mr. Riggs explains how commercial real estate is able to deliver what cannot be delivered by various investment alternatives in these stormy times.

Riggs Named 2012 Chair of The Counselors of Real Estate

Kenneth P. Riggs Jr., CRE®, chairman and president, Real Estate Research Corporation (RERC), was recently named 2012 Chair of the Board of The Counselors of Real Estate®, an international organization of top-level commercial real estate advisors headquartered in Chicago, at their annual convention in Washington, D.C. Riggs has served as president of RERC since 1991. Under Ken's leadership, the firm provides research services, valuation management, strategic consulting, independent fiduciary services, and web-based management services for property portfolios.

Commercial Trends in a World Unhinged

As the world focuses on the sovereign debt crisis in Europe, it is becoming clearer that the global economy is in danger. Commercial real estate has traditionally provided a sense of relative stability in the market and returns have been reasonable, but in this precarious investment environment, risk is increasing. RERC's institutional investment survey respondents continue to rate commercial real estate highest among the investment alternatives, however, the ratings for cash and bonds are increasing. As demonstrated in the fall 2011 issue of the RERC Real Estate Report, World Unhinged, RERC's required capitalization rates are generally stable....

Search for Clarity...In a Dangerous World

With words like "contagion," "austerity programs," and "sovereign debt crisis" now part of our lexicon, there is the realization that our world is in increasing financial danger. But as Ken Riggs, chairman and president of RERC, explains in Commercial Property Executive, the pull back by real estate investors in this environment should also serve to prevent the market from getting too far ahead of fundamentals, and will help to benefit the long-term success of real estate as a primary asset class....

Search for Safety

Given the slowdown in the U.S. economy, added concerns in the debt crisis in Europe, and the first-ever downgrade of our nation's AAA credit rating, it is no wonder that investors are seeking safety, and commercial real estate is increasingly attractive. As noted in the summer 2011 issue of the RERC Real Estate Report, "Search for Safety," institutional investment survey respondents rated commercial real estate as the strongest investment among various alternatives including stocks, bonds and cash. (click here to purchase)

Finding Safety in a Confused World

Just when we thought the financial markets were gaining some sanity, the world careened into a level of chaos that has completely overtaken the investment markets. Call it fear, or uncertainty, or just the conviction that the economy is going in the wrong direction--regardless, this unexpected chaos has damaged the psyche of large and small investors alike. According to Ken Riggs, RERC president and CEO, in his recent investment column for Commercial Property Executive, investors are seeking "safe" paths away from the insanity and toward investments that are tangible and have less volatility....(click here to read column)

Stability for Nervous Investors

Just a few short months ago, the recovery seemed to be finally taking hold. Job growth was finally strengthening, retail sales were starting to pick up, and the stock market was gaining steam. Our confidence was short-lived, however, as a confluence of events occurred: Japan's earthquake, civil war and upheaval in the Middle East and northern Africa, the debt crisis in Europe, further deterioration in the U.S. housing market, and higher gas and food prices putting additional pressure on already tapped-out consumers. But, as Ken Riggs, president and CEO of RERC notes in "The Risk Factor," published in the July/August 2011 issue of Commercial Investment Real Estate, commercial real estate is considered a safe haven from riskier investments (click here to read article).

The Chase Is On!

With the market starting to move from the top down, more and more investors are signaling their willingness to enter the race for commercial real estate, despite their hesitancy about paying high prices. According to results of a recent survey taken among members of the Association of Foreign Investors in Real Estate (AFIRE), the U.S. commercial real estate market offers a stronger investment opportunity for foreign investors than it has in the past 10 years, stated Ken Riggs, president and CEO of Real Estate Research Corporation (RERC) and first vice-chair of the Counselors of Real Estate (CRE), in his article, "The Chase Is On for Commercial Real Estate," as published in the Europe Real Estate Yearbook 2011. (Click here to read article.)

Investors Getting Down to Brass Tacks

As institutional investors continue the flight to quality as a strategy for real estate returns, demand continues to increase in large markets and values are increasing at a faster rate than in secondary markets. This is a necessary and appropriate part of the recovery process for commercial real estate, and as noted in the just-released spring 2011 issue of the RERC Real Estate Report, Getting Down to Brass Tacks, (click here to purchase) first-quarter 2011 fundamentals seem to support this approach, including return vs. risk ratings for core property types...(click here to read press release).

Riggs 1st Vice Chair of Counselors of RE

Kenneth P. Riggs, Jr., CRE, president and CEO of Real Estate Reserarch Corporation (RERC) was named first vice chair of The Counselors of Real Estate at the organization's recent mid-year meeting in San Diego. Mr. Riggs is to be named chairman of The Counselors of Real Estate in 2012. The Counselors of Real Estate is an international organization ...(click here to read press release).

Balancing Risk and Return during Uncertain Times

Commercial real estate investors appear to remain cautious with their return expectations during these uncertain times, and are weighing the risks presented by the economy and the capital markets, as stated in Expectations & Market Realities in Real Estate 2011—Balancing Risk and Return in an Era of Uncertainty, an annual report recently released and published jointly by Real Estate Research Corporation (RERC), Deloitte, and Real Capital Analytics (RCA) (FREE FOR A LIMITED TIME - e-mail bbush@rerc.com for your complimentary copy). Working together for the first time, the three organizations have drawn on their respective capabilities to examine the economy, capital markets, and commercial real estate property markets, conduct a thorough analysis of available research, and offer their interpretation of anticipated events in investment real estate in 2011 and beyond (see press announcement).

RERC Welcomes McKee & Schalka as RERC-Seattle

Real Estate Research Corporation is announcing the affiliation of McKee & Schalka Real Estate Appraisal Services & Consultants, Inc. with RERC. Bates McKee, MAI, CRE, and John Schalka, MAI, CRE, serve as co-managing directors(see RERC managing directors) of RERC-Seattle. "We welcome the McKee & Schalka group and are pleased to strengthen RERC's presence in the western U.S. as we benefit clients with our increased capacity and expertise," says Ken Riggs, president and CEO of RERC. "RERC has always been known for its strong real estate research, valuation, and consulting services, and the skills offered by Bates and John, along with those of their professional staff, contribute greatly in these core areas."

Kendall Leads NCREIF Valuation Committee in 2011

Del Kendall, CRE, MAI, managing director of RERC’s Houston office, and chairman of the NCREIF Valuation Committee for 2010 and 2011, organized and moderated a panel comprised of Ken Riggs, RERC president and CEO, Jim Clayton, vice president-research with Cornerstone Real Estate Advisers, and Robert Micera, CIO of Cole Real Estate Investments, on "Pricing Risk: Rational Expectations," at the winter NCREIF Research/Valuation Committee presentation in Scottsdale, Ariz., in March 2011. Slides from the presentation are available through NCREIF by clicking here. For more information about Mr. Kendall, please click here.

Investors Stretching Underwriting in California Office Market

With several quarters of stabilizing vacancies and rents, most major California office markets seem to have found bottom (or at least bottom is predictable and further decline is incremental), explains William Corbin, managing director of RERC's West Coast office in the winter 2011 issue of the RERC Real Estate Report. "As a result, investors are taking a forward-looking approach to purchase underwriting and transactions are starting to occur," he stated. "It appears that market pricing has reached its cyclical low point, and while values are already rising in the better markets, they should be increasing ...." Click here to access article.

Investors Inching Out on Risk Spectrum

Investors who want to preserve safety but are ready to slightly increase their risk level are starting to look at commercial properties in the secondary and tertiary markets, noted Ken Riggs, CEO of Real Estate Research Corporation and chief economist for the CCIM Institute, in The Wall Street Journal's MarketWatch report. Investors are more optimistic about return versus risk, as well as value versus price, for commercial property, according to RERC's transaction analysis. "Commercial real estate--particularly the apartment sector--is general safer than stocks, and we are seeing sales volume increase by approximately 10 percent on a 12-month trailing basis for apartment transactions of less than $2 million," he stated. Click here to link to article.

Commercial Real Estate "Defying Expectations"

Despite the sluggish economy, it is astounding how well the institutional commercial real estate market is performing. Required capitalization rates continue to compress, expected rental growth is increasing, and returns for top-tier properties are defying expectations. Although there are still serious difficulties for some property types in many of the secondary and tertiary markets, the recovery continues with institutional properties meeting the challenges head-on. Research includes rates for 10 major property types for institutional, regional, and 48 metropolitan markets. Click here to purchase just-released 4th quarter 2010 report.

2011 Forecast: The Good, The Bad, and The Unknown

The 2011 market remains divided among good quality properties selling at high prices in the best markets, distressed properties selling at a fraction of prices fetched in 2007, and the rest of the properties in small-town America where buyers, sellers, and lenders are finding it nearly impossible to get deals done. The third category is where the majority of properties exist--those properties that may be economically paying their way but technically are in default. According to RERC president and CEO Ken Riggs, it will take discipline to avoid rushing through this purgatory, but giving the market time to correct itself may be the best way to gain the transparency investors need. To read the article in its entirety in the January/February 2011 issue of Commercial Investment Real Estate, please click here.

Fall/Third Quarter 2010 RERC Real Estate Report released

Despite increased transparency, the commercial real estate market still faces a great deal of uncertainty and is becoming increasingly divided. Top-tier institutional real estate properties remain in great demand, while lower-tier properties are being repriced downward. As noted in the fall 2010 issue of the RERC Real Estate Report, "The Best, the Distressed, and the Rest,"cap rates and discount rates continue to compress for institutional-level properties, while...click here to purchase 3rd quarter report

CCIM Leadership Recharges Curriculum

CCIM leadership, including RERC's Ken Riggs, who serves as chief real estate economist for the CCIM Institute, is emphasizing education, technology, and networking to help support its approximately 15,000 members operate at the top of their game, as reported in the September 2010 issue of Real Estate Forum's cover story, "New School of Thought." click here to link to magazine article

Kendall Focuses on Valuation in Appraisal Institute Webinar

Del Kendall, CRE, MAI, managing director of RERC's Houston office and chairman of the NCREIF Valuation Committee, offered his insights in a Nov. 10 presentation on "REIS and GIPS: Investment Firm and Institutional Investor Initiatives and Perspectives on Real Estate Valuation." click here for webinar slides The purpose was to help the audience understand NCREIF's appraisal and valuation consulting needs and its role in the real estate industry. Kendall is responsible for providing leadership to the NCREIF organization as it relates to valuation trends affecting the pension fund industry, such as GIPS, fair value accounting, leased fee valuations, and other specialty valuation processes.

Riding the Edge of Success

As the second half of 2010 gets underway, we are at an inflection point in this investment cycle and are facing the harsh realities of a risky world. Top-tier institutional real estate continues to be in great demand, despite the slowdown in the economy, and required returns are increasing slightly for some property types, while cap rates are mostly declining, as reflected in the summer 2010 issue of the RERC Real Estate Report, "Riding the Edge of Success." click here to purchase 2nd quarter report

Fighting the Battle of Appraisal Lag

RERC Managing Director Del Kendall emphasizes the need for more accurate property valuations, particularly when there are few sales comparables on which to base valuations. To help avoid appraisal lag, Mr. Kendall suggests gathering more anecdotal evidence, and considering various methods of quantifying price declines (Band of Investment Technique). To read Mr. Kendall’s entire article, as published in the summer 2010 RERC Real Estate Report, please click here.

Investors Bullish about Commercial Real Estate

Investors are more bullish about commercial real estate than other investment classes, reported RERC in Commercial Real Estate Direct this week. "Institutional investors skittish about the slowing economy and the volatility and risk in the stock market are finding the diversification, stability and higher absolute returns of commercial real estate increasingly attractive," said Ken Riggs, president and CEO of RERC. click here to link to article

Apartment and Office Sectors Spark Investor Demand

RERC's investment conditions ratings for the institutional apartment and CBD office sectors jumped a full point during second quarter 2010, making them the two highest-rated property types that RERC surveys. The investment conditions rating for the apartment sector increased to 7.1, while the rating for the CBD office sector increased to...(click here for entire press release)

Real Estate Recovery Dependent on Repricing and Deleveraging

Investors expecting to find bargains on distressed properties are finding instead that the amount of liquidity in the market and the ability of lenders to re-price assets to a level that will clear the market is more measured than most had predicted, explained RERC President and CEO Ken Riggs, in the Wall Street Journal's MarketWatch report. Riggs, who also serves as the CCIM Institute's chief real estate economist, stated that the process of refinancing debt serves as a guiding hand out of this severe and Draconian commercial real estate recession, and he doesn't see...click here to link to article

Kendall Kicks-off NCREIF Capital Markets Symposium

Del Kendall, managing director of RERC's Houston office, kicked-off the Capital Markets Symposium at the NCREIF Summer Meeting in Chicago on June 30. Held jointly with the Appraisal Institute, the session featured panel members Bob White, CEO of Real Capital Analytics (RCA), and Ken Riggs, CEO of RERC, who discussed the state of the commercial real estate market. Click here to access PowerPoint.

Emerging from the Rubble

This article authored by RERC's Ken Riggs and published in the newly released Real Estate Issues takes a close look at investment returns for commercial real estate for 2010 and 2011. Bid-ask spreads are starting to narrow and investment capital is becoming more available, but the challenge in bridging market pricing to market values amid the uncertainty that surrounds forecasting cash flow under stressful economic conditions remains. click here to download

False Bottom or Firm Foundation?

As discussed in Commercial Property Executive, RERC's Ken Riggs notes that commercial real estate investors, burned when the markets collapsed a couple years ago and who had been keeping their distance, have been returning to the fold as the risk and return metrics have moved in their favor--or, at least as far as they can see. The question is, however, whether what appears to be the bottom of the market is really a false bottom? The signals indicate...click here to read investment column

Recovery Gains Traction

Although there are more signs of recovery in the economy and in commercial real estate, the market remains bifurcated and the recovery will be very uneven. As noted in the spring 2010 RERC Real Estate Report, "Recovery Gains Traction," we are seeing lower cap and pre-tax yield rates as demand for institutional-level properties increases, but there is a lack of demand for second-tier properties, and returns remain...Click here to purchase first quarter report

Time to "Gear Up" for Institutional CRE Opportunities

RERC, with partners Real Capital Analytics (RCA) and Holliday Fenoglio Fowler (HFF), says that 2010 will be the best time in many years to buy well-priced institutional-quality commercial real estate. In the recently released annual forecast report, Expectations & Market Realities in Real Estate 2010: Crossing the Divide—The Passage to Recovery, the firms draw on their respective capabilities to thoroughly examine today's commercial real estate market. Click here to purchase.

Real Estate Market Increasingly Divided

With some historically high prices being paid for institutional properties in top-tier markets, and other markets seeing little or no transaction activity other than distressed property sales, the commercial real estate market is becoming increasingly divided, said RERC President and CEO Ken Riggs in The Wall Street Journal's MarketWatch report. "The good news is that institutional markets are typically a leading indicator to change in the secondary markets, and we expect..."click here to link to article

Riggs Appointed Chief Real Estate Economist

Ken Riggs has been named chief real estate economist for the CCIM Institute. In addition to his continued role as president and CEO of RERC, Riggs will be responsible for addressing CCIM members at the annual fall meeting and through quarterly podcasts, conducting webinars through the CCIM Institute’s Ward Center for Real Estate Studies, providing analysis and forecast commentary to the media, and authoring the annual forecast article for the Institute's Commercial Investment Real Estate magazine.

Divisions Separate Investors from Opportunities

Despite forecasts of recovery in the commercial real estate market, there remain several factors that will limit a sustainable improvement in 2010, according to a report released by Real Estate Research Corp. (RERC) and the CCIM Institute, and as described in the Wall St. Journal's MarketWatch. Despite high unemployment, high vacancy rates, declining rents and other divides, RERC's Ken Riggs says, "Investors should view 2010 as a once-in-a-lifetime opportunity to snag key long-term...." To read the entire article, please click here.

Delinquent CRE Loans Could Sidetrack Recovery

Don Burns, CRE, FRICS, MAI, and managing director for RERC in the Atlanta office, reminded attendees of the Georgia Society of CFAs meeting that commercial real estate lags the economy, especially in the recovery phase. In a presentation to the group last week, Burns discussed how the deficit and high unemployment are already placing a huge drag on the economy, and that growing commercial real estate loan delinquencies put the economy at further risk. (Click here to access presentation.)

2010 Forecast Published in CIRE

Although the large institutions already have worked through a lion's share of repricing issues, the same cannot be said for the broader commercial real estate market. The year 2010 will be a year of reckoning for many investors who up to now have been able to defer their issues to a later date. Those playing the "blend, extend, and pretend" game may be forced to look ahead and see how daunting the road to recovery really is. "The Road to Recovery," by RERC's Ken Riggs as published in the Jan./Feb. 2010 issue of the Commercial Investment Real Estate magazine, discusses property trends and buy opportunities for 2010. (Click here to access article.)

"Pure Determination" Needed

Economic issues like a deepening federal deficit, high unemployment, increasing pressure on state and city budgets, and more bank failures continue to weigh down the investment environment for commercial real estate. Even so, RERC's new required pre-tax yield rates increased slightly over the previous quarter's rates, while capitalization rates are mixed… (Click here to purchase 4th quarter report)

Hotel Investors Look to Cap Rates for Sign of Stabilization

With little good news in the hotel market of late, investors looking for any ray of light at the end of the tunnel may be seeing it in capitalization rates. According to data presented in the summer 2009 issue of the RERC Real Estate Report, unleveraged going-in and terminal capitalization rates on an institutional level declined slightly, to 9.8 percent and 10.4 percent, respectively, during second quarter.

The Gauntlet Continues...

With investors summoning the strength and courage to continue their quest for returns, look to the fall 2009 RERC Real Estate Report, “The Gauntlet Continues,”for the latest cap rates, yield rates, investment conditions ratings, and other criteria. (Click here to purchase.)

Courage and Conviction Needed to Survive

Although we may be starting to see signs of stabilization in the economy, there is more pain ahead for the commercial real estate market. As shown in the new issue of the RERC Real Estate Report, investors will be required to muster the courage, conviction, and decisiveness needed to survive in this environment. click here to purchase

The Road to Recovery: Challenges and Opportunities

RERC's Ken Riggs and Principal Real Estate Investors' Randy Mundt offered their overview for the economy and for commercial real estate investment at the University of Chicago Graduate School of Business (GSB) Real Estate Conference on Nov. 5, 2009. (See PowerPoint presentation here.)

Retail Pre-Tax Yield Rates Retreat

Sluggish sales do not bode well for retailers, or for investors in regional retail malls, retail power centers, and neighborhood/community retail centers, says Managing Director Don Burns, and reflected by data released in the summer 2009 RERC Real Estate Report.

"7 Come 2011"

Although most investors do not want to stand back up at the real estate table until prices have stopped declining and have stabilized, RERC maintains that life is a gamble, and "7 come 2011," commercial real estate is still a bet that you have to take. See Ken Riggs' recent column, as published in Commercial Property Executive. (Click here to read.)

Valuation Navigates Steep Cliffs

RERC CEO Ken Riggs take an in-depth look at how cap rates impact values of commercial real estate in Valuation Navigates Steep Cliffs. Based on RERC’s second quarter 2009 required returns, the article compares these rates with NCREIF realized returns during various recessionary periods. Click here to read.

CRE Moving from Stress to Distress

A year after the U.S. financial system nearly collapsed, the stress on the credit markets has been relieved somewhat. Unfortunately, the distress in the commercial real estate market is intensifying, as more and more investors who have over leveraged or have no equity are defaulting...(see Ken Riggs' column in Commercial Property Executive)click here to read.

NCREIF Valuation Committee Mtg. Notes Presented

An open discussion on “What Is It Worth Now?” and a panel discussion headlined as “Four Forecasts” were the highlights of the NCREIF Valuation Committee, as described by RERC Managing Director Del Kendall. A reproduction of Mr. Kendall’s article is reprinted with permission from The Appraisal Journal, Summer 2009, ©2009 by the Appriasal Institute, Chicago, Illinois. All rights reserved. click here to access

Demand and Supply Analysis Critical to Self-Storage

To better anticipate the dynamics of a market for self-storage properties, RERC places great emphasis on various supply and demand factors in each subject's market area. For more information about this specialized analysis, or to request a copy of a white paper detailing this process, contact RERC Managing Director Kent Steele at 630.430.3865 or ksteele@rerc.com.

McCoy Book on Ethics Key in Today's Environment

Bowen H. "Buzz" McCoy wrote Living Into Leadership: A Journey in Ethics several years ago, but the principles he discussed are particularly relevant today. "Ethics is what you are willing to lose for," he explains. (Read Ken Riggs' review of McCoy's book by clicking here. (Reprinted from The Counselor, Fall 2007 issue, with permission from The Counselors of Real Estate.)

Lack of Trust, Confidence Exhibited in Economy

This zero-sum decade certainly has had its share of winners and losers (mostly losers). As Ken Riggs points out in the kick-off presentation to the NCREIF Summer Conference in Chicago, investors have lost both trust and confidence in the economy and the markets.... click here to access PowerPoint presentation

Investors Determined to Overcome New Depths

Commercial real estate has yet to see bottom, but investors committed to this asset class are determined to overcome the depths of this recession and the challenges facing the industry. As noted in the current issue of the RERC Real Estate Report, the losses in this recession appear to be more severe than what the industry suffered in the 1990s. click here to purchase

Riggs Elected 2010 Second Vice Chair: Headed for CRE Chairmanship

Kenneth P. Riggs, Jr., CRE, has been elected 2010 second vice chair of The Counselors of Real Estate, setting him on the path for the 2012 CRE chairmanship.

Real Estate Travels Uneven Road to Recovery

Despite some positive indicators in the economy, the retail property sector continues to struggle, as explained by Ken Riggs in Commercial Property News Online. Tied to consumers and reflecting their spending habits in this uneven road to recovery, the sector received the lowest return-versus-risk rating from institutional investors... see May 26, 2009 issue of CPNonline...

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