Musings Of A Veteran Broker

By Guenter Manczur

Those of us who have been around long enough to see prior real estate cycles remember only too well the period of 15% – 18% interest mortgages, the closure of numerous industrial banks and the much larger savings & loan debacle that was followed by an era when RTC-controlled properties seemed to be the only ones being sold.

Yet here we are, some 20 years later, having recently experienced an unparalleled period of price appreciation and economic growth in almost all sectors of the real estate industry. The expectation of constantly increasing prices has been the business model for many property owners, and countless purchases were made with the full expectation that an owner could re-sell any property, any time, for a profit.

Is it reasonable to expect that explosive growth can continue unchecked for long periods of time? Of course, not. Most of us agree that prices fluctuate with supply and demand conditions, and that periodic imbalances will result in price corrections.

In these times of being inundated by a barrage of negative financial news, it’s helpful to remember that commercial real estate transactions will continue to happen even in a down-market, albeit at a slower pace.