...Commercial Developers Not as Optimistic

Developer Jeff Stack has been through five downturns in his real estate career, but the current one is the worst yet. "It's the deepest, broadest, most all-pervasive because it has impacted every industry in the country, not just real estate," said the managing director of the SARES-REGIS group, an Irvine, Calif., firm which builds apartments and other commercial properties. Other panelists with Stack at PCBC in San Francisco have lived through one less cycle, but they weren't any more optimistic. Bradley Forrester, president of the ConAm Group, a San Diego-based company which acquires and develops communities through the country, believes the market is "stuck" at the bottom of the cycle, and Doug Bibby, president of the National Multi-Housing Council, shared that view. "I'm a skeptic" when it comes to the recovery, Bibby said. "I don't think a return is imminent. I think it will be a slow climb out" of the recession. Daryl Carter, chief executive officer of Irvine-based Avanath Capital Partners, an investment firm which focuses on affordable apartments, agreed with the "stuck" assessment. He also pointed out that while there is "a lot of capital cuing up" that would like to buy existing rental projects or back new ones, "what's available doesn't meet their requirements." Still, once investors accept the fact that 15%-20% returns are no longer in the cards unless they want to take "excessive risk," Carter expects to see that capital deployed eventually, and so does Stack. Investors "can't keep it as cash," said Stack.