Panelists See No CRE Bubble

There is no "bubble" in the commercial real estate market, according to several panelists at the recent Moody's Investors Service annual commercial mortgage-backed securities conference.At a panel session moderated by Tad Philipp of Moody's, Jeffrey Fastov of Goldman Sachs recalled that in the late 1980s the real estate market felt as it does today because of rising prices. "Real estate cycles are not going away, but it's not a bubble," Mr. Fastov said. The difference is that real estate was then a "dark industry" and it's transparent now, he maintained. Mark Warner of BlackRock said he isn't worried about the possibility of a 1991-92-type downturn, while Robert Ricci of Wachovia Securities said he believes that "we've developed technologies that are more efficient." And Kenneth Doiron of Hartford Investment Management contended that the real estate industry has come a long way, becoming more transparent and being subject to market discipline. He said he doesn't see a bubble, but expects that "the cycle will return."