May 4, 2009
By Scott Robinson, Visiting Clinical Professor, NYU Schack Institute of Real Estate, andJoseph Neckles, an M.S. in Real Estate student at the NYU Schack Institute, and assistant vice president, Lexington Realty Trust
At last month’s 14th Annual REIT Symposium (hosted by the NYU Schack Institute of Real Estate), keynote speaker Barry Sternlicht, chairman and CEO of the Starwood Capital Group outlined positive signs for the real estate capital markets. Conceding that no one can know what to expect with exactitude in the next three to five years, Sternlicht confirmed his long-term confidence in real estate as an investment vehicle.
“Growth bails you out eventually in property, and it is not a question of ‘if’, but ‘when’ the housing market will recover,” said Sternlicht.
He described the U.S. credit markets as frozen after Lehman Brothers’ bankruptcy in September 2008. After almost seven months, it seems that these markets are beginning to see the first signs of thawing. Cash flow is being created by the government for people to fix their problems, and this will be the first step toward recovery. Though debt is not yet available for real estate, the government is finally paying attention to the commercial side of the business, and Sternlicht said he expected that this will set the stage for recovery in the real estate sector.
Sternlicht expressed optimism for the global economy and the real estate market. Regarding the thawing of frozen capital markets he said, “It is $3.5 trillion earning one percent, and it doesn’t want to be there. The turnaround will happen at some point in the future, and it will be swift. The key is to stay out the crisis, remain liquid, and survive in order to capitalize.”
2009 NYU REIT Symposium: Starwood's Sternlicht Bullish on Real Estate as Long-Term Investment