Matthew May


Owner, May Realty Advisors Specialty: Retail

Most retailers are cutting back their expansion plans but companies not laden with debt are taking advantage of the market. Before, landlords were very aggressive, making deals at $3.95 per square foot, whereas now they'll take $3.50 or even $3 for the right tenant. Rental prices are like housing prices the belief is they will be lower in the future. So instead of 10-year leases, now they go for three years. We think there will be more opportunities to make money now, but it's not business as usual.

Kevin Shannon , Vice Chairman, CB Richard Ellis
Specialty: Investment Properties

The debt markets are nearly frozen so there have only been two major office sales over $50 million in value in Los Angeles County this year that didn't involve debt assumption or seller financing. Right now my team is focusing on working with realistic sellers on smaller deals. The good news is there is still a lot of capital on the sidelines. I believe the recovery will occur faster than people think, just as the downturn was much more rapid than anyone thought.

Bob Safai , Principal, Madison Partners
Specialty: Commercial Real Estate Lending

The effect of the downturn is a liquidity issue, so we're working on transactions with existing debt. The risk is that everybody becomes catatonic and transactions come to a standstill. In this market there's an incredible disconnect between buyers and sellers. Buyers might want to buy but can no longer borrow 75 percent of the market value. Sellers oftentimes have 2007 pricing in their minds and won't budge. We all knew a correction was coming, but no one anticipated a worldwide financial crisis. But people will pour their money into hard assets as they lost a lot of money in equities.

Carl Muhlstein , Executive Vice President, Cushman & Wakefield
Specialty: Office Leasing

Reduced volume of transactions means broker office consolidations, another wave of mergers in the real estate business and a further deterrent for young people to enter the business. There's simply an overcapacity of personnel for anticipated volume in the near future. The market won't recover before 2010, and there are a lot of international, national and local issues that will shape that outcome. What's important is that the L.A. economy is the most diversified it's ever been. We're well positioned to weather this downturn.

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