Investors Have $150 Billion on the Sidelines Waiting to Get In on New Facilities Projects
Pictured: Joseph Nahas Jr., senior vice president with Equus Capital Partners and this year’s global chair of The Therapists of Genuine Estate.When Joseph Nahas, Jr. and his group at The Counselors of Realty, an invitation-only market group with 1,100 members, started to put together its yearly list of rankings of the leading 10 issues dealing with the real estate market, a clear line began to form down the middle of the list. That separation came down in between short and long-term
problems affecting the property market. So, this year, the group’s leading 10 ranking has changed into two, top five rankings to deal with brief or long-lasting problems. The annual list, launched Wednesday at the National Association of Real Estate Editors conference in Las Vegas, is created by the group’s members with input from real estate investors and developers.” When we saw the ranked list, we identified that some of these issues had no instant effect, however
they have much longer term implications,”Nahas, a senior vice president with Newtown Square, PA-based Equus Capital Partners and this year’s global chair of The Counselors of Real Estate, informed CoStar News. “For example, facilities was originally No. 1 and the economy was No. 2, and this continued down the list. They naturally fell
into containers, and instead of jumping backward and forward between short-term and long-term issues, separating them offers us a little clearness for our customers and real estate choice makers.”Which concern might take top priority often can depend upon a real estate executive’s time horizon, he added. Whether it is evaluating the effect of increasing rates of interest on an offer closing in the next 60 days, or a financier considering the redevelopment of a project in the future, Nahas said they are various concerns with various horizons. “Property, by its nature, is a long-lasting property … however there are issues today with an immediate or short-term effect, “he added. Here are the Top 10 issues identified by the group: SHORT-TERM CONCERNS 1. Interest rates and the impacts of that on the economy 2. Politics and political unpredictability 3. Housing price 4.
Generational changes 5.E-commerce and logistics LONG-TERM ISSUES 1. Facilities
2. Disruptive technology 3. Natural catastrophes and environment modification 4
. Immigration 5. Energy and water The Therapists of Real Estate is not an advocacy group for any of these concerns or possible issues dealing with property, however Nahas sat down with CoStar
News to discuss the
issues facing the industry and
what his counselors are advising clients. CoStar News:
Exactly what issues outlined
in the ranking is having one of the most influence on real estate investments today? Nahas:”Real estate affordability … We don’t see a cohesive option existing by any one group. Our role is to advise our customers on ways in which they might deal with local preparation authorities
to maybe get their project authorized, but our organization does not take an advocacy position. Our objective is to fix our
client’s property problems. We tell them they might have some occupancy issues in the near and instant term. CoStar News: There’s billions on the sidelines waiting to invest in infrastructure. Will it actually take an act of Congress to put that cash into action? Nahas: “Depending upon the jurisdiction, it might take an act of Congress to pass funds to carry out projects, however a regional airport broadening or including a runway might just take a county or lower level federal government approval. Regrettably, in the bulk of cases, infrastructure involves public lands and there’s going to be some governmental agency
involved. As an outcome, I can’t sit down with a buyer or seller to work out a deal. The general public officials have to response to their constituents about expanding a runway and the sound concerns that might pop up, or broadening a sewage system treatment plant so you can add in more real estate systems. If they have to be liable mainly to citizens, a different vibrant develops
. CoStar News: Why is there so much cash on the sidelines for facilities tasks? Nahas: “All the money that has actually been raised was because throughout the project for the presidency, both prospects promoted infrastructure costs, so the marketplace said,’Great, there’s going to be jobs and we’ll collaborate in public-private partnerships. ‘So, capital started getting assigned, but it kind of fizzled.
A large portion of that$ 67 billion raised in 2015 is on the sidelines. There have been some
regional deals, like Indiana selling an interest in the Indiana Turnpike to a financier, however there’s$150 billion of facilities financing that’s not being used. That consists of the$67 billion raised last year in 2017. It’s a great deal of fresh capital. However even if tomorrow the federal government awakened and said, ‘We’ll set up $500 million
together with this $150 billion,’these tasks take years. It will take a while to feel the effect of that investment. CoStar News: Does this mean we’ll see facilities top the rankings of concerns in realty in the future? Nahas:”It might bop around to No. 1, No. 2 or No. 3 depending on other concerns that surface area, but it will continue to be on the list. I do not see it going away in the near term.