3. Jim Costello, senior vice president with Real Capital Analytics
“Do not let the day-to-day noise in the headlines distract you and force you into a panic. Yes, there are risks in the world, and yes, we should face a recession at some point … next year, two years from now, even further away? You cannot let fears of what might happen in the future get in the way of making good decisions now. And if we do have a downturn, and that is meant to be a pretty big if, it will not be like the last one. Will not be like the last one in the sense of the drives or magnitude.
Whether we have a recession driven by the real economy… or one from the financial economy, the answer on how to survive a downturn is similar. Do not be too highly leveraged going into the downturn. The better question to ask though is what opportunities will come for commercial real estate investors out of any potential downturn… I think people are too negative about retail today. Yes, there are certain malls that are facing challenges, and people ascribe it all to the Internet. But the weakness is from another source… Housing demand is still there, but new investments in any market considering rent control are facing challenges... Larger markets not facing rent control changes would be better in my mind.
Economic growth will come to the innovators. Just because a market is small and inexpensive, [does not mean it will] see economic growth. All these secondary and tertiary markets, which were once horse towns, populated by the innovators of the 19th and 20th century, they cannot participate in the 21st century economy in the same way… Innovations in the 21st century are about action in the digital realm and requires highly skilled labor. Some secondary and tertiary markets will flourish based on good partnerships with local universities and city boosters. Some, but not all, however."