Richard Edelstein

The other industry experts were Caroline Blakely, a vice president in multifamily housing and community development at Fannie Mae; Richard Edelstein, a professor at the Haas School of Business at the University of California at Berkeley; and Bradford Case, an economist with the Board of Governors of the Federal Reserve System.
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Edelstein, a real estate professor at the University of California at Berkeley's business school, was less sanguine about prospects for the commercial real estate market. He agreed that commercial real estate is currently in a good position, and that the U.S. economy's strength and resilience will benefit the industry generally. But he pointed out that the world we live in now is more global than it was 10 or 20 years ago and that capital can be rapidly pulled out of markets because of events that occur thousands of miles away. That makes commercial real estate's status as a favored child more precarious, he said.

"Capital market integration and securitization is going on and is inevitable," Edelstein observed. Securitization refers to the pooling together of relatively illiquid assets into more diversified financial products, whose securities are then sold to investors. This enables markets to develop by expanding their investor base and providing lower-cost financing. However, investors can now respond to new information more quickly than ever before -- and in Edelstein's view, this has the potential to create more volatility, not less.

"There has been a capital tsunami and that's likely to continue for a while, but there's nothing so mobile as capital," Edelstein said. "The tsunami could flow out very, very quickly. Events in other parts of the world could affect demand for many U.S. assets, including real estate. At the same time, the commercial real estate market's shift in the last year or two into higher-risk and leveraged assets could exacerbate any problems that develop, he added.

What could cause this to happen? China could revalue its currency faster than expected, Edelstein said. That would translate into higher prices in the U.S., which would impact the real estate market. An unanticipated jump in U.S. interest rates could also cause investors to shed real estate very quickly. "All you need is a few performance failures, because a lot of real estate is being bought with the notion that there will be growth in fundamentals," Edelstein noted. "I think we're at a very high risk point in real estate," he said.

The other industry experts were Caroline Blakely, a vice president in multifamily housing and community development at Fannie Mae; Richard Edelstein, a professor at the Haas School of Business at the University of California at Berkeley; and Bradford Case, an economist with the Board of Governors of the Federal Reserve System.
...
Edelstein, a real estate professor at the University of California at Berkeley's business school, was less sanguine about prospects for the commercial real estate market. He agreed that commercial real estate is currently in a good position, and that the U.S. economy's strength and resilience will benefit the industry generally. But he pointed out that the world we live in now is more global than it was 10 or 20 years ago and that capital can be rapidly pulled out of markets because of events that occur thousands of miles away. That makes commercial real estate's status as a favored child more precarious, he said.

"Capital market integration and securitization is going on and is inevitable," Edelstein observed. Securitization refers to the pooling together of relatively illiquid assets into more diversified financial products, whose securities are then sold to investors. This enables markets to develop by expanding their investor base and providing lower-cost financing. However, investors can now respond to new information more quickly than ever before -- and in Edelstein's view, this has the potential to create more volatility, not less.

"There has been a capital tsunami and that's likely to continue for a while, but there's nothing so mobile as capital," Edelstein said. "The tsunami could flow out very, very quickly." Events in other parts of the world could affect demand for many U.S. assets, including real estate. At the same time, the commercial real estate market's shift in the last year or two into higher-risk and leveraged assets could exacerbate any problems that develop, he added.

What could cause this to happen? China could revalue its currency faster than expected, Edelstein said. That would translate into higher prices in the U.S., which would impact the real estate market. An unanticipated jump in U.S. interest rates could also cause investors to shed real estate very quickly. "All you need is a few performance failures, because a lot of real estate is being bought with the notion that there will be growth in fundamentals," Edelstein noted. "I think we're at a very high risk point in real estate," he said.

The other industry experts were Caroline Blakely, a vice president in multifamily housing and community development at Fannie Mae; Richard Edelstein, a professor at the Haas School of Business at the University of California at Berkeley; and Bradford Case, an economist with the Board of Governors of the Federal Reserve System.

The other industry experts were Caroline Blakely, a vice president in multifamily housing and community development at Fannie Mae; Richard Edelstein, a professor at the Haas School of Business at the University of California at Berkeley; and Bradford Case, an economist with the Board of Governors of the Federal Reserve System.
...
Edelstein, a real estate professor at the University of California at Berkeley's business school, was less sanguine about prospects for the commercial real estate market.He agreed that commercial real estate is currently in a good position, and that the U.S. economy's strength and resilience will benefit the industry generally.But he pointed out that the world we live in now is more global than it was 10 or 20 years ago and that capital can be rapidly pulled out of markets because of events that occur thousands of miles away.That makes commercial real estate's status as a favored child more precarious, he said.

"Capital market integration and securitization is going on and is inevitable," Edelstein observed.Securitization refers to the pooling together of relatively illiquid assets into more diversified financial products, whose securities are then sold to investors.This enables markets to develop by expanding their investor base and providing lower-cost financing.However, investors can now respond to new information more quickly than ever before -- and in Edelstein's view, this has the potential to create more volatility, not less.

"There has been a capital tsunami and that's likely to continue for a while, but there's nothing so mobile as capital," Edelstein said."The tsunami could flow out very, very quickly."Events in other parts of the world could affect demand for many U.S. assets, including real estate.At the same time, the commercial real estate market's shift in the last year or two into higher-risk and leveraged assets could exacerbate any problems that develop, he added.

What could cause this to happen?China could revalue its currency faster than expected, Edelstein said.That would translate into higher prices in the U.S., which would impact the real estate market.An unanticipated jump in U.S. interest rates could also cause investors to shed real estate very quickly."All you need is a few performance failures, because a lot of real estate is being bought with the notion that there will be growth in fundamentals," Edelstein noted."I think we're at a very high risk point in real estate," he said.

Richard Edelstein has been named associate dean of MBA programs at the Eberhardt School of Business at the University of the Pacific.Edelstein has worked at the University of California, Berkeley and the European Institute for Education and Social Policy.He also served as director of international affairs for AACSB Internationalâ€"The Association to Advance Collegiate Schools of Business.Edelstein earned his undergraduate degree at the University of the Pacific and a graduate degree at the University of California, Berkeley.

We could possibly be at a very high risk point in commercial real estate. (Richard Edelstein, a professor at the Haas School of Business at the University of California at Berkeley). Sources: Caroline Blakely, a vice president in multifamily housing and community development at Fannie Mae; Richard Edelstein, a professor at the Haas School of Business at the University of California at Berkeley; and Bradford Case, an economist with the Board of Governors of the Federal Reserve System.