Nothing really meaningful is going to happen until we fix the job situation, said Sinkuler.

Part 2 of 2

SAN FRANCISCO-In an earlier story, GlobeSt.com reported on ULI Real Estate Consensus Forecast from ULIs Real Estate Finance and Investment conference here, noting that real estate is much safer for investors than it has been for some time. It is an attractive environment, agreed panelists.

The discussion then moved on to the topic of returns, where David Lynn, EVP and chief investment strategist of Cole Real Estate Investments, predicted that, going forward, a majority of returns will come from income. According to Lynn, the 8% to 10% total return range is probably there.

Andrew Nelson, director of research and strategy at Deutsche Asset Wealth Management, added that We will see increasing NOI growth starting in 2014. We expect to see more income based returns.

Attendees watch the opening panel discussion at the ULI Real Estate Finance and Investment Conference.

Drilling down to each property type, Richard Sinkuler, partner and global real estate markets leader at Ernst Young, forecasts a big demand in warehouse. Office is having a sluggish time recovering, he said. Retail is doing well at the high end and the low end, but the folks in the middle are having a tough time.

In terms of unemployment, there is no more national average, said Sinkuler. Nothing really meaningful is going to happen until we fix the job situation.

To be considered unemployed, you have to be looking, he continued. That cuts behind all the numbers. Dont look at the flat percentage as a national average Look at the various places where the unemployment growth is taking place. That growth, he said, is where the demand is coming from. Demographics is playing more of an important role than it ever has before.

When discussing the 10-year treasury, Lynns prediction is that the Fed will scale back gradually because we have been in this period of free money for four years. But the change has occurred, he said, but it has to. They cant continue to stimulate the economy forever, and it will have an effect on cap rates, but that will be gradual as well.

According to Sinkuler, The Fed isnt going to do anything drastic. We are going to have stimulus for some time to come, but the question is whether you are going to get the central banks and everyone on the same playing field because everyone is at a different stage in the game and that remains to be seen.

Check back with GlobeSt.com for more from the ULI Investment conference.

Article source: http://www.globest.com/news/12_620/sanfrancisco/finance/Panelists-More-Income-Based-Returns-in-2014-334130.html

Meg Spriggs of AvalonBay Communities said her firm sees continued demand for apartment development in San Francisco for at least a few years to come. 

Blanca Torres
Reporter- San Francisco Business Times

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San Francisco is expected to reign as the nation’s top real estate market for investment, development and homebuilding in 2013, according a recently released annual report from the Urban Land Institute.

The report, “Emerging Trends in Real Estate,” placed San Francisco above other markets such as New York (second), San Jose (third) and Austin, Texas, (fourth) for having the best real estate prospects in the year to come.

It may not be surprising that San Francisco and San Jose would make the top five, while Los Angeles ranked No. 16. Nonetheless, Bay Area experts and real estate leaders are wondering, how long will the good times last?

ULI presented the reports findings at an event Tuesday morning in San Francisco featuring a panel of local experts including Luis Belmonte of Seven Hills Properties, Mike Covarrubias of TMG Partners, Oz Erickson of the Emerald Fund, John McNellis of McNellis Partners and Meg Spriggs of AvalonBay Communities.

The panelists spent an hour debating whether we can call the current market a bear or a bull and sharing insights.

Some of the panelists pointed out the market’s strengths. Erickson said double-digit rent growth has made apartment development lucrative and even with thousands of units under construction, there will still be demand.

Spriggs presented data that showed the number of jobs in San Francisco has outpaced housing development in recent years, further emphasizing Erickson’s view. She also said renting is cheaper than buying in the Bay Area, which isn’t the case in other markets, like New York City.

McNellis said that economic conditions in China and Europe are important to keep an eye on, but are unlikely to derail the Bay Area’s growth.

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

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Article source: http://www.bizjournals.com/sanfrancisco/blog/real-estate/2012/12/san-francisco-number-one-real-estate.html