Establishing the backdrop for his comments by reporting that nearly a trillion dollars had been lost in the REIT and Commercial Mortgage Backed Securities (CMBS) Markets from 2007-2008, Greer declared that “this greatly affects real estate values.  The CMBS market is completely broken, and REITs are off nearly 35 percent.”  He also noted that there is $62 trillion of notional disclosure on Credit Default Swaps today which he said are “critically important” because all the biggest banks are involved.  “If any one of them defaults, Secretary Paulson is afraid the whole thing will crumble.  Brokers should be aware of this market.”

Yet, despite the indisputable disruption in the finance market, Greer said opportunities associated with what he said will be a narrowing gap between values and rents foretells a rise in sales activity.

“We had runaway value growth, but rents didn’t keep up.  There was a 30-plus percent gap.  Values are eventually going to be given back in the 30-35 percent range. I’m guessing in six months we’re going to see values fall just like in 1993.  Currently sales volume is off 75-90 percent nationwide for industrial and office properties, and retail should be going down,” Greer said.

“People are looking to buy, and we are near the trough on sales volume.  The ’bottom fishers’ are looking for value and will bring volume back, while the disconnect between buyers and sellers will close within six months and activity will pick up in an environment where cash is king.  Moreover, commercial short sales will pick up like they did in 1993.  We need reasonable returns in the securities world, and with mortgages; in short we need to bring intelligence back to the market,” Greer said.