Published: Wednesday, 5 Aug 2009 | 12:14 PM ET

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Even though the commercial real estate market is a little better than at the first of the year, there is an enormous amount of turmoil left according to Barry Gosin, Newmark Knight Frank CEO. The chief executive of one of the world’s largest commercial real estate firms said fear is a main reason investors are not getting loans refinanced.

"The question really is how quickly will this adjust? When will rent come back, when will cap rates reduce and when will the fear be out of the market? Fear is a lot more of a powerful emotion than greed," said Gosin. "You can control greed to a certain extent but you cannot control what you do under fear."

Gosin also noted that banks have assets left on their balance sheets to refinance some of the loans, but the financial institutions are putting other concerns first.

"In addition to real estate, banks are concerned about consumer lending and they’re concerned about revolving credit," he said. "With everything assaulting the banks, they are still hoarding cash and as a result they are not very easily going to roll over some of these loans."

Gosin said another issue plaguing the commercial market is that the rental market had been disconnected on its way up and on the way down, and that the rise in rent values were never connected to a real market demand.

"Values were driven not by underlying demand but they were driven by liquidity and cap rates and a desire to invest in real estate."

Gosin’s view is that the rental market has relatively stabilized since its turn downward and this is evident with rental rates in big cities reduced by 50 percent. The rest of the country, where rent is much lower, cities are seeing a rental price reduction between 15 and 20 percent. Investments, however, have slowed down.

"The rents are set but the investment side is trailing because we are just going into that black hole of how do you deal with all of this value and how are you going to get banks to open up?"
Regardless of the current troubles, Gosin says there are still ways for investors to get in and make money in the commercial real estate market.

"There are always opportunities in bad times and we offer advice to special servicers. Smart people will figure out how to make money in this market."

For more on the real estate market:

• Mortgage Demand Boosted by Refis as Rates Drop
• Obama Foreclosure Plan Shows 'Uneven' Early Results
• Foreclosures Stabilize in Some of Hardest Hit States

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