Seeing little upside in the stock market, Cantor Fitzgerald CEO Howard Lutnicksaid Tuesday on CNBC that low interest rates were making commercial real estate a strong bet.
“I think the stock market is in a tough spot, right? There’s no growth. The Fed couldn't have made it more clear. You know what Operation Twist means? It means we’re all getting twisted,” he said on “The Kudlow Report.” “There’s not really an economy out there.”
The one bright spot, however, was commercial real estate.
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“Why? Because interest rates are so low. You have to figure if the Fed is going to crush interest rates and keep them low, and people are afraid to put their money in the stock market, where is that money going to go? People are willing to investment in real estate,” Lutnick said. “Real estate’s got life, even though it doesn’t make sense.”
BGC Partners, which spun off from Cantor Fitzgerald in 2004, recently put its money where its mouth was with the purchase of Newmark Knight Frank and Grubb & Ellis.
Lutnick said the two commercial real estate brokerages were on track to post revenues of more than $125 million in the second quarter, up from $50 million last year.
“The real estate business has got a chance because interest rates are so low and capital is sitting on the sidelines,” he said. “You hear risk-on, risk off scenario — real estate is pretty safe.”
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Lutnick said he was “not in love with the stock market,” citing declining volumes.
He added that yields were increasingly attractive, but away from blue-chip stocks — “BBB, single-A.”
“Make sure you stick to good companies, high-quality companies,” he said.
Lutnick exhibited optimism for once the economy picks up.
“When times get good, there’s so much cash on the sidelines, it’s going to be a great time,” he said.
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