Commercial Real Estate Near Disaster: Fund Manager

Commercial real estate is somewhere between an orderly massacre and a disaster, William Mack, founder and chairman of Area Property Partners, a real estate investment fund, told CNBC.

“Commercial real estate has over the last several months or few years taken a tremendous setback both in rents and in cap rates,” explained Mack. “I would say depending on the type of product, the value of real estate is down anywhere from 25 to 75 percent.”

Formerly known as Apollo Real Estate Advisors, Area Property is an an international real estate fund manager with more than $50 billion invested in real estate.

Mack said the hardest hit sector of commercial real estate has been raw land, followed by hotels. The least affected sector, though not untouched, has been multi-family residential.

In order for the commercial real estate market to turn around, Mack said consumer confidence must be restored.

The four keys to restoring this confidence, according to Mack, are: making sure consumers have jobs, having them see their home prices go up instead of down, giving them access to credit and having them see an increase in their 401k.

“This is going to take a very long time, it’s going to be a very slow process and I think many years before we get back to the heydays of 2007,” he concluded.

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