I was wondering this also. I have heard several people say that commercial is going to be the next shoe to drop. Is it?
The debt issues that have started subprime have started to effect commerical real estate because many firms no longer have access to cheap debt like Blackstone used to buy EOP. The cheap debt helped push commercial real estate prices up to crazy levels too. Many of the high leveraged players are on the sideline or they have started to have trouble as some of their short-term debt will need to be refinanced. However there is no longer cheap debt for them to refinance too. So we are just starting to see some distressed selling and I know several firms have raised money specifically to take advantage of this. Commerical real estate has definitely begun to be repriced and many deals have not been completed this year because buyers and sellers have completely different ideas of todays values (like residential experienced). Then you add on a potential recession which would effect office vacancy, the use of industrial warehouses, and money spent in retail shopping centers. As far as my situation I work at a conservative pension fund who is typically an all cash buyer. My firm also has stock and bond funds. A portion of the money we have to spend in the real estate department is from our participants who have a box checked for their retirement for a real estate allocation. So just like mutual funds typically stay invested in all markets we too have to consistently stay invested in all markets because we are a real estate account not a cash account. Most of our money is measured against a benchmark to beat rather then being a total return fund. So if the benchmark is negative and we beat it then we still did our job. So it is expected that we will have a few billion to spend this year. My pay came from closing a few deals and the fact that I performed better then many of my peers. I think the intensity I learned from trading definitely helped. I just remember being a trader and wanting to move but I felt kind of trapped by my background. I often thought who is going to hire me with this background. However after I started taking real steps to leave trading I realized that I would be bringing qualities to another career that most people won't have. Of course this is based on how serious someone approached trading to begin with. I learned I would just have to figure out how to best package myself to get my foot in the door. Things turned out a lot better then I ever imagined.
Wow that's a great story. It's only too bad you didn't get into this new career sooner. You appear headed towards even bigger paydays.