Content area
Full text
Here's to everyone who did big deals in 1997 (and there sure were a lot of them). In years to come, this may be the Golden Age of commercial real estate.
The big question is this - was 1997 the year of the deal or the year of the wheel, one that just kept rolling and rolling ... ?
There can be no question that 1997 will rank as a watershed "event" in commercial real estate lore in the years to come. One recent conference participant said it best, "We will look back on 1997 and the mid-1990s as the Golden Age of real estate."
Can it get any better? We have a great economic engine that just keeps chugging along. Interest rates remain low. Instead of inflation, now everyone is worrying about the new terminology of deflation.
Many of 1997's highs and low can best be illustrated in the performance of the stock markets, and the Dow Jones Industrial Average in particular. Consider that on October 28, 1997, well into the fourth quarter of the year, the New York Stock Exchange gained 337 points in a single day and traded 1.2 billion shares, the largest ever and the first day the exchange ever traded over 1 billion shares. Richard Grasso, CEO and chairman of the NYSE, recently predicted that volume on the Big Board will average 1 billion shares a day. Folks, that is unheard-of territory.
But at the same time, it is wise to consider the wild gyrations that also characterized the Dow. Even though the DJIA was up 23% overall in 1997, on October 27, the day just before it rose those 337 points, it dropped by 554 points, its largest-ever single-day point drop. Ultimately, the Dow still rose from its Jan. 1, 1997 opening at 6444, surpassed 7000 in April and then 8000 in July. That is the first time it has ever hit two such milestones in a single year.
Likewise, you can rightly say that 1997 was the landmark year when the public markets finally, truly, once and for all, recognized real estate as a viable asset class. And you might give both Barry Sternlicht and Stephen Bollenbach at least partial recognition for putting it there. Consider that...