Decline in capital reins in developers.(Economic Forecast: Real Estate)(real estate developers)

Market wild ride should be tamer in '99

The missteps and corrections commercial real estate survived this year, especially related to oscillating capital markets, should make it more cautious but still strong in 1999.

The wild ride of the last couple of years may be tamer, but it won't end just yet, sources speculate. Real estate fundamentals - rents and occupancy, particularly - should be good.

"The key component of real estate this year was the collapse of the capital markets," said Brad Calbert, president of Colliers, Bennett & Kahnweiler Inc., a local commercial real estate brokerage. "That's what 1998 will be about."

Ultimately, that collapse has been good for real estate, though, and should continue to be, according to Janice Stanton, director of investment research at Cushman & Wakefield Inc. in New York. Tighter capital is expected to keep a tight rein on developers. "It's keeping everybody honest, and that's a good thing," she added.

Capital for buying, developing and otherwise being involved in real estate, after being abundant and obtained with relative ease for the first half of 1998, dried up in September. That's when Russia defaulted on its government debt, much of it tied up in commercial …