Academic Expert Sees Risks for Commercial Realty on Horizon.

Ken Rosen, chairman, Fisher Center for Real Estate and Urban Economics at the University of California at Berkeley, is expecting "a lot of uncertainty" relating to the economy in 2005.

At a panel session on the post-election scenario at the Urban Land Institute's annual fall meeting here, Mr. Rosen noted that he expects moderate growth next year due to the risks, which include higher energy prices, increasing interest rates and geopolitical events. In fact, if oil prices continue to go up and the risk of another terrorist attack on the U.S. actually happens, the country could even go back into recession, according to him. He is seeing "huge imbalances as a result of low interest rates" and a housing market bubble in 30 markets in which he considers assets to be overvalued.

Mr. Rosen expects "short" interest rates in the 3.5% to 4.5% range next year, which will result in a long bond rate of about 5.5%. Therefore, he advises borrowers to lock in the current interest rates.

For real estate, what really matters is job creation rather than gross domestic product and this has fallen off after picking up in the spring, he said.

While the U.S. ...