Property owners fortunate enough not to have become distressed sellers during the global financial crisis and ensuing global recession have had other challenges to endure. Not only did the values of their assets decline, but vacancy rates have increased as firms struggle and demand dwindles, which in part puts downward pressure on rents. While 2009 was especially glum regarding office vacancies and rental rates — and the pain of oversupply in Asia will continue to vex a number of markets in the near term — global economic stabilization is beginning to take hold, and this will help improve real estate owners’ bottom line.

Commercial real estate in the United States is entering an extended period of unprecedented restructuring and repositioning. The next five years offer huge opportunities to Asia Pacific investors who have the skills to acquire and operate U.S. assets through a challenging environment.

The global recession ended in 2009, but echoes of the financial crisis persist. To mix metaphors, the credit bubble has a very long tail. In private equity real estate, for example, deleveraging is going to take time. In the listed sector, the deleveraging process was brutal and fast. Not every company survived. Those that did survive had to sell stock at highly dilutive levels to pay down debt. In private equity terms, these secondary offerings were the equivalent of a series of abrupt writedowns to levels low enough to attract capital and allow re-equitization to occur. A similar process — with a considerable lag — will play out in private equity in the years ahead.