RCA in the commercial property press:

Real Estate: The End Of Gentrification?

Forbes reports: Urban gentrification has been a fact of life for two decades. But can it last, and if so where? Our real estate experts have the answers.

Forbes recently gathered a panel of real estate experts to discuss urban gentrification. Panelists included Pat Lashinsky, Spencer Rascoff, Peter Slatin and Michael Feder. Stephane Fitch hosts this discussion.

Though some areas are under pressure, our experts say gentrification might slow down, but it won't stop. The discussion follows.

Forbes: Gentlemen, welcome once again to our lively discussion of housing and the economy. I want do some deep thinking this week about the future. As housing purchasers, we've been able to depend for at least two decades on a wave of urban gentrification. Can that continue? Will the housing collapse ruin a long-term trend that had been reviving downtown neighborhoods like Manhattan's Lower East Side, Los Angeles' Venice Beach, and Chicago's West Loop and Bucktown neighborhoods?

Pat Lashinsky, Zipreality.com: Actually I don't think so. One item that we have seen that is becoming more important to buyers is reduced commute times and closer-to-work locations. In the places you noted, they are all closer to many of the work places then the suburbs, and consumer demand for those areas is still pretty strong. Of course, the major prevailing issue that could undermine that is if crime goes up in those areas, then that could slow down that demand.

Michael Feder, Radar Logic: There's no immediate evidence that the trend has been "ruined," nor would one expect there to be. The real force behind gentrification was probably more demographic growth toward the center city than anything else, and lower-cost neighborhoods provided the space for new development to satisfy the resultant housing demand. So if anything is going to deter this trend, it's the loss of jobs in those cities, not the housing bust.

Forbes: Really? Michael, you're a hardened New Yorker. Do you remember when Manhattan neighborhoods like SoHo or the East Village or Brooklyn's Williamsburg used to be cheap? Now even the scuzziest blocks are expensive. In the classic gentrifications, it starts with artists and urban pioneers swooping in to buy housing on the cheap and hoping they'll be seeing huge appreciation later. Is that really possible anymore?

Feder: Stephane, I'm not sure I agree with your characterization. Some of those neighborhoods attracted business people and artistic people. And, of course, the trend can continue and probably will. The north edge of Central Park is a great example. Some beautiful blocks and buildings, where people who were hoping to generate a "return" by renovating or even developing saw real opportunity. There is no indication that the "return" motive has vanished, nor that the pioneers will either.

Spencer Rascoff, Zillow: I walked from Central Park South to Columbia (120th Street) a few months ago and was blown away by what has happened to the area north of Central Park. Growing up as a kid on the Upper East Side, I was basically never allowed north of 96th Street, but it's a completely different story nowadays, and New York is a better place for that.

Lashinsky: It is definitely possible to get great deals in many of the area you mentioned, Stephane: Venice Beach, West Loop, BuckTown--in all of those areas, condos are value-priced and buyers are still looking there.

Forbes: I'm sorry, I'm not sure I agree on Venice Beach. But you're the expert.

I'll bet, though, that in Bucktown and West Loop, which are two Chicago neighborhoods that hadn't completely gentrified yet, there are folks who bought two years ago who are now kicking themselves for having played the pioneer. Doesn't that sour the whole movement?

Peter Slatin, Real Capital Analytics: For once, I can be the optimist. While there will surely be regression in some newly gentrified neighborhoods, for the most part, gains will hold. Residents, investors, retailers, etc. will fight to keep areas moving up or at least flat. Where holes do develop--and they will--investors will buy up REO. There's still plenty of life and enticement in most of these neighborhoods, and emptied out tracts are far less alluring.

The concept of a "great" deal remains relative, and isn't that what pricing is all about? Then there's financing. In other words, despite falling prices, the buyers are still not plentiful enough because people remain uncertain about the firma of their terra.