In a video interview with REIT.com at NAREIT's Washington Leadership Forum, O'Brien discussed some of the key themes in the commercial real estate industry. He noted a number of concerning developments related to the economic recovery. He pointed out that while job growth has increased in early 2012, unemployment remains high and consumer incomes are stagnant.
"This economic recovery is still very fragile," he said.
O'Brien also highlighted the ongoing issues in the commercial mortgage-backed securities (CMBS) market as another major story. The signs of life in CMBS represent a positive sign for the industry, he said.
"We are seeing the CMBS market reemerge, and that's a great thing for real estate," O'Brien said. "With the amount of debt coming due over the next few years, we need a properly functioning CMBS market."
O'Brien also identified the capital accumulation of REITs and private equity real estate firms as another key development in the market. He commended companies for staying "disciplined" in their use of their capital.
"We expect a lot of that capital to be deployed over the next several years," he said.
One area where some of that capital could come into play is in the mergers-and-acquisitions market. O'Brien observed that rather than trying to take advantage in cases of favorable cost of capital scenarios, M&A activity has generally been limited to "strategic" opportunities. He pointed out that some of the sectors that are more susceptible to the economic cycle, including hotel and office REITs, have yet to witness the same level of M&A activity as companies in the healthcare and industrial sectors.
"Perhaps that's a function of the macroeconomic uncertainty," he said.
O'Brien also discussed the outlook for the convergence of financial reporting standards. He singled out leasing standards and fair value reporting as two issues that are receiving significant attention.
"I would say in general the timeline is not clear for how exactly this is going to play out," O'Brien said.