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How Moody’s Ermengarde Jabir Approaches CRE Economics in a Volatile Time

First rule: Go long.

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Ermengarde Jabir once envisioned working as a dermatologist before quickly realizing the field was not the right fit for someone who is averse to blood. She shifted to a different type of doctorate, and is now on the front lines of data-crunching and Moody’s research team, and — despite her hemophobia — is tracking blood in the industry water instead. 

“I like economics because it really is the framework of our society, and whether people realize it or not every single person is an economic agent in our society,” said Jabir, a senior economist at Moody’s specializing in the commercial real estate market. “A lot of it has to do with human behavior and human nature — so I have a Ph.D. in that, and I’m still a doctor, just a different kind of doctor.”

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It has been a bit of a baptism by fire for Jabir, to say the least. She joined Moody’s in October 2020 as an assistant director amid heightened dislocation and uncertainty in the CRE market seven months into the COVID-19 pandemic. Vaccines hadn’t yet been approved, and much of the country was still working remotely. 

In addition to pressures that struck the office market early in the pandemic, Jabir found herself firmly in the thick of discovering what the fallout would be for other sectors like hospitality and retail hit hard from social distancing measures. 

“It was an extremely exciting time to be an economist covering commercial real estate, as every sector was completely upended by the pandemic, each in a different way due to the high degree of uncertainty that followed such a strong and unexpected exogenous macroeconomic shock,” said Jabir, who since arriving at Moody’s has scaled the ranks and been promoted to associate director-senior economist. “The outcomes of the past four years on CRE and how each sector has fared given the initial, somewhat apocalyptic predictions that were bandied about for much of 2020 once again are proving that COVID really did usher in an era of expecting the unexpected as it relates to commercial real estate.”  

Even before pursuing her doctorate in economics from American University in Washington, D.C, Jabir knew she wanted to focus on real estate. The Miami where she spent her childhood (until her family moved to Maryland when she was 10) teemed with real estate development and sparked an early interest.

The decision to focus on CRE analysis in her adult life has put Jabir at ground zero of studying major catalysts behind the industry’s chief economic drivers as well as any uncertainty — the latter being especially pronounced since the onset of the COVID-19 pandemic and the rising interest rates that followed in 2022. 

Some of the CRE trends Jabir has been tracking with particular interest include how the office market has continued to suffer post-pandemic while retail has proven resilient, in part thanks to the strength of grocery-anchored shopping centers. Jabir is also closely monitoring increased demand for data centers and cold-storage properties as well as multifamily housing, sectors she said are best positioned to succeed in a volatile market.

Since interest rates started rising two years ago, industry participants have held their breath and prayed the Federal Reserve would bring rates back down, with transaction volume stalling in the meantime. 

Moody’s had predicted three interest rate cuts this year, but Jabir said she would not be surprised if the Fed holds steady in 2024. That’s because bringing inflation down to the central bank’s 2 percent target has proved to be a slow process, despite some recent progress. She stressed, though, that the Fed will be closely monitoring how many CRE loans with looming maturities are given extensions to make sure defaults don’t bring down the economy. 

“There are a lot of workouts happening with the so-called ‘survive ’til 25’ extend and pretend — with all the bandages you can imagine to keep things going,” said Jabir of how lenders are, in many cases, trying to avoid taking back the keys on distressed properties. “I think the Fed, as long as they see that those sorts of advantages are working in the short term, are going to keep on their interest rate policy for the moment until they feel confident that price stability has been established.”

Given the expected persistence of higher interest rates, Jabir said she is interested in how 2024 plays out, and whether transactions will be executed with debt or all cash. She’s also keenly focused on whether stabilizing cap rate levels means we’ll finally see price discovery between buyers and sellers. And Jabir is delving into possible changes to performance metrics with coveted property sectors like industrial trying to find a “new equilibrium” after experiencing large-scale growth in 2020 and 2021.  

After arriving at Moody’s in 2020, Jabir was mentored by her first manager, Hsiao-shan Yang, who she said was very supportive in helping her grow into the role. Her Ph.D. adviser at American, Robert Feinberg, and Tom LaSalvia, head of CRE economics at Moody’s, have also been integral to her career development, she said.

“Ermengarde has worked incredibly hard to build all of the necessary tools for being a top-class economist,” LaSalvia said. “She is strong with data and model construction, with an excellent ability to explain difficult topics in a concise manner. But, in all honesty, what drew me to work with her and made me confident about making her an integral part of the team was her integrity and character.”

LaSalvia added that Jabir goes the extra mile to assure full transparency with assignments and is “not concerned with getting her name in lights, but instead assures the nuanced and accurate story is told.”

“Her dissertation was an extensive exploration of the roles of real estate finance in the macroeconomy, consumer investment decisions, and forecasting models,” Feinberg said. “I am glad to see she is doing so well in her career.” 

A big part of the attraction for Jabir to join Moody’s was the “ample opportunity for professional growth,” she said, which is supported and encouraged by senior leadership. While she still lives in the Washington, D.C., region, Jabir travels regularly to Moody’s headquarters at 7 World Trade Center in Lower Manhattan. 

Those Amtrak rides sometimes give her time for her side passions. When not busily engrossed in the multitude of factors driving the CRE finance markets, Jabir is an avid reader, particularly mystery books in the Nancy Drew and Agatha Christie series. She also loves traveling, walking and spending time at the beach, which includes many visits back to South Florida. 

Despite many headwinds facing the CRE world in 2024 and the industry’s tolerance for bad news wearing thin, Jabir said it is important for her research to provide proper context for how various property sectors are navigating the choppy waters. It’s necessary to arm investors with as much knowledge as possible on how assets will perform in a more distant future.

“I’m not about to tell people how they should invest because all of these private equity players and asset managers and so forth are experts at their jobs, but there needs to be a longer-term vision,” Jabir said. “If you’re very shortsighted, very myopic and just zooming in on what’s happening in a quarter, two quarters or even a year, that doesn’t really give you the perspective needed to understand the long-term prospects.”

There are many current economists Jabir admires today. She highlights Janet Yellen, the former Federal Reserve chair and current Treasury secretary, as the greatest living one in the profession due to her work with macroeconomics through both academic research and applied policy work. Among all-time economists, Jabir cites Thorstein Veblen, who was also a sociologist, and in 1899 authored “The Theory of the Leisure Class,” which she noted formalized the conspicuous consumption aspect of behavioral economics that still very much drives the nation’s economy today.

It’s been a long haul in seeing increased numbers of women in CRE finance senior roles and C-suites, but Jabir said she has already seen advances in recent years with more women economists joining the field. Still, she stressed more can be done to encourage women to aspire to this career path. A big barrier to entry remains the number of years required to pursue a Ph.D., she said, which is why educating girls at a younger age about a career option in CRE economics is so important.

For women who aspire to become economists, Jabir suggests pursuing the career if there is a passion for the work. They should still understand that it will take a number of years to pursue via graduate school work. 

“Don’t choose to be an economist because of the salary or the title or because someone is guiding you in that direction, but rather because you find the field exciting and interesting,” Jabir said. “Although it extends your time in academia, it’s so worth it in the end.” 

Andrew Coen can be reached at acoen@commercialobserver.com