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People have to live somewhere. They need a place to put their stuff. So with home foreclosures soaring, maybe it’s a good time to be in the apartment business.

“If any property type is likely to benefit from the current crisis, it’s apartments,” said Susan Pfeil at this year’s Iowa Commercial Real Estate Expo. Pfeil is a senior producer on the commercial mortgage team at Aviva Investors North America Inc.

According to Pfeil, Aviva Investors has 5.5 percent of its assets in real estate and has experienced zero defaults. The organization, a branch of British insurance giant Aviva plc, made $250 million in mortgage loans in 2006, $540 million in 2007 and will close more than $700 million this year.

“We’ve never been involved in CMBS (commercial mortgage-backed securities),” she said. “We have stayed the course with prudent lending.”

The field isn’t as crowded these days for Aviva. Life insurance companies are an important source of funding for commercial mortgages, but about half of the usual players are watching from the sidelines, according to Bill Kusy, who operates Iowa Commercial Mortgage Inc.

Kusy said Aviva’s exposure to commercial real estate is conservative. Life insurance companies “don’t have to make loans, but they like to have 10 to 12 percent of their portfolio in commercial mortgage loans,” he said.

Pfeil and Kusy spoke after some of the worst days ever for the U.S. stock market – which were followed by more of the worst days ever.

But so far, the commercial real estate market has held up.

Delinquencies remain low, Kusy said. “If the economy really suffers, then we’ll start to see an increase in office and retail vacancies,” he said. “Hopefully, loans were being made at conservative enough levels so there will still be a cushion.”

Kusy reported that some of Central Iowa’s leading brokers are still seeing interest from out-of-state investors. “I’ve had lunch with two of the more active groups in the last month, and they claim there’s still an appetite for Midwest-based properties,” he said.

The rules for financing that appetite have changed.

And yet, in the apartment sector, “financing has not been a problem, either construction or permanent financing,” according to apartment owner, developer and manager Jim Conlin. He said he recently went looking for financing on an apartment project and immediately got two offers. Still, he said, “I agree that lenders are more picky now. Formerly I might have had four different offers instead of just two.”

Harry Bookey, whose BH Equities LLC operates in the apartment sector in 18 states, said: “A lot of institutional investors are waiting; they’re skittish. (However,) there are a lot of investors out there who want to capitalize on these market conditions. Our management business right now is very strong; our acquisition business is just different.

“We’re looking at two or three deals where we’re going to finish out the apartment development side of things.”

Even if hard times drag on, different players will be affected differently.

In the midst of the grimmest week, one commercial broker told me that 2008 is shaping up as his best year ever.

And Conlin noted that he finally expanded his operations beyond Central Iowa amid the worry and turmoil of the past year and a half. “I’ve always had the philosophy that I didn’t want to invest in anything that I couldn’t ride a bicycle to when it had a problem,” he said. “But there are just too many opportunities out there.”

The need for residential property is going to keep growing, he pointed out. “Unless we’re going to eliminate sex.”