Commercial Real Estate Investors Turn More Gloomy

Posted by: Chris Palmeri on November 3, 2009

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LoopNet.com, a Web site for commercial real estate listings, took a poll of 1,000 its members in the last two weeks of October. LoopNet members include real estate investors, brokers and owners. The results suggest that unlike those in the rebounding housing market, commercial real estate players are a little more gloomy.

When Will the Commercial Real Estate Market Recover?

In July a vast majority (66%) expected the volume of commercial real estate transactions to rebound in 2010. Now that number has decreased to just over 50%. Instead there has been a sharp increase (up 13% to 46%) in those expecting the recovery won’t occur until 2011 or later. Investors are more pessimistic, with a median expectation of recovery timing that is approximately one quarter later than that of brokers or commercial property owners.

Have Commercial Real Estate Prices Hit Bottom Yet?

More than half of all respondents expected to see future declines of 11% or more. All three groups surveyed expect values to drop further. Owners are the most optimistic, with nearly 20% saying prices have already bottomed.

When Will Commercial Real Estate Sales Prices Hit Bottom?

Expectations for when pricing will bottom mirror that of when transactions will recover: The second quarter of 2010 was the most common choice, but more than 10% said 2012.

What are the Biggest Barriers to Commercial Real Estate Market Recovery?

Lack of access to debt financing is the #1 barrier to market recovery, according to survey participants. High asking prices were the #2 reason cited by investors and brokers, while owners considered this less of an issue. Uncertainty about future cash flows remains a significant factor.

Treasury Secretary Timothy Geithner told the Economic Club of Chicago last week that commercial real estate would not be a drag on the nation’s banking system the way housing markets have been. “That’s a problem the economy can manage through even though it’s going to be still exceptionally difficult,” he said.

Reader Comments

DissentFromDayOneDOTcom

November 3, 2009 9:15 PM

Using a survey to gauge the market? How about some numbers....the numbers will show that New World Order puppet pResident Obama is destroying our country on purpose....the blueprint is Ayn Rand's "Atlas Shrugged." (Rand was a mistress of Philipe de Rothschild....globalist criminal).

Now start printing the Truth.

Ballbuster

November 4, 2009 4:08 AM

Always talking positively about the miserable economy, both Geithner and Bernanke are not eternal optimists but plain liars. They make Joseph Goebel sound like an amateur. The commercial real estate market will resume its death spiral after the holiday shopping days are over. Plague with their "upside down" home, job insecurity and depleted 401k, consumers are counting their pennies more than ever. Just as last year's frugal holiday shoppers caused many retailers to file for bankruptcy in January, this coming January will be more of the same and maybe even worse. Last year, dreamers were deluding themselves into thinking the depressed economy will be short-lived as “Stimulus” money poured in. Yesteryears’ wishful thinkers are today’s realists. As more banks and retailers fail, further home prices decline, and high unemployment persists as well as big name corporations such as Chrysler and GM filed for bankruptcy, the cruel reality has transformed the frugal into tight-wads. Come this January, there will be other big retailers joining the ranks of the bankrupt Linen-n-Things, Circuit City and CIT. As shopping centers lose their anchor stores, the appendages of mom-and-pop stores will die on the vine. The commercial landlords, collecting no rent and can not refinance, will be forced into foreclosure unless the Federal Reserve prints enough TARP green-backs to prop-up the commercial real estate. That scenario is unlikely as another bailout is a political suicide. The unraveling of the commercial real estate market has just begun, inspite of the garbage propaganda coming out of Geithner and Bernanke.

LTK

November 6, 2009 8:00 PM

I don't care what anyone says, and neither should you. Just get out there and sell. People will always want goods and services. Lots of people still have lots of money. Don't let others bring you down.

patricia

November 10, 2009 12:33 PM

LTK are you kidding? What is it that you don't get about economic depression? The banks are cooking the books where a good portion of them are insolvent or close to it. They are re-engaging in risky investments while our treasury and federal reserve have guaranteed all the bad debts(25 trillion) that these banksters created. Its not doom and gloom of earth. What will fall is this consumerism, non production economy. That is why we are borrowing from China and not the other way around. Why should we have to compete with chinese, vietnamese and other 3rd world nations labor which make less than 2$ per day. THat's fair? Regan began this insane economic theory that if we let the poor nations make stuff, than we could get rich with a service industry. WRONG!! CLinton, Bush Sr., Bush Jerk Jr, and now Obama all bought into this bullcrap economics that has made us go into so much debt that we are drowning in it. Looking at the last 30 years, the growth of our economy was not made by an increase in wages, it was due to the large amount OF CHEAP CREDIT !! Take away equity lines and credit cards and you will have shrunk the economy by 40 %.Don't forget 2 BUSH WARS costing us 8 billion per month and Obama decided to continue these wars. How are we going to pay for these wars???? Wake up and see the reality of this economy which will collapse. LARGE EMPIRES HAVE ALWAYS FALLEN WHEN THEY GET TOO BIG!! I am optimistic than when we rebuild this great nation, it will be a better world for the working class!!! Take care.

LTK

November 11, 2009 7:16 PM

Patricia, it looks to me like you're trying to make sense of the things you hear on the news. If the news were reporting that the world was in the midst of the greatest prosperity ever you'd believe that too.

Yes, I will agree with you there are fundamental problems in various sectors. The point I was making above was, regardless of the conditions, you just need to go forward giving your best to make situations work. That is creating and/or selling the best products/services you can. I will state it again: Lots of people still have lots of money. People will always want to buy things and will trade you money or something of value to you. Don't worry, the world will adjust.

Jeff

November 18, 2009 6:02 PM

LTK, the facts are that Mass Media is trying to tell us we are beginning to see a new prosperity. This time, even a blind person can see that this is not the truth.
I am 57 and have been witness to a few events in this nation but nothing comes even close to what Americans are witnessing today. The truth is we have been reduced to an nation of non-producers and Patricia is right. The growth of services and goods has been fueled by unrealistic credit expansion.
We are all to blame, most of us bought into the process and added additions to our homes, bought the expensive counter tops - why not - home values always go up.
After every period of madness there must be a normalizing period. This one is going to be more painful than almost any our nation has been through.
But you are also right LTK- you still have to get up, go to work and sell something - yourself, goods, services or whatever it is that you do. The important point that Patricia is making is this time is different, very different and all the Horatio Alger sentiment in the world is not going to change how rough this is going to be. You just might want to brush up on your wampum making because it may be more valuable than US dollars soon.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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