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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.
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.