Editor’s Note: This is the most optimistic survey so far on the U.S. commercial property market. We have seen an estimate as far as 2016 for a recovery. If we are looking at unemployment not peaking until “atleast” the second quarter of 2010 (I believe 2011 or 2012 to be realistic), I don’t see businesses going out and signing new leases for space or purchasing buildings when there is still so much uncertainty.
Our stock market has some quite robust growth rates (3-6%) priced in so until we see some real growth that is not supported by the government and the jobless numbers start coming down, in my opinion this survey is just painting a rosy picture that doesn’t have any meat behind it. Here was my favorite quote, For developers of new projects, the advice is blunt: Write off 2010, as well as 2011 and probably 2012. “You can close up shop, hit the links,” the report said. “Forget about construction financing — that’s a pipe dream.”
The U.S. commercial real estate market, slammed by the credit squeeze and recession, is likely to hit bottom in 2010, according to a survey of industry investors, developers, lenders and consultants.
Commercial real estate values will fall 40 percent, on average, from their peaks in mid-2007, and up to 50 percent in some sectors, according to the 2010 edition of Emerging Trends in Real Estate, released on Thursday by the Urban Land Institute and PricewaterhouseCoopers LLP.
It will be the worst commercial real estate decline since the Great Depression, eclipsing the 1990s savings-and-loan crisis, according to the report.
“Not surprisingly, the overwhelming sentiment (of) interviewees remains decidedly negative, colored by impending doom and distress over prospects for an extended period of anemic demand and costly deleveraging,” the report said.
Source: Reuters
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