Wednesday, January 5, 2011

More News On Commercial Recovery

I am cautiously optimistic, and feel that 2011 is still going to be rough sledding for many sectors of the commercial/investment real estate market. Still, there are opportunities out there for both buyers and sellers, as long as both parties are realistic.

As I have written before, multi-unit housing has generally stayed strong. Some markets this has not been the case, but in most areas and for a myriad of reasons multifamily has been stable or better economically. And now, more institutional validation of the same.

Multifamily Biz magazine says the recovery has started, referencing a study by NAI Global. I believe the market has stabilized somewhat but, as I have stated repeatedly, we are not out of the woods yet. There are NUMEROUS hurdles yet, and PCRE colleague Greg Will -- at an economics luncheon yesterday -- reported back that that same pessimism remains among knowledgable practioners. Repeating: there are many, many opportunities out there. But, we've got some bumps, curves and obstacles to get past before things are rosy, pretty, and tied up in pink ribbons (with pink ponies and unicorns prancing in the background).

No fairy tale, the commercial/investment real estate market is a rollercoaster right now -- an E-ticket ride you might say.

Still, please take a moment to read the article from Multifamily Biz. Worth the effort.


mark said...

Hi Brent,

I would be interested to get your take on the commercial real estate recovery? Is there still a lot more carnage to come? I only focus on non-commercial real estate.


Brent Greer said...

Hi Mark.
Fundamentals are improving but there is some carnage coming, yes. I am in the middle of a post right now that discusses how some $22 billion in commercial backed mortgage securities are coming due, and banks are going to be hard-pressed to want to re-fi them. Most were purchased during the go-go years 3-5 years ago and were interest-only. A lot of lenders held back on foreclosure on commercial properties the past two years, hoping that various "work arounds" or other modified terms for 18-24 months could give borrowers some breathing room. It worked for some, for others it only extended the problem as they could not recover. We will see a lot of property put on the market this year. BUT, people are buying everywhere right now. Retail properties already have picked up the pace across the nation as transactions are occurring. Would I call it "carnage?" Maybe a bit rough. But, as they say in New England, we are in for another 12 months of rough sledding.... Mark, thanks for writing.