Many opinions have been flying recently as to whether the commercial real estate market is heading towards Armageddon or opportunity as we head into 2010 (though one could argue they’re one and the same). On one hand, a recent survey points to great buying opportunities abounding next year, fueled by all cash buyers.
Predictions are that “investors will score bargains on premium properties” based on both distressed sellers and banks clearing out bad loans and real estate owned portfolios. This view is also supported by Sam Zell who feels that talk of a commercial melt-down is overblown. He believes that demand will catch up to supply and that 2011 will see the beginnings of a rebound.
{ 3 comments… read them below or add one }
I am glad to see one of the apples stuck around to work this holiday week. I would agree with you that 2010 will be a tough year in the commercial real estate market. It is getting harder and harder to secure financing for any commercial real estate loan as the banks continue to tighten their lending guidelines. Investor property buyers had better have the cash to buy the property or at least 40% cash down payment to have any chance at a loan. As a commercial loan broker I am lucky enough to have sources that will finance larger loans over $10 million at low 5.5% fixed rates for 10 yeears and a couple of lenders that will look at the not so strong commercial loans still. If you are a commercial real estate investor and you think your bank will finance it for you, I would tell you the likelihood of this happening is slim, very slim. The prices are good right now and by 2011 when things are supposed to improve, the prices will stay about the same still, or at least for a while. I would say if you have the cash, start looking in spring 2010, unless you have an ‘in” at a bank that can connect you with a loan that is discounted, and possibly discounted heavy if you buy it before 12/31/2009.
Both apples are around
(albeit spending quality time in their respective orchards)
Always appreciate your comments, Scott, especially from your professional perspective. There’s one more post on the commercial front coming, and it will be arguing the more bearish side of the equation. I have a feeling it may provide you with even more fodder for your juicy insights …
Merry X-mas until then!
The holidays are certainly a good time for tending to our orchards. I will look forward to the next commercial front posting, and also the others before and afterward it too!
Merry X-mas to the two hardest working apples I know of in Manhattan!