Business Specialties
Investment
Jul 31, 2009
By: Melissa Lin, Contributing Editor
Confidence has waned about a near-term recovery in the commercial real estate industry, according to a new poll by commercial property listing service LoopNet Inc.
Over 2,000 LoopNet members responded to the poll, which was open from July 16 to July 24. Respondents were split among commercial real estate investors, brokers and owners.
The responses in July to the question of commercial real estate market recovery timing revealed great change from those of the last survey in May. At that time, 33 percent of investors polled expected a recovery in 2009; now, those expecting a recovery this year have dwindled to only 10 percent. On the other hand the number of investors anticipating a recovery in 2010 has increased from 42 to 56 percent.
In terms of when there will be an increase in transaction volume, all three groups of respondents shared relatively similar views, agreeing that an increase would occur in 2011. It is significant to note that since the May survey, when 44 percent of owners predicted a recovery in transaction volume in 2010—a percentage far surpassing those of brokers and investors--this statistic fell to 10 percent in July--a number more level with the others type of respondents .
In response to the issue of commercial real estate sales pricing in the coming months, the majority of overall replies revealed an expectation of a decline of 11-20 percent in price while one-fifth of respondents expect declines of 20 percent or more. However, when analyzed by category, the results reveal significant differences in opinion.
28 percent of owners believe that pricing has already hit the lowest point or will decline by 5 percent or less, in comparison to 19 percent of investors who believe the same. In fact, 28 percent of investors expect much larger declines of over 20 percent, while only 19 percent of owners agree. Brokers fall in between the two groups, as 18 percent expect small declines and 19 percent forecast declines of over 20 percent.
Mike Manning, LoopNet’s vice president of marketing, was not surprised by the difference in opinion among the different types of respondents: “Typically if selling, one is optimistic; whereas if looking to buy a property, one tends to feel the opposite way. Brokers fall somewhere in the middle.”
When asked their thoughts on the bottoming of commercial real estate sales prices, 60 percent of respondents anticipate its occurrence between the fourth quarter of 2009 and the third of 2010. Few believe that the market has seen its trough, with 17 percent predicting continual declines through 2011.
Respondents proved to be unanimous in their belief that multi-family housing will provide the best opportunity for long-term investments. Manning noted, “that number wasn’t surprising; it was in line with the logic we heard early on that as people exited their homes, there would be more demand for multi-housing.
So what do all these numbers mean for the near future of the commercial real estate market? According to Manning, “The timing has slipped a bit since the last poll; respondents expected the market to pick up in 2009--that’s been pushed back a bit. It means that hopefully we will be seeing the recovery in 2010.”
By: Melissa Lin, Contributing Editor
Confidence has waned about a near-term recovery in the commercial real estate industry, according to a new poll by commercial property listing service LoopNet Inc.
Over 2,000 LoopNet members responded to the poll, which was open from July 16 to July 24. Respondents were split among commercial real estate investors, brokers and owners.
The responses in July to the question of commercial real estate market recovery timing revealed great change from those of the last survey in May. At that time, 33 percent of investors polled expected a recovery in 2009; now, those expecting a recovery this year have dwindled to only 10 percent. On the other hand the number of investors anticipating a recovery in 2010 has increased from 42 to 56 percent.
In terms of when there will be an increase in transaction volume, all three groups of respondents shared relatively similar views, agreeing that an increase would occur in 2011. It is significant to note that since the May survey, when 44 percent of owners predicted a recovery in transaction volume in 2010—a percentage far surpassing those of brokers and investors--this statistic fell to 10 percent in July--a number more level with the others type of respondents .
In response to the issue of commercial real estate sales pricing in the coming months, the majority of overall replies revealed an expectation of a decline of 11-20 percent in price while one-fifth of respondents expect declines of 20 percent or more. However, when analyzed by category, the results reveal significant differences in opinion.
28 percent of owners believe that pricing has already hit the lowest point or will decline by 5 percent or less, in comparison to 19 percent of investors who believe the same. In fact, 28 percent of investors expect much larger declines of over 20 percent, while only 19 percent of owners agree. Brokers fall in between the two groups, as 18 percent expect small declines and 19 percent forecast declines of over 20 percent.
Mike Manning, LoopNet’s vice president of marketing, was not surprised by the difference in opinion among the different types of respondents: “Typically if selling, one is optimistic; whereas if looking to buy a property, one tends to feel the opposite way. Brokers fall somewhere in the middle.”
When asked their thoughts on the bottoming of commercial real estate sales prices, 60 percent of respondents anticipate its occurrence between the fourth quarter of 2009 and the third of 2010. Few believe that the market has seen its trough, with 17 percent predicting continual declines through 2011.
Respondents proved to be unanimous in their belief that multi-family housing will provide the best opportunity for long-term investments. Manning noted, “that number wasn’t surprising; it was in line with the logic we heard early on that as people exited their homes, there would be more demand for multi-housing.
So what do all these numbers mean for the near future of the commercial real estate market? According to Manning, “The timing has slipped a bit since the last poll; respondents expected the market to pick up in 2009--that’s been pushed back a bit. It means that hopefully we will be seeing the recovery in 2010.”
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