Jul 01, 2009
By: Tonie Auer, Contributing Correspondent

Warsaw’s first certified green building also earned the recognition as the largest commercial real estate transaction so far this year for Central and Eastern Europe, selling for €117 million, or $164 million. But commercial real estate markets in many parts of the world continue to fact debt repayment issues, declining values and deteriorating rents and occupancies in different combinations.

The newly-constructed Class A Deloitte House office building--located in Warsaw's Central Business District, officially opened this month.

While the United States is poised for a deep, lingering dive in commercial real estate, commercial property markets in many parts of the world are falling, as well. Prices are resetting lower at different speeds and magnitudes country by country.

But in the United States, commercial real estate players are trying to avoid selling at prices most experts believe are half of what they were at their peaks in 2007. Commercial real estate sales worldwide in the second quarter are expected to be off 67 percent from a year earlier, according to research firm Real Capital Analytics, with U.S. volume down 83 percent, according to a Reuters report.

Colliers International arranged the Warsaw transaction, representing property owner, Skanska, the world’s fifth largest construction company. Clifford Chance acted as legal advisor to the seller. The buyer was a fund managed by Deka Immobilien, a German-based international investment management firm. Colliers also serves as property manager for the fully leased building. Global financial services firm Deloitte is the 21,000-square-meter building's anchor tenant.

A director with CCE Colliers International said that while investment volumes there remain low, as the global economy appears to stabilize, there is a renewal in institutional and private capital interest. The interest is largely coming out of Germany on both the debt and equity side, he said.

The sale ranks as the fifth largest office sale in EMEA (Europe, Middle East and Africa) in 2009 to date, the year’s largest transaction in Poland, and one of the top 12 office trades globally, according to data supplied by Real Capital Analytics.

RCA reported that the ratio of office building offerings to closings is greater than three to one in the first two months of 2009 and just 53 office property sales greater than $5 million closed during this period, Grubb & Ellis Co. reported in its first quarter 2009 United States Office Market Trends report. RCA classified 211 office properties as distressed at the end of February with the tally growing by about 30 properties per month. Pricing is expected to fall into next year due to the deterioration in net operating incomes, the lack of debt capital and the reluctance (or patience) of equity investors who are waiting on the sidelines, the Grubb & Ellis report stated.

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