New Data-Based Forecast Shows It is Time to “Gear Up” for Commercial Real Estate Opportunities

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Real Estate Research Corporation (RERC), Holliday Fenoglio Fowler (HFF), and Real Capital Analytics (RCA) say that 2010 will be the best time in many years to buy well-priced institutional-quality commercial real estate, in their Expectations & Market Realities in Real Estate 2010: Crossing the Divide—The Passage to Recovery.

Partnering for the first time to produce this annual forecast report, the three firms have drawn on their respective capabilities to thoroughly examine today’s commercial real estate market, conduct a thorough analysis of the best research available, and more importantly, offer their expert interpretation and projections for investment real estate for the rest of 2010 and beyond. Findings indicate that the momentum for commercial real estate, which lags other investment alternatives, is starting to shift upward.

According to Kenneth P. Riggs, president and CEO of RERC, “The past decade has served up some tough lessons about acting on our gut instincts and about what makes sense and what simply does not fit with sustainable practices. But for investors seeking to seize market opportunities, 2010 is time to gear up for a possible once-in-a-lifetime opportunity to snag key long-term investments in commercial real estate.”

“We are pleased to partner with RERC and RCA, two firms we greatly admire, to bring some perspective to the rapidly changing capital markets environment,” stated Mark D. Gibson, executive managing director at HFF. In addition to providing a full review of the capital markets environment, Gibson provides a detailed description of the Office of the Comptroller of the Currency’s directives and the impact on lenders, in the report.

“This exhaustive review of 2009 investment trends and activity allows us to put into context the enormous challenges that have been facing investors since the dislocations of the credit crunch and financial crisis,” said Peter Slatin, editorial director for RCA. “It also has shown us the progress that’s being made. Despite continuing high unemployment and weak operating fundamentals, volume began to find its footing in the fourth quarter as borrowers, lenders and investors are finding more common ground, especially with the emergence of a two-tiered market for higher-quality assets. In addition, more distressed assets are coming to market and new distress is diminishing.”

“We certainly aren’t out of the woods yet. There are still major concerns that must be dealt with, including a growing deficit, high unemployment, higher taxes, and new banking regulations. And although credit is loosening for institutional players, it remains hard to come by in the broader market. These issues, along with the weak fundamentals in the property markets, mean that the passage to recovery remains very long and obstacle-ridden, and there are still value adjustments to come that will be reflected in higher cap rates. But with the research and insights provided by HFF, RCA, and RERC, along with the space market data provided by Grubb & Ellis, Axiometrics, and PKF Hospitality Research, as analyzed in this report, we are much better equipped to successfully travel this path,” Riggs concludes.



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