March 22, 2010
Deloitte is out with a report titled “Perspectives on Real Estate: Uncovering Opportunity in a Distressed Market”. It’s a good read. It pretty much tells you everything we already knew was broken, that we are facing problems with:
- Declining Real Estate Values
- Debt Maturity and Credit Access
- Stalled Construction
The rest of the report is peppered with uncertainty, and terms like could be, may be, and are expected to. Which leaves us in the same place we were in 2009, except it seems organizations have given up on trying to call a bottom to this mess. The concluding paragraph does a pretty good paragraph of summing things up:
Will 2010 be a positive year for U.S. commercial real estate? The outlook is, at best, uncertain. The sector likely will see continuing pressure on operating results across every asset class. While the hospitality and residential markets may have bottomed out, neither will start improving significantly anytime soon. Many assets will continue to be challenged by declining occupancy rates and property values, debt maturity issues and credit restrictions. New construction projects are expected to be few and far between. As the economic recovery begins to gain hold, much of real estate’s revival will depend on the pace and strength of job growth. Some opportunistic buyers and realistic sellers will complete deals in 2010 that could prove to be very positive for investors. Realistically, however, it will be 2011 or 2012 before the United States sees significant increases in real estate value and a corresponding uptick in the industry as a whole.
The only certainty in this report is that don’t expect an uptick until 2011…..or perhaps maybe 2012.
You can download the report here.
- Moody’s: CRE Prices Will Continue To Fall
- Real Estate Roundtable Q4 Sentiment Index: Better But Not Good
- Commercial Maturities Update from First American CoreLogic
- Deutsche Bank Q1 CRE Outlook
- SF Fed Real Estate Lending Update