Next peak for big properties? 7 years off

November 29th, 2009, 4:00 pm · 14 Comments · posted by Jeff Collins

Nadji

One in a series of commercial real estate forecasts …

Sixty-one percent of investors responding to a survey say it will take from three to seven years before commercial real estate values return to levels seen at the peak of the market, an industry executive told a recent UCLA real estate conference.

Just 4% of the 1,494 investors in the survey think peak pricing will return in less than three years, while 34% believe it’ll take longer than seven years.

Hessam Nadji, managing director of research for Marcus & Millichap said the survey, conducted this past year, queried investors with an average of 19 years experience and an average real estate portfolio size of $37 million. Other findings include:

54% said that now is the time to by apartments.
20% said now is the time to buy industrial properties, and 28% believed it’s a good time to invest in retail.
Most respondents expect property values to decrease over the next 12 months, especially in the office sector.
31% expect apartment values to fall, 31% expect them to rise, while 38% expect no change.
A majority expect rent rates after concessions to fall for most commercial properties next year, especially for offices.
41% expect apartment rents to be unchanged, while 24% think apartment rents will increase.
Commercial real estate vacancies will approach or exceed levels reached in the 1990s downturn and the 2001 recession.
72% said they are raising capital for acquisitions but most plan to be “cautious” or “very cautious” in making future purchases.

More on the outlook for 2010 …

You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

See blog content by category ...

Adam Brett says:

November 29, 2009 at 4 pm

This really tells us nothing. 31% are for it - 31% are against it - and the rest are in the middle. Why write this at all?

How about 25% vacancy rates in Orange County, over 35% in Brea! How about the tidal wave of commercial paper going to bust next year.

How about current tenants renegotiating their leases - lowering even more the landlords bottom line.

How about the cap on Fannie and Freddie’s purchase of mortgage backed securities at 1.25 Trillion on March 31, 2010.

There is a lot more to real estate than the so called ‘investors’ looking into their crystal ball.

Planet Reality says:

November 29, 2009 at 5 pm

Adam, all that stuff isn’t part of Lansners agenda. Plus, it would take actual research = work.

Tex says:

November 29, 2009 at 5 pm

Dubai debt woes may hit U.S. property market
http://www.reuters.com/article/ousiv/idUSTRE5AQ4G620091127
(excerpts):
In the United States, Dubai World’s portfolio includes several well-known properties, and the fallout could have a larger impact on the entire real estate market.

The main threat to U.S. commercial property from Dubai World woes may be “potential for contagion,” said Sam Chandan, chief economist at Real Estate Econometrics LLC in New York.

U.S. commercial real estate values have already fallen 42.9 percent from their 2007 peak, Moody’s Investors Service said.

In a November 23 report, Moody’s analyst Nick Levidy said prices could bottom at 45 percent to 55 percent below their peak, implying an additional 5 percent to 28 percent decline, but in a “stress case” could drop 65 percent from their peak.

sunnsea says:

November 30, 2009 at 10 pm

And why would not the same be true for residential properties? There is no good reason for residential properties to be even at these levels given the unemployment rate in the OC or is the worst yet to come?

Planet Reality says:

I haven’t seen any articles from Matt in awhile or can’t figure out how to search for them. Whats up?

GetOverYourselves says:

November 29, 2009 at 6 pm

they are there. go to “business”, then “real estate news’, and scroll down to matt padilla’s blog list.

CoolView4375 says:

November 29, 2009 at 6 pm

If you want the Commercial Real Estate market to recover, lower California’s taxes.

Hail Mary says:

It will likely take around 7 years for commercial real estate to bottom.

King says:

November 30, 2009 at 1 pm

“big properties”…….. is that a technical term?

shockg says:

November 30, 2009 at 7 pm

yup like Rant’s big bottom.

sunnsea says:

November 30, 2009 at 10 pm

On an underreported side note, Dubai World was the same group that Bush and your Republican buddies wanted to buy up much of our port operations in the U.S.
Thankfully, that was defeated in Congress.

Debt Cancellation says:

December 1, 2009 at 5 pm

I don’t know if I have much confidence in what these “experts” say. Many of these folks a couple years ago said the market would go up indefinitely. Just beware of any published “forecasts”.

nvest80 says:

December 1, 2009 at 11 pm

with all the market manipulation, 7 years from now we will be about to hit bottom.

DeeDee says:

December 3, 2009 at 10 pm

The market topped out in ‘81, bottomed out in ‘85-86, topped out in ‘91, bottomed out in ‘95-96. Should have topped out in 2001, but with the insane loans and qualifying ratios, it continued on way past where it should have gone. Topping out in 2016? Maybe, maybe not. Depends on our global economy and how much greedier the corps will get. Soon the other countries will be outsourcing their jobs to the US because of the devaluation of the dollar if this keeps up.

Is there anyone out there who has an ethical framework from which to conduct business?

Carly Fiorina for Senator? God help us all!

Slice	Price	Ch.	Sold	Ch.
House	$500,000	+18%	1,833	+11%
Condo	$290,000	+7%	881	+22%
New	$617,500	+24%	171	-17%
All OC	$435,000	+10%	2,885	+12%

Orange County Register