Commercial real estate has not been hit nearly as hard as the residential sector, however, it is expected that the commercial market has more pain coming. The decline started later, and so will the recovery. According to one survey of commercial real estate investors, we should expect things to only get worse from here. For more on this, read the following article from Property Wire.
The US commercial real estate market is in a bad state and property investors expect it to get a whole lot worse, according to a survey.
Many property investors are struggling with ways to preserve the value of their investments and maintain ownership in the wake of restricted debt sources, declining tenant demand, and falling values, the survey by PricewaterhouseCoopers says.
“As investors painfully watch the value of their assets decline, many feel troubled knowing that the ills of the US economic recession have yet to fully impact the commercial real estate industry,” according to the first quarter Korpacz Real Estate Investor Survey of more than 100 investors from real estate investment trusts, pension funds, private equity firms and insurance and mortgage companies.
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It shows that real estate investors do not expect the commercial property sector to rebound until well into 2010 at the earliest. “Investors are not expecting this recovery, when it does happen, to be a sharp recovery where it hits bottom and bounces up,” said Susan Smith, a director at PricewaterhouseCoopers in the real estate group and the survey’s editor.
“It’s going to be a very slow sluggish recovery. There are just too many things right now that are impacting the industry to make investors very confident about what’s going on,” she added.
Some property owners are lowering rental rates and increasing concessions, which results in lower revenue.
Compared to a year ago, the average amount of free rent landlords are offering has increased to six month in several major office markets, such as Boston, where it rose from 2.15 months; Manhattan, where it grew from four and half months and San Francisco, where increased from three-and-half months, the survey said.
One investor in the survey suggested “making the best deal you can today because tomorrow’s deal will be worse.”
This article has been reposted from Property Wire. View the article on Property Wire’s international real estate news website here.