Survey says: Slim sales volume ahead
Brokers will continue to be challenged when it comes to finding investment salesin 2009, according to a recent study conducted by Colliers Investment Services Group, a division of Boston-based Colliers International, a global real estate services firm. Like many recent forecasts, the Colliers survey indicates that many investors believe a turnaround in the sales markets will come no earlier than the third quarter of the year. As evidence, 22% of investors said they would be active buyers in the first half of 2009, while 78% noted they would not return to the market until the second half of the year.
Overall, Colliers concluded that “…the latter half of 2009 should mark the start of a new beginning for commercial real estate.” The survey tallied responses from 120 public and private companies.
office market puts on the brakes
One of the strongest office markets in the country in recent years began to experience a slowdown in late 2008, according to new information from Delta Associates, the research division of Transwestern, a privately held commercial real estate andfirm. In the fourth quarter of 2008, net absorption of office space slowed dramatically to just 247,000 sq. ft. versus 1.6 million sq. ft. during the same period in 2007. The area vacancy rate rose only slightly from 17.1% in fourth quarter 2007 to 17.2% in the same period in 2008.
Investment sales, however, stumbled significantly, totaling $1.6 billion in 2008 compared with $3.4 billion in 2007, while and sales prices rose to $195 per sq. ft. versus $126 per sq. ft. in 2007. Developers remained active, but office space underdropped from 9 million sq. ft. at the end of 2007 to 6.6 million sq. ft. at the end of 2008.