Outlook Bleak for Commercial Real Estate
May 21, 2009 by Lela Davidson
Filed under Finance
Commercial property rental rates continued to fall internationally in the first quarter of 2009 according RICS’s Global Commercial Property Survey. This quarterly survey tracks sentiment among property professionals around the world.
Globally, respondents expect continued decline in the coming three months. US real estate professionals were among the most pessimistic of all survey respondents regarding the near term price outlook. Demand from tenants is down and therefore available space is up, compounding to drive rates down and forcing commercial real estate agents to offer increasingly larger incentive packages in order to secure a deal.
One possible silver lining is that re-pricing in some markets may encourage investors.
“Across the United States, we’re seeing lenders taking their lumps, writing down assets instead of hanging on to now outdated value expectations,” said Matt Bruck, Managing Director, RICS Americas. “The survey reveals that activity in commercial space continues to be slow. Traditionally activity in commercial space lags behind trends in residential. The sentiment among property professionals in the U.S. is that even if we’re near the bottom, the recovery over the next two years will be minimal. Some of our members are saying that local investment is starting to move as local and regional banks were less dramatically affected by the global crisis.”
Get the full report here.
