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Experienced Solutions in Uncertain Times
I was listening to a hedge fund manager on CNBC describe how they got caught investing in the bottom of the market only to find that the bottom was a lot further down than they expected. The negative psychology and recessionary environment are affecting all forms of investments including commercial real estate. But amidst the fear there is really some good news. The vacancy rates across most commercial classes of investment real estate in the top markets really are not that bad. I was recently in Orlando evaluating the downtown office market, where office vacancy rates are approaching 15 percent, but that was after a strong boom period and fundamentals remain favorable in the near term.
Every class of commercial real estate is taking a much needed breather from the sometimes frenetic pace of building and speculative trading that has been robust over the past 7 years. The break in the action is good, but the collapse of credit is bad and is now acting like sand in the wheels of real progress. The capital intensity of commercial assets requires debt participation to keep the game alive and that lack of availability is having a tangible and immediate impact on progress. From developers to business owners the credit crisis is having an impact that will likely result in a spike in capital demand in the first quarter of 2009.
We will see... in the interim we are continuing to help our clients navigate the troubled market with solutions in valuation, brokerage, and consulting.
Call me if we can help you.
Rich Correll
317.507.0009