When all you read is gloom, turn here for a much different perspective.

Saturday, June 27, 2009

Commercial Real Estate: Recovery Signs?

Some commercial real estate business is stirring again.

The deals seem to be starting small, but never-the-less they are happening.

"Until a couple of transactions settled, you didn’t have a floor in the market," says Jeff Pacy, a broker with Preston Partners in Lutherville, MD.

According to Pacy and other commercial real estate insiders outside of Baltimore, they are seeing a "sudden burst of business." For commercial property under $10M, the pricing now seems to be right. Institutional buyers are also treading softly back into commercial property from the sidelines.

Sensing the recovering markets, those investors see demand growing and bargain basement prices says Jonathan M. Carpenter, vice president with Colliers Pinkard’s Investment Services Group. Some businesses are also looking to save some money by trading their monthly rent for a mortgage payment that they can finance.

And their bankers seem to be willing to lend again. Scott Nicholson, executive vice president and chief banking officer at Columbia Bank says that his bank is more likely to lend to owner-occupied commercial tenants as those loans tend to perform better over the long run.

You may recall additional federal programs that help small business. The U.S. Small Business Administration’s 504 loan program is designed to aid small businesses in getting the money they need to buy properties for their operations. Back in March, President Obama announced that the U.S. Treasury would invest $15 billion with the Small Business Administration (SBA) in order to further boost the secondary markets for such small business loans.

So we've, recently we've seen:

1. Homeowners with more manageable monthly payments
2. Housing starts bounce up
3. The number of residential foreclosures begin to fall
4. Jumbo mortgage activity increasing
5. Pending home sales jump up
6. Existing home sales rising

And now commercial real estate is showing recovery signs.

1 comment:

  1. I wish I could be as optimistic as you about commercial real estate but I'm still seeing no meaningful activity at my large law firm that used to have a large real estate department. Prices continue to fall and banks refuse to lend. The only decent deals involve the sale of timber lands. I hope it turns soon but I read where one senior commercial real estate analyst believes it will be 2017 before it recovers.


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