Despite some encouraging economic signs, the commercial real estate industry is still desperately seeking stability.
At the midpoint of 2010, local and national industry experts agree that the worst misfortunes of the Great Recession appear to be over. For the near future, overall vacancies will continue to rise and rental rates will continue to slide in all sectors.
Sustainable improvement throughout the entire industry is not expected until mid-2011. Commercial sector analysts for the National Association of Realtors forecast that office space positive absorption will not occur until then. In the industrial category, obsolete facilities will linger on the market the longest. Nationally, retail vacancies are expected to stabilize in the first quarter of 2011, then hold steady and increase slightly during the rest of the year, the National Association of Realtors reported.
Every year through 2015, PricewaterhouseCoopers, a New York-based professional services company, projects that $250 billion to $300 billion in commercial real estate loans will come due.
Not all notes coming due will default; some owners will successfully refinance. Others will find buyers. Some will negotiate with their lenders on short sales. But overall, PricewaterhouseCoopers projects that commercial property foreclosures will accelerate. When that happens, cash-rich investors will buy bank-owned properties at reasonable prices.
With guarded optimism, positive signs are giving hope for meaningful improvement next year.