Commercial Real Estate Problems are Behind Us, Say Experts

Experts speaking at this year's Commercial Real Estate Market Forecast had some interesting observations, not least of which is that the worst of the commercial real estate turmoil is several years behind us already. Interestingly, some believe the residential condo market will not be fully corrected for another twelve years or so. Yes, twelve years.

On the subject of commercial land, I believe things will pick up as soon as lenders get a little more motivated to provide construction loans for projects. First, however, we need some of the inventory to go away and that seems to be happening...slowly. From the Tampa Bay Business Journal.

By Margaret Cashill

Speakers at the 2009 Commercial Real Estate Market Forecast believe local executives are displaying cautious optimism, but said the greatest difficulties in the commercial real estate market are several years behind us.

The Tampa Bay Business Journal hosted the luncheon Thursday afternoon at the A La Carte Event Pavilion in Tampa, in partnership with the National Association of Industrial and Office Properties.

After an introduction from Bridgette Mill, president and publisher, the event featured five commentaries on the topics of investments, land, retail, industrial and office with Dallas Whitaker of Greystone Equity LLC and TBBJ Staff Writer Janet Leiser serving as moderators.

Steve Ekovich, first VP and regional manager of Marcus & Millichap Real Estate Investment Services, spoke of a “recalibration market” following the transition of recent years. He predicted that the inexpensive cost of doing business would benefit local retail, multifamily and office markets.

Bill Eshenbaugh of Eshenbaugh Land Company echoed Ekovich’s sentiment of a recovering market in his discussion of land. Recounting his travels to Pennsylvania, he mentioned a “groundhog” effect in the homeowner’s market following a three-year downturn.

He also predicted that for the condominium market, the cycle would not correct itself until 2020, based on past upturns in 1986 and 1972.

Pat Duffy, president of Colliers Arnold, addressed the subject of retail. Retailers are “cautiously optimistic,” he said. The rising cost of oil has decreased people’s disposable income, which decreases demand for shopping centers.

In speaking about industrial real estate, Ray Sandelli, senior managing director of CB Richard Ellis, said retailers are trying to move closer to populations. For the region, he believes activity will remain slow, flexibility in tenant renewals will increase and distribution centers will gravitate closer to customers.

Larry Richey, senior managing director of Cushman & Wakefield of Florida, Inc., commented on the state of the office market. Since Tampa Bay has lost 16,000 jobs in the last year, the first six months have seen more than 833,000 square feet of negative absorption in the market, he said. The cost to do business in Tampa is reasonable, however, and Richey predicted the cost of living will go down, and leave tenants with more options.

Richey also emphasized that the negative impact of the storm seasons in 2004 and 2005 is fading. The fact that the Bay area has a competitive cost has always helped the region, he said, and is beginning to help again.

Continue Reading...