La Jolla-based Equus Realty Advisors is ramping up its acquisitions as a result of "promising buying opportunities" as a result of eroded demand for office and industrial space.

The company specializes in the acquisition, management and redevelopment of financially distressed commercial properties. Equus is in escrow or late negotiations to acquire nearly 1 million sf throughout the western U.S.

Equus President Chad Carpenter attributes the expanded availability of property to sellers dropping prices to "market-clearing" levels.

"Generally speaking, prices of stabilized properties with longer lease terms and credit tenants are relatively firm," he says. "However, properties that are in poor condition or that have significant vacancy in weak markets are becoming available at attractive prices.

"We expect property prices to fall further over the next 12 months as lenders take back non-performing properties and rents fall."

Tenants clearly have the upper hand in many markets, Carpenter says. But he believes it's a temporary condition: the fall in commercial property values will be relatively short-lived in most markets.

Investment capital is available for real estate deals offering high returns and debt can be obtained at very low interest rates. Equus officials say lack of demand, not overbuilding, is currently the real estate industry's major challenge. Values are expected to return to pre-recession levels by mid-2004.

Equus has a select group of private investors that co-invest with the principals of Equus for acquisitions of less than $10 million. For larger transactions up to $100 million, Equus will be co-investing its equity with institutional equity.

"When we get an investment opportunity that meets our investment criteria, we give our existing investors first crack", says Equus Chairman David Bourne.