Robert White, president of New York City-based Real CapitalAnalytics, has released his analysis of the unofficial anniversaryof the credit crisis. Likewise, so have CB Richard Ellis CapitalMarkets and Torto Wheaton Research. The two reports share many ofthe same observations and conclusions.

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White points out that his company's latest sales figures showthat the office sector "has fared better with transaction activitystarting to grow and prices not down as much as for other propertytypes." Overall, however, he observes that "one year after theonset of the credit crunch, recent sales data paint a picture ofcontinuing investor confusion rife with contradictory signals."

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Those contradictory signals result from quite a mixed bag ofstatistics, according to the reports by White and CBRE-TortoWheaton researchers. "The monthly snapshot of office sales wasclearly discouraging in July, the latest month for which figuresare available--with sales of office properties off 80%year-over-year, at $3.6 billion, for the slowest July since 2003,"White writes. On the other hand, he points out that more than 100significant office properties sold in July, of which $2.1 billionwere suburban assets and $1.5 billion were CBD properties.

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The CBRE-Torto Wheaton analysis shows that transaction volume inthe office market "peaked with the EOP portfolio buyout andsubsequent transactions," producing what the researchers describeas an "artificial high" of market activity and pricing in 2007. Theoffice market activity thus far this year is "roughly 60% of thepace set in a more normal period like 2004 and 2005," the teamstates.

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Pricing has not fallen nearly as much as the number of sales,according to CBRE-Torto Wheaton. Prices have fallen roughly 15%from second quarter 2007 to the second quarter 2008--with officeassets selling for $241 per sf across all TWR-tracked markets. TheCBRE-TWR analysis is that the decline in pricing is not especiallysevere when viewed in context of the impact of the EOP deal andother portfolio trades in the months and years before the creditcrunch arrived. Many EOP assets were higher-quality properties,which "rightly commanded some sort of premium," the researchersconclude.

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In addition, the CBRE-TWR team points out that "with so manyhigh-quality assets trading two or three times in early 2007, asthe EOP portfolio was dismembered, it would be difficult not to seea falloff in sale prices." In light of those factors, a 15% declinein prices is not particularly severe, they suggest.

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CBRE-TWR's researchers mention some of the same contradictionslisted in the Real Capital Analytics report. "With uncertaintyregarding future market conditions and disparate expectationsbetween buyers and sellers," they say, "it's no wonder thattransaction volume has faded. One year into the credit crisis, thefactors driving hesitancy and slow volume of the market are stillin force."

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Real Capital Analytics' White notes in his review of thestatistics that "there are signs that transaction activity foroffice properties has hit bottom and is poised to rise." His firmis looking forward to seeing the results for September, which is"traditionally a time for refreshed market activity," Whiteadds.

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White points out September is one of the most active months forsellers to list properties for sale although the expected wave inofferings will add to a backlog of early 2008 offerings that arestill on the market. One of the questions that Real CapitalAnalytics will be asking in looking at September's results iswhether sellers "are ready to accept pricing that better reflectsexisting market conditions and entices buyers back to the market inforce."

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