The investment sales market has been steadily improving over thelast few quarters, as fundamentals begin to improve and economicrecovery, while sluggish, is upon us. With regard to fundamentals,we have seen rent concessions evaporating and occupancy ratesimproving. The economy is moving in a generally positive directionbut is having difficulty finding momentum as employment growth iswell below expectation and last week it was reported that consumerspending experienced a decline of 1.2% in May, the first drop sinceSeptember of 2009. While the investment sales sector appearshealthy, the future of the market, however, is uncertain as marketindicators are presently difficult to interpret. These conditionsbeg the question: Are we in another bubble at the bottom of acycle?

Today, nothing is impacting the investment sales market morethan the supply / demand relationship. Real estate markets arealways dependant upon the supply / demand dynamic, however;it appears to be impacting the market more acutely now than we haveseen in the past. Presently, there is excessive demand met by arelatively weak supply of available properties for sale.

Demand drivers are active from every segment of the purchasingarena. When we first started to tangibly feel the impact of thecredit crisis in the summer of 2007, the institutional capital,which drove up value in the bubble inflating years of 2005 -2007,all but evaporated from the marketplace. The overwhelming majorityof investment properties that Massey Knakal closed from mid-2007until recently have been purchased by with high-net-worthindividuals and families that have been investing in the market fordecades. Recently, we have seen a reemergence of institutionalcapital as these investors have formed distressed asset buyingfunds and opportunity funds to take advantage of perceivedopportunities in today’s market. Add to this the significantnumbers of foreign investors and we have a demand side of theequation that is overwhelming.