Few people are looking forward to hearing 2009's final bean counting,which despite a flurry of sales in the summer and fall, is going tobe, by any measure, bad. The good news is that even without a hardnumber for 2009, brokers feel confident in saying that 2010 will be animprovement.
"Investment sales in 2010 will definitely be better," Jones LangLaSalle's John Kevill, tells GlobeSt.com. "By how, much I couldn't sayright now. We have limited visibility for what will happen in the nextseveral months." Indeed, any conversation about DC area commercialreal estate's future is inevitably couched with caveats given thescarcity of data points. Cap rates, valuations, an acceptable priceper square foot for core assets – pinpointing these is still a work inprogress.
"Although we've had an increase in deal flow as we get more clarity onwhere valuations are we will have a better sense of how things willplay out," Kevill says.
There are some financial guideposts, of course.
The investment-sales market probably bottomed in April or May, GeraldP. Trainor with Transwestern, says. Cap rates are down at least 100basis points, he tells GlobeSt.com. "We will continue to see cap ratesuppression until more product comes back on the market." When thatwill happen, he cannot say. What is clear is that the sense ofabsolute panic and complete uncertainty this time last year is gone."A year ago there was tremendous fear about how far away the bottomwas. No one wanted to grab at the knife while it was still falling."More good news is that lenders are showing small signs of re-enteringthe market – at least the District's core asset market, which has heldup relatively well.
CBRE's Ernie Jarvis notes that -- like last year -- there is a greatdeal of equity still parked on the sidelines waiting to re-enter thereal estate markets. Many expected that to have happened by now, butas Javis puts it, better late than never. "We are starting to see someof the equity cautiously enter strong markets like DC," he tellsGlobeSt.com. "There is certainly pent up demand and as well aspressure on banks to make loans again."
Life companies, as well, restarted lending to commercial real estatein Q4, Jarvis adds – a trend he expects to continue in 2010, albeitnot quite at the levels many in the industry would like to see. "Wewill see more signs of life companies increasing allocations. I talkedto a big company the other day – and that person used a very tellinganalogy about real estate lending. He said they had been in neutral in2009 and while they are not ready to take the car out on the highwayyet, they have at least taken it out of park and are putting it indrive."
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