X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

NEW YORK CITY-Job cutbacks, an uncertain stock market, pricing woes are all part and parcel of a slumping economy. But it’s the economy itself rather than any one of its symptoms that is being blamed for the current paralysis in real estate deal-making. According to the results of GlobeSt.com’s latest Quick Survey, 64% of respondents blame the overall economic picture for the current inactivity.

Oddly enough, when asked if they’ve noticed a decline in sales and leasing, 88.5% of respondents said no while a paltry 11.5% admitted to it. A classic case of false bravado? Perhaps.

“That’s strange,” observes Jacques Gordon, international director of investment strategy and research for LaSalle Investment Management in Chicago. “False bravado might be the only explanation, unless a bulk of the respondents were from areas like New York City, which didn’t experience that severe a decline. But from a researcher’s perspective, the statistics all clearly show a huge drop-off in leasing and a substantial drop-off in sales.”

Respondents took a more realistic view when enumerating the other causes of the slump, and 12% of the survey’s participants blamed job cutbacks and the inability of corporate America to implement real estate growth strategies. As many respondents blamed real estate pricing. This, presumably, is a reference to budgetary constraints more than inflexibility on the part of the brokerage community. (In fact, a prior Quick Survey revealed that brokers are more than willing to negotiate and that concessions were on the rise. Click on: Quick Survey: Concessions Are Back )

When will it all return to normal? It wasn’t too long ago that experts were predicting a year-end loosening of the market and a resultant Q4 closing crunch.

Not so any longer, and the rebound has been delayed by three months. Most respondents (33%) don’t see relief coming until the first quarter of next year. But Q4 did come in second, garnering 27% of the vote. An equal number believe it will last still longer–until the second quarter. A pessimistic 13% are betting on Q3 of next year.

Not surprisingly, most participants (68%) bash the idea of a Q4 closing crunch. Some 32% of our respondents are holding onto the hope that it will occur.

Gordon–who first predicted the crunch in a recent GlobeSt.com UpClose (click on: UpClose With LaSalle Investment’s Jacques Gordon)–still believes the crunch will occur. “If you’re on the buy side, the answer is yes, because that’s always the way the industry works,” he explains. “There’s been a stand-off between buyers and sellers that will last until sellers realize in the third quarter that they have to do the deal for fiscal and tax considerations.”

He does acknowledge, however, that the prolonged effects of the economic slowdown will also push some deals into the next year. Needless to say, time alone will tell.

(GlobeSt.com’s Quick Survey is not a scientific poll and is designed to reflect only the opinions of those participating in it.)

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.