A new survey shows that commercial real estate investors are looking for a continued deterioration of the fundamentals the commercial real estate market a through the rest of 2009 and 2010 as investors continue to wait for better values, a new survey shows.
According to the new PricewaterhouseCoopers (PwC) Korpacz Real Estate Investors Survey, are looking for near-term defaults and fast-approaching due date on commercial mortage-backed securities to start the buying cycle in the next two years.
So far, the de-leveraging of the commercial real estate industry has disappointed many investors, said the PwC analysts.
“Investors seem surprised at the lack of quality buying opportunities, given the problems in the financial markets and the continued weakening of the industry’s fundamentals,” said Susan Smith, editor-in-chief of the survey. “Some investors sense that near-term defaults with commercial banks will allow them to acquire quality assets at steep discounts, as banks may no longer be able to continue to ‘pretend and extend’ troubled loans and would be forced to place assets up for sale.”
Investors are also looking to the 2012 due date for $153 billion of CMBS loans to spur buying opportunities. Since commercial banks account for a much greater percentage of the total looming debt, however, they could provide distressed sales sooner than 2012.
The PwC Korpacz survey found that the majority of the commercial real estate industry is expected to remain in recession through 2011. While an industry-wide recovery is not expected to begin until 2012, the pace of the recovery will vary for each property sector, as well as across individual geographies.
The U.S. multifamily sector is expected to lead the industry out of the recession as its recovery starts to take hold in 2010 and continues through 2012. In Prescott Valley, we have seen multi-family properties plummet in price over the last two years. As an example, I recently had an investor pick up two duplexes for $200,000 each that had been listed only the year before at $325,000 each.
If you are thinking about investing in multi-family properties in the Prescott area, there are deals to be had and more on the way as more foreclosures take place and sellers have to get real.
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