Commercial real estate about to turn the corner, experts predict
DALLAS — The CEO of one of the country’s top commercial property firms says the industry is turning the corner.
“It’s evident that the market has started some kind of recovery,” said John Santora, president of real estate service firm Cushman & Wakefield’s U.S. operations. “Overall the fundamentals either improved in the second half of 2009 or the deterioration began to slow.
“From a leasing perspective, the market came back in the second half of the year,” Santora said last week at an economic forecast seminar in Dallas.
While companies are taking advantage of lower real estate costs to do long-term deals, the outlook for commercial property owners is still troubled, he said.
“Many landlords are still facing liquidity issues particularly owners who purchased properties at the peak of the market,” Santora said. “Their equity is gone.”
That will mean bargains for new buyers, he said.
“You are going to see some great opportunities to acquire assets in the next year and 24 months,” Santora said. “And from everything I hear, there is enough money on the sidelines.’
Mark Dotzour, chief economist with the Real Estate Center at Texas A&M University, told real estate executives that the commercial market should be in full recovery by next year.
“In 2012, if you are not in the market you are going to be too late,” said Dotzour, who predicts investors will snap up buildings.
“There are billions of dollars of dry powder sitting on the sidelines itching to go,” he said. “You have people out there ready to fire all kinds of cannons at real estate.”
Banks holding back on property foreclosures are delaying the market comeback, he said.
“If the banks would put that property out on the market, you’d see a massive resurgence of transactions, and you’d see prices firm up,” Dotzour said. “But the financial system is not solvent enough to let that happen.”
He predicts that the commercial property sector will go through a period of little or no construction.