With all the data for the year in for 3 quarters., looks like we are in for a serious reset of asset values, all across the board. The offers being presented by tenants are chock full of free-rent and 20-40% off peak prices. On the actual demand for bldgs. below 50,000 sf , demand is strong, tenant's who missed the 1st wave and were out there paddling , found a new set of waves coming through with sellers who want out. There are few and far sellers who want out but that number is increasing. Listing volume is way up. LOTS of space, not enough demand. The way to look at this whole thing, the Commercial Real Estate sector is there are no buyers for investments without good credit tenants or else a 50% off the price. There are pockets of leasing activity dominated by credit tenants looking to capitalize on the price reduction. The SBA programs whereby the US gov't guarantees a significant portion of a bank's loan to a borrower of commercial real estate with only 10% is the only area that has some volume. Conventional lending is as dry as the desert. The banks just do not want to make any mistakes and loaning money without being able to see over the horizon is a risk. Its a fun time to be advising businesses right now because you can draw on 1991 experiences and explain how difficult it could get yet remaining optimistic to be nimble and ready for the right deal. As always cash is king in most any market. as for now a lot of that cash is stuck at <1% treasury yields, it won't stay there for long.
Chris Galiano
Managing Director
NAI DiLeoBram & Co.
1315 Stelton Rd.
Piscataway, NJ 08854
cgaliano@naidileobram.com
Monday, October 26, 2009
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