Dr. Sam Chandan, President and Chief Economist of Real Estate Econometrics and an adjunct professor of real estate at the Wharton School of the University of Pennsylvania, recently gave a presentation on what he believes 2010 holds for the commercial real estate market. The upshot of his findings:
- Though the economy remains fragile, we are beginning to recover from the depression scenario
- The economy will need support the next few years
- There will be some modest growth in spending in 2010
- Multifamily is not faring well as the greatest demographic for renters is in the 21-29 year age range; this group is facing 16% unemployment and living back at home or pursuing advanced degrees
- The real estate sector of the economy has declined sharply from 2007 highs
- The first time home buyer program undercut the industry
- NOI will stabilize over time; last recession it took 4 years to stabilize
- Transaction activity will be primarily concentrated in the REIT sector and private buyers
- Private buyers will be seeking properties in the $1-3,500,000 price range
- Prices will stabilize and credit availability will be more robust
- Retail operations will remain challenging
- Still a disparity between buyers and sellers but the gap is narrowing
- Investors waiting for the flood of distressed properties have been disappointed
- FDIC has instituted a variety of programs to avert flooding the market
- Lenders are exercising the extend and pretend option
- The CRE section of the economy will revive with the creation of sustainable jobs
Dr. Chandan’s personal website is www.chandan.com.
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