Commercial real estate is getting so bad, even the commercial real estate guys have stopped talking up the market.
An online survey released today by Deloitte said 76% of the executives it surveyed expect values and rents to continue declining this year.
Deloitte, via Bayer Consulting, surveyed 327 executives, including 186 executives from real estate companies, on the prospects for a real estate recovery. The survey was conducted between December 2009 and January 2010.
“The commercial real estate market continues to be adversely affected by one of the deepest recessions in decades,” said E.J. Huntley, principal, Deloitte Financial Advisory Services LLP and national leader of the real estate consulting practice. “Increased unemployment has resulted in less demand for office space, reduced rents and an overall decline in commercial property values.”
Could this mean the end of “extend and pretend?” Usually, you can count on the commercial real estate people for a glass-is-half-full view of the world, but now it appears that glass has been knocked over and spilled.
* 74% expect interest rates to rise in 2010.
* 48% expect rates to increase by 50 basis points or more.
* 63% predict that a full recovery of the market will require two to three years.
* 29% believe a full recovery will take four years or longer.
* 8% foresee a full recovery within the next year.
* 47% said they were either investigating potential acquisitions, or expect to begin doing so within the next year.
* 46% said lower prices make it a better time to buy than lease.