2009 has ended and, while there was little celebrating to do, the overall impact of the year was not as calamitous as many people predicted. About halfway through the year we saw a noticeable increase in activity on both the sales and leasing side. While bank lending continued to be sparse in the commercial market there was positive activity on the apartment investment side.
Additionally, Small Business Administration loans grew in popularity as the federal government was willing to provide the backing of a significant number of commercial loans. Have we reached the bottom yet? That’s a difficult question to answer because there are few good indicators of what a bottom is and we typically only know in hindsight after we’ve seen the market begin to improve. What we can say is that if we have not hit bottom yet, we will this year. If you thought of 2009 as a “reset” year for commercial real estate, think of 2010 as a year of “starts and stops.”
We are going to see more activity this year in leasing but it will include more ups and downs in the vacancy levels. We will see a continuation of lower than historic average sales as a result of the continuation of stricter lending requirements and the lack of a quality supply of properties for sale. If we can avoid another major shock to the economy, then 2010 will be the year we reach the bottom. The only question after that is how long we will stay in it. While we have a long way to go to overcome the high unemployment rates that we face locally and statewide and the lackluster economy as a whole, there are some positive indicators that say a recovery is coming.
Overall, our prediction is that we will see positive indicators toward the end of this year with a forecast of growth in 2011.
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— Brian Johnson is an agent with Radius Group Commercial Real Estate.