Marktbericht USA Apr09

The commercial real estate market is in the midst of a correction that is painful, to be sure, but it also is a necessary step to moving in the right direction.

Executive Summary

• Economic trends are unfavorable for the commercial real estate market. Rising unemployment and reduced consumer spending translate into reduced demand for space and declining net operating incomes.
  
• Debt for commercial real estate continues to be scarce and expensive. Lenders remain largely on the sidelines as they slowly move to clean up balance sheets and monitor the impact of new government programs.
  
• Transaction activity remains at a snail’s pace. Private equity players are reluctant to jump into the market, either due to a lack of capital or because they are waiting for prices to fall further.
  
• Despite historically low stock prices, many REITs have recently raised equity and debt in an effort to strengthen their balance sheets.
  
• Property values are falling rapidly. On the heels of its worst performance ever in 4Q08 (-9.5% appreciation and -8.3% total return), the National Council of Real Estate Fiduciaries’ (NCREIF) index produced a -7.3% total return (-8.7% appreciation and 1.4% income) in the first quarter.
  
• Distress should begin to rise among property owners due to poor performance and/or the inability to refinance maturing debt. This should create opportunities for investors with access to capital.