Running on Square Feet

In the most recent Loopnet Pulse Poll, 1500 Owners, investors and brokers were asked to time the recovery, which was defined as the point in time when commercial real estate transaction volumes will increase.

45% of respondents answered 2010; 35% said 2011 and 20% said 2012. Data shows show that transaction volume increased 40% in Q4 2009 over Q3 2009. Although Q4 2009 was 24% lower than Q4 2008, that result was much better than the 65% drop in the Q1-3 2009 period as compared to Q1-3 2008.

When asked to name the biggest obstacle to completing transactions, 50% of respondents cited debt financing and 25% referred to high asking prices. Interestingly, 50% of the responses from the investor group said high asking price was the biggest obstacle.

60 % of the respondents believe that commercial prices will bottom in 2010. However, only 45% expect that transaction volumes will increase in 2010. This discrepancy suggests that there will need to be a period of stable pricing before buyers will reenter the market in earnest.

Note: Moody’s/ REAL CPPI (commercial real estate pricing index) ticked up slightly in November. Does this represent a change in sentiment that will result in buyers taking action?