The PricewaterhouseCoopers Korpacz Real Estate Investor Survey shows the commercial real estate market has kicked a growing number of investors into survival mode. Investors do not expect a rebound until well into 2010, according to the survey's Amy Olson.
"The investors really feel like we have not bottomed out yet, but they're still hopeful, and investors are working this year — in 2009 — on preserving the value that they have in their assets. 2009 is going to be slow all the way around, and 2010 — they're starting to feel like that may be the year when things, you know, start picking up again. More than one person has told me these are extraordinary times, and they can't really compare it to anything! But we have to get to the economic turnaround before we can get to the commercial real estate turnaround."
Property owners are faced with limited financing options and declining tenant demand. In fact, Olson says tenants are in the driver's seat.
"Absolutely. The tenants are sort of getting the good end of the deal here because what the landlords want to do is keep tenants in their buildings, as well as get more tenants. And they are willing to drop rents and provide concessions in order to keep their buildings full. They need to keep their bottom lines strong, as strong as they can during this time, and they're going to, you know, go to lengths to do that."
Olson says investors feel Houston's office market is faring better than in other cities. Office owners who are able to remain financially strong will be better positioned to capitalize on buying opportunities later.
Ed Mayberry, KUHF Houston Public Radio News.