Since 2008 the commercial real estate market has been in recovery and it is no secret that a lack of stable employment progress, every segment of the commercial real estate industry will continue to be weakened.
Employment growth or decline influences the demand for housing, goods and services and tenant demand for office space. Without jobs consumers cannot seek and secure adequate housing or have funds available for other goods and services. Each segment of the economy has a direct effect on the other and the CRE industry suffers in correlation.
The results of a survey recently conducted by PricewaterhouseCoopers' Korpacz Real Estate Investor Survey, the editor-in-chief, Susan Smith was discussed in an interview with Housingwire.com about the stabilization of capital and the rate of vacancy in 2010. Commercial real estate is by and large susceptible to the changes in the economy, in particular the US employment situation.
Economists are saying that opportunities for tenants is promising for tenants renewing current leases and relocating due to lower rental rates all over the country including for the most part all property types.
Landlords are offering concessions keep current tenants and attract new ones in spite of a rise in vacancy rates. Concessions can come in the form of free rent at the inception of the lease for a specified number of months while the tenant conducts renovations or as a free office build out to the tenant's specifications.
As an example, some New York landlords are adding deals called recognition agreements to sublease which allows a subtenant to remain in the space at the sublease rent even if the over-tenant, who is often paying a higher rent, defaults.
The over stressed market for owners and lenders have created some limited opportunities for investors to acquire assets at below-peak pricing based on Moody’s REAL Commercial Property Price Index.
Based on the survey 2010 is expected to be a slow year for sales but a promising improvement from 2009. The time is right for investors given the current surplus of capital combined with a promising outlook and the willingness of banks and lenders ready to make offers as a great time to buy.