KORPACZ REAL ESTATE INVESTOR SURVEY by xke10509

VIEWS: 0 PAGES: 6

									Current Issue Highlights

NATIONAL HIGHLIGHTS
A few glimmers of economic improvement have been noted recently,
such as better-than-expected employment numbers in November 2009.

Consumers and businesses remain anxious about spending.

Investors believe that the road to recovery for both the U.S.
economy and the commercial real estate industry will be a long
and bumpy one.

Refinancing difficulties could easily sidetrack the U.S. economic
recovery and detour the recovery of commercial real estate.

OVERALL CAP RATE (OAR) ANALYSIS
The average OAR increased for all Surveyed markets except six
over the past three months.

The amount of the OAR increase has declined.

Investors are still concerned about the near-term performance of
the real estate industry.

VALUATION ISSUES
Tenant improvement (TI) allowances vary across each main property
sector, as well as across geographies.

TIs are commonplace and vary based on whether the space being
leased is shell space (raw, new space) or existing, second-
generation space.

The number of months assumed vacant on rollover has increased in
all 28 Survey markets over the past year.

TECHNOLOGY NEWS AND TRENDS
Real estate is at the forefront of the sustainability initiative.

One technology contributing to real estate’s sustainability
efforts is document digitization.

In the coming years, everything from acquisitions due diligence to
site inspections to the overall tenant experience will be affected
by real estate sustainability initiatives.
ECONOMIC NEWS
The buy-hold-sell barometer in Emerging Trends in Real Estate®
2010 suggests that next year will be a great time to buy
commercial real estate assets.

2010 is expected to present many challenges as rents continue to
decline, vacancies rise, and capital remains limited.

Many investors who held investments, overleveraged, or bought late
in the cycle now must face difficult tasks.

REAL ESTATE CAPITAL MARKETS
Over the coming year, commercial real estate pricing will be more
influenced by what goes on in Washington, DC than by what happens
with rents or occupancy rates.

Policy makers in Washington, DC control much of what else will
influence property pricing over the near term.

Government policy has already had a positive influence on the industry
and will likely determine the shape of its recovery.

RESIDENTIAL DEVELOPMENT LAND - Special Report
Public builders, flush with cash, have since re-entered some
markets.

Since public builders are in the home-building business, lots are
being acquired to build on rather than bank.

In certain markets, new home construction and sales in existing
developments have accelerated.

DOMESTIC SELF-STORAGE MARKET
Although self-storage revenues have declined over the past
several months, they remain relatively stable compared to other
asset classes.

For the most part, value declines to date are due to overall cap
rate expansion.

Overall, investors remain bullish on investing in self-storage
assets.
NATIONAL REGIONAL MALL
The vacancy rate for regional and super-regional malls rose in the
third quarter of 2009.

Very little quality product is available for sale.

NATIONAL POWER CENTER
Power centers ranked as one of the least favored core property
types in Emerging Trends in Real Estate 2010.
                                                                   2
Landlords continue to focus on asset management and value
preservation.

NATIONAL STRIP SHOPPING CENTER MARKET
Centers anchored by dominant supermarket and drugstore chains
should outperform the retail sector as a whole in 2010.

Investors are using much higher overall capitalization rates in
their analyses now than they were a year ago.

NATIONAL CBD OFFICE MARKET
Landlords are dealing with diminished tenant demand, rising levels
of sublease space, and declining rental rates.

Owners with low leverage positions on existing assets will be able
to withstand declining rental rates better than highly leveraged
operators.

NATIONAL SUBURBAN OFFICE MARKET
Some of the highest gains in vacancy during the past year were
reported in Los Angeles Tri-Cities, Palm Beach, and San Francisco.

Over the next 12 months, participants expect property values for
suburban office product to decline.

ATLANTA OFFICE MARKET
Negative net absorption is surging due to diluted tenant demand
and incessant new construction.

Overzealous office development and falling rental rates concern
investors.

BOSTON OFFICE MARKET
Most investors remain nervously optimistic about this market.

Sublease space nearly tripled in the CBD over the past year.

CHARLOTTE OFFICE MARKET
Sales activity is at a standstill.

The majority of Survey participants anticipate overall cap rates
to increase in this market over the next six months.
CHICAGO OFFICE MARKET
Most participants believe that market conditions favor buyers.

Over the next six month, most Survey participants expect OARs to
increase in this market.

DALLAS OFFICE MARKET
In spite of aggressive landlord incentives, lackluster tenant
demand persists.
                                                                   3
Investors are implementing more conservative underwriting in their
cash flow analyses.

DENVER OFFICE MARKET
Landlords are offering attractive concession packages to entice
new tenants and retain existing ones.

Given such favorable market conditions for tenants, some deals are
being signed in certain submarkets.

HOUSTON OFFICE MARKET
Rising unemployment is still stifling demand for office space.

This market's average overall cap rate has risen steadily since
the first quarter of 2008.

LOS ANGELES OFFICE MARKET
Some tenants are able to capitalize on lower rental rates,
liberal concessions, and abundant space options.

The average overall cap rate has risen for the fifth straight
quarter.

MANHATTAN OFFICE MARKET
Many jobs have been lost here since the recession started.

A lack of "normal" sales activity continues to make pricing assets
in a deleveraging environment very difficult.

NORTHERN VIRGINIA OFFICE MARKET
This market continues to benefit from the leasing of space by the
U.S. General Services Administration (GSA).

Free rent offered to tenants has nearly doubled in the past year.

PACIFIC NORTHWEST OFFICE MARKET
Recession and banking troubles continue to negatively impact the
performance of this market.

Landlords have become much more willing to provide free rent.
PHILADELPHIA OFFICE MARKET
Lackluster leasing levels have placed increasing pressure on
landlords to reduce rents for both new and existing tenants.

Rising vacancy illustrates the impact of continuous negative
absorption.

PHOENIX OFFICE MARKET
Over the past 12 months, free rent has risen.
                                                                  4
Well-positioned tenants are executing both renewals and new
leases.

SAN DIEGO OFFICE MARKET
Despite a favorable environment for tenants, leasing activity is
down on a year-over-year basis.

Many investors believe that there will be good buying
opportunities at advantageous pricing in the near term.

SAN FRANCISCO OFFICE MARKET
Market fundamentals are not expected to recovery too quickly.

Weaker tenant demand has prompted some owners to lower rental
rates in order to secure tenants.

SOUTHEAST FLORIDA OFFICE MARKET
Like many other major office markets, the bulk of oversupply
problems reside in the suburbs.

Market fundamentals have shifted in favor of tenants.

SUBURBAN MARYLAND OFFICE MARKET
Tenants looking for space are finding generous concession
packages.

One top concern is the unknown of what the next big job-growth
engine will be for the local economy.

WASHINGTON, DC OFFICE MARKET
This ranks as the number one market in Emerging Trends in Real
Estate2010.

Leasing activity has slowed while sublease space has grown.

NATIONAL FLEX/R&D MARKET
Most participants believe that buyers dictate market pricing.

After six consecutive quarterly declines, this market's average
initial-year market rent change rate increased this quarter.
NATIONAL WAREHOUSE MARKET
Performances vary greatly across individual metro areas.

Several warehouse property owners have defaulted on loans, been
foreclosed on, or declared bankruptcy.

NATIONAL APARTMENT MARKET
Tenant demand remains fragile.

                                                                   5
The average overall cap rate has increased over the past year.

REGIONAL APARTMENT MARKETS - NEW
This quarter, both the Mid-Atlantic and Pacific regions debut in
the Survey.

Many investors believe that apartment fundamentals in Washington,
D.C. will outperform other markets.

In the Pacific region, investors are still anticipating rent loss
in the initial year of their cash flows.

NATIONAL NET LEASE MARKET
Sales activity remains sluggish across all property types.

The current priority among most investors is to seek deals with
investment-grade tenants.

NATIONAL MEDICAL OFFICE BUILDINGS (MOB) MARKET
High-quality assets located on hospital campuses are back in vogue
among both tenants and investors.

Sales activity, especially for stabilized, well-located assets, is
beginning to gain momentum.

NATIONAL DEVELOPMENT LAND MARKET - Semiannual Report
Prospects for homebuilders can only improve.

Next-generation projects will orient to infill, urbanizing
suburbs, and transit-oriented development.

Smaller housing units - - close to mass transit, work, and 24-hour
amenities - - gain favor among investors over large houses on big
lots at the suburban edge.

Over the next 12 months, Survey participants expect development
land property values to decline.




                                                                   6

								
To top