Bring on the bears. The brand-new 2008 State of the Market Survey from DLA Piper shows \u201ca new record level of bearish sentiment,\u201d 90 percent, among the survey\u2019s 424 respondents, all C-level and other senior executives in commercial real estate. More specifically, in a last-minute supplementary survey following the Fannie-Freddie\/Lehman Brothers\/Merrill Lynch\/AIG crisis, a majority of respondents, 60 percent, said this near meltdown of the capital markets has surpassed the 1989-to-early-1990s savings and loan debacle as the event having the greatest impact on commercial real estate in the past 20 years. Further, a strong majority of respondents don\u2019t believe that the situation has bottomed out yet; nearly 85 percent expect to see the real estate market stabilize no sooner than 2010. == The main factor cited by the bears (71 percent) was \u201cContinued fallout from credit crisis,\u201d such as unfavorable financing terms and a lack of available debt. Nearly another quarter named \u201cSluggish economic\/job growth.\u201d In addition, nearly half (46 percent) of respondents believe that it will be 2011 at the earliest before securitized lending activity returns to prior levels. Perhaps significantly, one in six think that securitized lending transactions will never return to where they were. \u201cWe don\u2019t really know yet how deep or broad the fallout will be,\u201d Jay Epstien, chair of DLA Piper\u2019s U.S. real estate practice, told CPN. \u201cIt\u2019s too early to say with any sort of conviction that this credit crunch situation\u2019s impact will be worse than the S&L crisis,\u201d though he understands why survey respondents might feel that way. Epstien also commented that plenty of people in commercial real estate right now weren\u2019t in this business 10 years ago. \u201cThere are a lot of people taking this survey who have never seen the downside\u201d of the real estate cycle, he said. As always seems to be the case, however, some bulls remain. Of the 10 percent of respondents who professed confidence in the real estate market, exactly half cited \u201cInvestment opportunities created by market correction\/credit crunch.\u201d Handfuls of other optimists noted an expected rebound of the U.S. economy, foreign investment and an abundance of equity capital available for investment as reasons for hopefulness. Nearly 58 percent of respondents predict that interest rates will rise slightly in the next six months, while nearly 32 percent expect no change. More significantly perhaps, a similar majority (nearly 63 percent) expects cap rates to trend upward over the next six to 12 months. \u201cThe extended period of cap rate compression\u201d appears to be over now, Epstien said, heralding a return to a more logical, more traditional situation regarding cap and interest rates.<\/p>\n","protected":false},"excerpt":{"rendered":"
Bring on the bears. The brand-new 2008 State of the Market Survey from DLA Piper shows \u201ca new record level of bearish sentiment,\u201d 90 percent, among the survey\u2019s 424 respondents, all C-level and other senior executives in commercial real estate. More specifically, in a last-minute supplementary survey following the Fannie-Freddie\/Lehman Brothers\/Merrill Lynch\/AIG crisis, a majority…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1003853183","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n