rebound. “If there truly is momentum in
this recovery and we start to see significant improvements in corporate profits,
more significant improvements in job
creation and not a letdown overall in the
Source: Grubb & Ellis Q2 2010 Philadelphia: Office
Absorption (350,000 sf)
Avg. Asking Rents $27.94 psf
kets and foresee further declines in 13
others, by as much as 100 basis points.
In particular, investors surveyed by PwC
cited potential declines of 100 basis points
in near-term overall cap rates in the
Manhattan office, national warehouse and
national apartment sectors. For the 18
individual office markets in the survey,
average overall cap rates remain lower for
central business district submarkets than
in the suburbs. This suggests that investors
continue to see less risk and better invest-
ment potential in CBD assets.
Prudential Commercial Real Estate
Source: CB Richard Ellis
Absorption 186,524 sf
Avg. Asking Rents $3.64 psf
Under Construction 667,000 sf
Build your commercial real estate portfolio on a Rock Solid® foundation.
Source: CB Richard Ellis Change from
Q2 2009 Q2 2010 San Francisco: Office
Absorption (208,229 sf)
Avg. Asking Rents $30.60 psf
Under Construction 200,000 sf
expansion, that’s where we’ll see investors begin to gamble a little more with
value-add,” Thorpe says.
As it is, though, would-be buyers in general are still doing more looking than
reaching for their checkbooks. “The
unknown speed and strength of the recovery have many in the industry anxious,”
comments one investor in the latest
PricewaterhouseCoopers Korpacz Real
Estate Investor Survey. Combine that with
a relative dearth of institutional-grade
assets on the market, and the result is what
the report calls “calm” deal flow.
However, a majority of commercial real
estate investors see light on the horizon in
the form of shrinking cap rates. Average
cap rates fell in 17 of the survey’s 30 markets over the past quarter, with declines
ranging from two basis points for San
Diego office to 58 for Pacific Northwest
properties in the same sector. Over the
next six months, survey respondents
expect cap rates to hold steady in 18 mar-
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expert by your side.
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