including employment and GDP estimates—that point to a slowdown. While there was a belief in early to mid-2011 that the underpinnings of a recovery were in place, fears of inflation and a slowing
US economy are causing investors to step back and ask themselves:
“‘Are things going to be cheaper six months from now?’ Because
there are just no signs of a bounce and, if anything, a little more air
is being let out of the tires,” Grinis says.
The domestic issues, combined with the European sovereign
debt crisis, produced reverberations that also affected the CMBS
market and even caused some lenders to re-price loan terms mid-
way through transactions. RCA expects commercial real estate sales
to total more than $200 billion in 2011, a sharp increase from the
approximately $120 billion posted in 2010, but less than what mar-
ket watchers had anticipated. “We are basically back to 2003 or
2004 levels of activity, which was considered a pretty healthy market
back then,” Fasulo says. “But at the peak in 2007, we did well over
half a trillion dollars in deals nationwide.”
In its most recent report on the US investment sales market,
RCA reported that while the $13 billion in commercial property
sales during July was still positive and roughly equaled the monthly
average for the first five months of 2011, the 16% increase in vol-
ume was the lowest recorded since sales growth turned positive in
Fasulo contends that the current market is
nearing its apex in terms of transactions it
can support without the return of the CMBS
market as a key player. “That is going to be
the key in terms of whether we will see a con-
tinued recovery in investment activity and
values,” he says.
December 2009. The firm speculated that the slowing of the recovery in investment sales was likely due to the greater economic turbulence and pullback in CMBS originations
that began this summer.
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The market
expected
a small
resurgence
of CMBS
deals,
but the
reception wasn’t sufficient
to make them happen.”
JAHN S. BRODWIN
FTI Consulting
Tenant Representation / Capital Markets / Project Leasing / Corporate Services
Property Management / Project & Development Services
He attributes the pullback in CMBS transactions from earlier, lofty projections by analysts in part to the crisis in confidence that
now plagues the economy as well as pricing
