The National Real Estate Investor reported this month that “Amid Gloom and Doom, 2009 Holds ‘Best Buying Opportunities Ever’”. Focusing on the Commercial Real Estate Industry and by interviewing Bernard Haddigan, Ben Johnson finds that confidence is down, but hopes are up.
In a recent survey of more than 1,100 institutional and private investors, NREI and Marcus & Millichap found the lowest level of confidence since the survey began five years ago, with 51% of respondents expressing plans to increase their commercial real estate allocations in 2009 versus 62% a year ago.
‘Going into this summer, we’ll see a huge surge in delinquencies and foreclosures on commercial real estate, much like the huge wave in residential. Once that happens, the market will start getting some direction; it’s going to look like the early to mid-1990s with a lot of foreclosed real estate that needs to be cleaned up. Will there be an RTC (Resolution Trust Corp.) II? I don’t know, but right now the market doesn’t have a lot of direction. It had very strong direction from 2002 to early 2007. But for the last year and a half, all that’s been trading has been the safe bets and the quality deals.’
‘Some people think I’m too much gloom and doom, but I’m basically an optimist. I see the business running in cycles. As a long-term participant in the business, I think the next three to five years are going to be the best buying opportunity that any of us have seen in our careers. There are a lot of people who are very excited, who have been disciplined and are sitting on cash for this opportunity. I know people who have been waiting for this window for years, and it’s finally coming.’
Haddigan: Wasn’t there a line from the movie Animal House, “Start drinking early”? I’ve heard another line, “It will be heaven in 2011.” I’m not predicting the sky is falling. As a buyer, I think heaven is going to be the summer of 2009, when the buying opportunities are going to be on the distressed side. As an owner, it’s the opposite. It is going to get worse before it gets better.
