Commercial Real Estate: Balto-Wash Corridor Outlook
By: Myles, October 22nd, 2008
Real estate investors and professionals say financial and real estate markets in the U.S.will hit bottom in 2009 and continue to slump for much of 2010, according to a report released October 22, 2008, by the Urban Land Institute (ULI) and PricewaterhouseCoopers LLP (read the full report), and as reported in the Baltimore Business Journal.
We have seen what the Wallstreet-types think about the overall commercial real estate market, as we have reported on it many times within this Blog, but what we know is that ultimately ALL real estate is local.
So what is in store for the Baltimore-Washington corridor? We may have an insight into this most important question. The annual industry outlook includes responses from more than 600 real estate experts, including investors, developers, property company representatives, lenders, brokers and consultants.
CONCLUSION:
- The report projects 15 percent to 20 percent losses in real estate values next year from the mid-2007 peak on a national level.
- In general, respondents say financial institutions will continue to be pressured into moving bad loans off balance sheets, using auctions to speed up the process.
- There is an unprecedented avoidance of risk. Only when financing gets restructured will pricing reconcile, giving the industry a point from which to start digging out of this hole.
So what sector(s) are the deals going to happen in? To find out, specifically, read on:
- According to the report, moderate-income apartments in core urban markets near mass transit offer the best investment opportunities, a consistent trend from the previous year.
- Distribution/warehouse facilities were the next best investment, according to the experts.
- Downtown office space is expected to outperform suburban markets, according to the report, and
- Retail development is generally near the bottom but still has farther to fall.
- The housing industry faces more foreclosures and no rebound in values for 2009, according to the report.
In terms of investment prospects for 2009, within the Baltimore-Washington, D.C. area, and beyond, how are things looking for each city:
- D.C. is the No. 3 city in the country.
- Baltimore was not included in the report’s “Cities to Watch” list.
- Seattle (No. 1)
- San Francisco (No. 2) top the list, beating
New York City, which has traditionally topped the list and slipped to No. 4.
The Bottom-Line: Savvy investors will be able to cash in on the inevitable recovery, according to experts. Money will be made on riding markets back to recovery and releasing properties, not on financing structures, according to the report.
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