Commercial Real Estate Market May Finally Start Recovery
But Roundtable Survey shows concern for refinancing challenges and impending wave of defaults
Senior real estate executives say they’re feeling optimistic that commercial real estate is beginning to stabilize.
The big question is will the other shoe drop with a stomp?
The Real Estate Roundtable’s Q2 Sentiment Survey indicates that the market nationwide may have finally hit bottom and that valuations may be on a slow crawl back up.
That’s evident in the Tucson commercial real estate market, where we’ve seen the free fall of property valuations slow. Signs of recovery may occur this year.
But disturbing trends continue. The survey says that commercial property refinancing remains difficult and defaults continue to rise.
Many building owners carry vastly reduced equity, while lenders are demanding larger down payments to refinance maturing loans. The squeeze will lead to a significant number of commercial mortgage defaults. About half of commercial real estate loans in the United States could be under water by the end of 2010.
This calls for the tenant to protect against a default or foreclosure in a new lease or lease renewal.
You don’t want to get caught in a situation where a default or foreclosure will hamper your ability to make building improvements. You could lose crucial utilities and other building infrastructure in this position.
On the other hand, a financially strapped landlord may work with you in many surprising aspects in order to have you or keep you as a tenant.
It’s a balancing act that requires you to be knowledgeable of the Tucson commercial real estate market and where it’s going.
Commercial Real Estate Group of Tucsonspecializes in representing tenants and corporate users across the United States, Latin America, Europe and Asia as a member of ITRA. For more information call 520-299-3400.
