Commercial: Experts optimistic despite tight credit conditions

WASHINGTON – April 22, 2009 – Senior real estate executives believe market conditions in the income-producing real estate sector – encompassing office buildings, shopping malls, warehouses, hotels, and apartment buildings – are getting better, even though conditions eroded a bit in the second quarter, according to The Real Estate Roundtable Sentiment Survey for second quarter 2009.

Nearly 60 percent of the 120 survey respondents say that they expect conditions in the real estate market to get better within a year. This view caused a slight uptick in the Overall Q2 2009 Sentiment Index, which at 41 is up from the previous quarter’s score of 38 and its low point of 33 six months ago.

Most executives surveyed are troubled by the lack of access to capital. Eighty-eight percent of respondents think it’s harder to get a loan compared to a year ago, though 69 percent of respondents believe the situation will turn around in the next year. Likewise, 86 percent of respondents think equity financing has deteriorated from a year ago, yet 68 percent of respondents predict it will improve in the next year.

“There is access to both equity and debt, but they’re expensive. Banks are being very selective and are trying to pick survivors,” said one survey respondent.

Roundtable members’ portfolios contain over 5 billion square feet of office, retail and industrial properties; over 1.5 million apartment units; and in excess of 1.3 million hotel rooms. Participating trade associations represent more than 1.5 million people involved in virtually every aspect of the real estate business.

Source: Real Estate Roundtable (04/20/2009)

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