Dr. Sam Chandan, President and Chief Economist of Real Estate Econometrics and an adjunct professor of real estate at the Wharton School of the University of Pennsylvania, recently gave a presentation on what he believes 2010 holds for the commercial real estate market. The upshot of his findings:

  • Though the economy remains fragile, we are beginning to recover from the depression scenario
  • The economy will need support the next few years
  • There will be some modest growth in spending in 2010
  • Multifamily is not faring well as the greatest demographic for renters is in the 21-29 year age range; this group is facing 16% unemployment and living back at home or pursuing advanced degrees
  • The real estate sector of the economy has declined sharply from 2007 highs
  • The first time home buyer program undercut the industry
  • NOI will stabilize over time; last recession it took 4 years to stabilize
  • Transaction activity will be primarily concentrated in the REIT sector and private buyers
  • Private buyers will be seeking properties in the $1-3,500,000 price range
  • Prices will stabilize and credit availability will be more robust
  • Retail operations will remain challenging
  • Still a disparity between buyers and sellers but the gap is narrowing
  • Investors waiting for the flood of distressed properties have been disappointed
  • FDIC has instituted a variety of programs to avert flooding the market
  • Lenders are exercising the extend and pretend option
  • The CRE section of the economy will revive with the creation of sustainable jobs

Dr. Chandan’s personal website is www.chandan.com.

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