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A new mood in 2011 January 4, 2011

Posted by Erik Swanson in Articles, Blogs, Research/Data, Retail News, Retail Sales Comps, Uncategorized.

This morning our office held the first general sales meeting of the year. There seemed to be a sense of optimism (albeit guarded) about the general direction of the market heading into 2011. Even despite the holidays, many brokers reported an increase in activity in the late part of the fourth quarter. This matches our own experience…over the last few we’ve written and received multiple offers on our listed inventory. We’re not counting chickens anytime soon, but this activity is an encouraging sign of a different mood in the market.

Perhaps it’s too early to tell if we’ve turned the corner but there are many voices in the media pointing to gains. Dr. Sam Chandan, chief economist at Real Capital Analytics put it this way:

“Despite disconcertingly weak economic and labor market outcomes, investor optimism about the sector’s asset price trajectory has supported more intense bidding for properties, giving traction to the process of price discovery and driving cap rates lower for well-tenanted properties in every sector. Absent a derailment of investor sentiment or a sharp downside deviation from the baseline economic and capital markets outlook, the stage is set for further gains in investment activity across a broader range of the nation’s markets in the New Year.”

And Brett White, CEO of CB Richard Ellis Group said this about real estates leading indicators:

Those are 100 percent positive at the moment. Vacancies have clearly peaked in almost every market and every asset class. Rental rates we believe now have troughed in nearly every market and every asset class. That’s not to say that you’re not going to see a couple quarters of vacancy rates perhaps edging up a 10th of a percent in a few markets, and you’re not going to see rental rates perhaps go down a percent or two in a few markets, but generally speaking the vast majority of major markets now across the U.S. are turning positive both on vacancy rates and rents. (click here for full Washington Times article)

In the coming days, ReCapNW will be post 2010 retail investment sales comps, construction and leasing data for the Puget Sound market. After a preliminary look at the numbers it’s easy to see that we’re at or very near the bottom. And I’m optimistic that the recent activity isn’t reflecting a bounce and market trajectory will remain solidly upward.



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