Survey: Real estate recovery expected in ’11

Manhattan West, a condominium project in Las Vegas, is an example of the stalled national commercial real estate market. (AP Photo by Jae C. Hong)

By M. Scott Carter
Dolan Media Newswires

Oklahoma City — The national commercial real estate market is still a couple of years away from recovery and needs more debt financing, according to a new industry survey.

More than 50 percent of the 1,000 real estate professionals surveyed nationwide remain pessimistic about when the country’s commercial real estate sector will recover, according to the most recent Pulse Poll by LoopNet, which operates one of the country’s largest online commercial real estate marketplaces.

“There has been a sharp increase — up 13 percent to 46 percent — in those expecting the recovery to wait until 2011 or later. And nearly one in five expect to wait until 2012 to see a recovery in transaction volume,” according to the survey.

Additionally, the survey listed the lack of access to debt financing as the No. 1 barrier to market recovery. Other factors were high asking prices by investors and brokers, and uncertainty about future cash flow.

Those numbers don’t surprise some industry leaders.

“That’s a fairly accurate picture,” said Victor Guarry, senior vice president for commercial real estate at Bank of Oklahoma. “The secondary market for permanent financing has yet to return. Some of the long-term financing has still not come back.”

Many banks, Guarry said, are less interested in making speculative loans.
“Apartments are still about the only product that you can get long-term permanent financing under reasonable terms,” Guarry said.

The problem, one local chamber of commerce official said, is that many investors are being forced to deal with national banking institutions.

“You’re dealing with national banking institutions and they are going to have national policies, which are reflective of the national economy,” said David Burnett, economic development director of the Midwest City Chamber of Commerce. “I’m not sure we are seeing all the same problems here in Oklahoma.”

Many Oklahoma City area banks, he said, are working together to develop financing for commercial projects.

“Look at BancFirst and First National of Midwest City,” Burnett said. “They did a combined loan around $25 million to make the Midwest Regional Medical Center happen.”

And although Burnett and Guarry agreed that it could be a few more years before the market recovers, both said Oklahomans are in better shape than the rest of the country — in some areas.

“Locally, our financial institutions are helping fund projects that make sense,” Burnett said. “But there’s not a lot of help available for the highly speculative.”