20 posts tagged “recession”

Mortgage applications slumped again last week marking the third decline in three weeks, despite the slight dip in rates moving from 5.07% two weeks ago to 5.04% last week, reports the Mortgage Bankers Association (MBA). The association also released its forecast for 2010, summarized in CPE, "the good news is that the recession is over; the bad news is that the country will continue to reel from the ramifications next year."

And according to the Outlook for the Industry report by The Council to Shape Change, the real estate finance industry will face dramatic changes in the economy over the next five to ten years: in capital markets, in borrowers, products and processes, and in technology. The Council, an independent group of 19 real estate finance industry leaders, was created by the Mortgage Bankers Association as a means of helping the Association and its members better identify and prepare for the changes that the $12 trillion real estate finance industry will likely face in the next five to ten years.

For more news and information visit Blumberg Capital Partners.

As many experts start to see a diminishing threat to our economy due to a large-scale recession or depression, the commercial real estate sector is sorting through the ashes and starting to look down the road for signs of life. According to the National Real Estate Investor Online, one indicator that should give us a sense of optimism is a recent slowing trend in the growth available office sublease space, which now sits at 113.1 million square feet nationally.  However, if recovery follows the pattern of the last two economic cycles, employment might lag behind. "It's easily a nine- to 12-month gap between the economy turning, jobs being created and space being [in demand]," stated Hessam Nadji, managing director of research services for Marcus & Millichap. He estimates for the sector to achieve net absorption of space, it will require two quarters of job growth.

A telling indicator in the commercial real estate finance sector will be the successful ventures of Developers Diversified Realty and Vornado Realty Trust which have ambitions to raise CMBS funds through the Term Asset-Backed Security Loan Facility program. "Those deals, once they go through in the fall, will signal the return of the securitization market to the best-quality assets and best-quality net operating incomes," says Nadji. "It's a very limited signal. It's not going to affect the broad commercial real estate market, especially assets averaging $10 million to $20 million in value, which make up most of the market. But it's a start."

For more news and information, visit Blumerg Capital Partners.

"The D.C. metro may in fact be in a recession," said Kevin Thorpe, vice president & director of market research at Cassidy & Pinkard Colliers, in a CPN article.  "The region has suffered three consecutive months of job losses, with the brunt of the pain experienced in Northern Virginia and Suburban Maryland." According to a new report by Cassidy, despite having managed to fair partly better than other markets due to its governmental sector, the DC metro office market is showing an 11.7% vacancy rate with an increase in overall negative net absorption and falling rents in the first quarter of 2009.

Despite sector concerns, projects that are already in the pipeline continue to be developed. Duke Realty Corp. is continuing its work on a 1.7 million square foot office complex in Alexandria, Virginia, a $1 billion project for the Department of Defense, and expects to maintain schedule to deliver in September 2001. Boston Properties Inc. is also constructing a 430,000 square foot office building at 2200 Pennsylvania Avenue, and Monday Properties is planning two new offices, one above a Metro station in Rosslyn and the other to serve as National Public Radio's headquarters in northeast DC.

For more news and information, visit Blumberg Capital Partners.

Blumberg Capital Partners, one of the nation's leading investment fund managers, today said that an analysis of commercial real estate values, leasing and vacancy trends by its staff shows that any federal bailout of the industry will require a painful, significant deleveraging to succeed.

The company said any bailout plan is working against a legacy of debt time bombs created by imprudent, unrealistic buyers who over-borrowed during the peak of the market in anticipation prices would continue rising unabated.

The Blumberg analysis shows that maturing debt obligations will come under even more stress in 2009 with leasing rates poised to drop an additional 20% to levels not seen since 2002, and with office vacancies potentially rising to 25% by the end of the year. Indeed, the nation's office market could take until 2011 to stabilize, the company's analysis shows.

"Creating a refinancing stimulus is helpful to thaw the credit freeze, but these ticking debt time bombs will make it difficult for our public officials to get their arms around this problem," said Philip Blumberg, Chairman and CEO, as well as firm's chief investment strategist. "Now, because the global economic recession has worsened over the past few weeks, coupled with layoffs at the front end of the cycle, demand for office space nationally is falling. Until companies can weather this storm and start expanding again, prices will remain low for landlords, and vacancies will rise."

To read the full article and analysis, click here.

Impact of the Economy on Investments:  Philip Blumberg of Blumberg Capital Partners discusses the influence that the economy's troubles are having on investment decisions.  For more real estate news and information, visit Blumberg Capital Partners.