Commercial real estate deal drought in Silicon Valley stuns industry - Houston Business Journal:

glafirarynyxu.blogspot.com
All told, a mere $9 million in office transactionsz traded during the first quarterr inSilicon Valley, a 98 percent drop compared with the first quarter of 2008 when $716 million was The star performer was the industrial market, with $67 millioh traded. Still, that was down about 65 percent from ayear ago. The othert two sectors — retail and multifamily — were off by 56 percen and 96 percent respectively, as reporte by LoopNet Inc. in partnership with Real CapitalAnalytices Inc. LoopNet tracks sales of $2.
5 million or The South Bay was not alone themarket “virtually stopped” across the with some regions registering zero “It was worse than anyone anticipated,” said Hessam Nadji, managinh director of research services for Marcus & “It was almost impossible to predict the freezingv of the market.” Experts hope the low numbera mean the bottom is near. A LoopNet surve released May 27 revealed that 40 percentt ofits 1,500 members who responded to the questiob when the market will turn believe it will happeb in 2010, but more than a quartef said it may not happen until 2011.
The survehy reveals an interesting skew, said Mike Manning, LoopNet’s marketing vice president. “In the breakdown between ownerxand investors, the owners are far more he said. “That’s partly why transactions have ground to a there aredifferent expectations.” Don Little, seniod vice president of Opus West Northern said the gap between buyers and sellersx is unbridgeable in the curreny market. Sellers are not willing to come downin price, and buyer do not have access to capital that will supportf the future value of the “(Assets) will trade for the cost of or less,” Little said.
“That means the top 20 or 30 percenr of value will getknocked off. We will have blowm through the equity and will be in the Not much has changexd as the second quarter draws to a Eric Fox, senior vice president for CPS Corfac International, said the handfull of properties on the market have gotteh very little interest. “Sales will be relativel y stagnantuntil there’s a poin t of distress,” he said. “I don’t know when that will happen.” The market is not thers yet. Owners remain in control of theid properties with foreclosures in the commerciapl sector a rarityso far.
“There’s not a lot of desperatio n onthe sellers’ side,” Littlse said. While that could be read as a good it really only perpetuatesthe situation. Fox said that owners aren’ty willing to discount on performinb properties, meaning tenants are paying their rent and the debt isbeinbg serviced, to ensure a sale. “Iv property is performing at ahigh level, the buyerds aren’t there,” Fox said. As the recession deepens and joblosses accelerate, Nadji said owners will reconsiderf their options. “Hanging on doesn’t fit what they need to he said.
“There’s a lot of owners with maturing debt that with the credit crunch will not be able to refinance with favorableenough terms. So they are decidintg to sell the property.”