As we begin the last quarter of the year, we are beginning to see an increased amount of activity in the market by both sellers and buyers. You may have heard of the term “deal fatigue” before but I think what we are seeing now is a case of “deal anxiety”. With the realization that values have declined and may continue to decline for some time, sellers are coming to grip more and more to true market values. At the same time, buyers are realizing there are some very good deals out there that will allow them to lock in good values and low cost financing (if they can get it) and to position themselves strongly for a future rebound. Having said that, the majority of the deals that are getting done are what’s been termed as “trophy or trauma” deals. That is, deals that either are very good pieces of real estate or those that are truly distressed and the value opportunity is too good to pass. The increased in transaction activity has not come with significant increase in capital liquidity though. Most deals are still involving seller financing, assumptions, or all cash transactions.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

3 Responses to “Deal Anxiety”

1. Martin Bernstein says:

   October 20, 2009 at 12:58 am

   I agree. There are lots of distressed properties out there that are too good to pass.
2. Carl Beltran says:

   October 20, 2009 at 1:25 pm

   Sales volume are up but still below pre-crash levels. The latest numbers from Moody’s CPPI indicate a further 3% drop in commercial property values in August marking a 41% drop from the peak. Accdg to Goldman Sachs, commercial real estate prices are to fall additional 17 percent in the fourth quarter of next year, due to scarce credit, rising vacancy rates and the risk of forced sales.
3. munish ramchandan says:

   October 22, 2009 at 2:30 pm

   accdg to fed bank – the weakest sector was commercial real estate, with conditions described as either weak or deteriorating across all districts…. manhattan’s office vacancy rate continued to climb in september and for the third quarter overall, while asking rents continued to drop and were again down about 20 percent from a year earlier not counting increased concessions by landlords. – i say it may be true for manhattan but not everywhere else.

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