Commercial real estate report: “Sober year for 2010 and maybe not much better for 2011’’

Bad news from commercial real estate source CoStar Group:

A record 900 people participated in this year's Emerging Trends in Real Estate 2010 survey by PricewaterhouseCoopers and the Urban Land Institute. The results won't do much to either comfort the pessimists or encourage the optimists.

Across the board, investor sentiment was at or near record lows. Survey respondents predicted that vacancies will rise and rents will fall in all property types before the market hits bottom next year. Only apartments rated as a "fair" prospect, with all others sinking into the fair to poor range, with respondents especially bearish on retail and hotels. Development prospects ranged from "dead" and "abysmal" to "modestly poor."

"Not surprisingly, the overwhelming sentiment of Emerging Trends interviewees remains decidedly negative, colored by impending doom and distress over prospects for an extended period of anemic demand and costly deleveraging," the report said.

On the other hand, value declines of 40% to 50% off 2007 peaks will present once-in-a-generation opportunities, respondents said. "A sense of nervous euphoria is growing among liquid investors who can make all-cash purchases" from distressed sellers and banks, said ULI Senior Resident Fellow for Real Estate Finance Stephen Blank.

I listened in sporadically to a Web conference about this report on Thursday and the presenters didn't have too much flattering to say about Tampa Bay.

It seems we're not an international gateway. Neither are we a job creation powerhouse with all the requisite cultural amenities and public transportation. We build too many homes in fringe suburbs in a time of rising energy prices. 

"Places that accommodate mass transit will be much better off than places that don’t,’’ said Jonathan Miller, a consultant with Pricewaterhouse, in reference to a question about Tampa Bay.

Comments

[Confused]

Tampa has become an enigma to me. When I first moved here 20 years ago, it really did seem like the next great city, but now? The town still seems to have all the ingredients to be "the next great city." Leaders just can't seem to agree on an economic direction, it struggles to attract meaningful job growth and the area general maintains a xenophobic undercurrent that contradicts its history of an international port and destination.

Look at the volume of port traffic that we have now and compare it to 1920. Seemingly every port in the country has exploded with the increase in international trade...except ours. Twenty years later, the only direct European air route Tampa has is to London, yet Sarasota, Manatee and Pinellas beaches are loaded with European vacationers and property owners. Most fly in to Orlando and drive the additional hour to get to their final destinations.

There is no driving economic base here now that housing and development is asleep and there seems to be little direction. Anyone have any suggestions?

[James Thorner]

You're right. The Gulf of Mexico should be our lake. We should own it --- and most of the shipping in and out of Mexico and central America, not to mention Panama Canal business.

[Tino]

Every mass transit system created in the past 25 years has had a negative financial impact on its community. These systems do nothing but add to the region's debt (and may actually make traffic WORSE, as shown by the Tampa trolley system).

I would love to see Mr. Miller's factual evidence to the contrary.

[James Thorner]

Tino, I think Miller's point was that corporate recruiters value mass transit. But I'm not sure how true that is. When I've seen surveys of why a company came to a city, it's usually the work force quality/quantity that's paramount. Proximity to an international airport/good interstates ranks more highly than trolleys and buses. Look at Research Triangle Park in N.C. I think commuter rail has value for the long term - and we should start planning now - but it's no jobs panacea.