Poll: Real estate industry pessimistic on recovery

Los Angeles Online commercial real estate marketplace LoopNet announced on Tuesday its just-completed fourth quarter LoopNet Pulse showed a declining number of real estate professionals expect an economic recovery in 2010.

Compared with the previous survey, conducted in July 2009, in which 66% of respondents expected the volume of commercial real estate transactions to rebound in 2010 or earlier, the fourth-quarter survey found that number has decreased to just over 50%.

However, while the July survey showed just 1/3 of respondents expected the recovery to wait until 2011 or later, the 4Q survey showed a sharp increase (up 13% to 46%) in those expecting the recovery to wait until 2011 or later. 

Nearly one in five expect to wait until 2012 to see a recovery in transaction volume. When cut by industry role, investors are slightly more pessimistic, with a median expectation of recovery timing that is approximately one quarter later than that of brokers or commercial property owners.

Despite the declines in pricing seen over the past quarter, respondents’ expectations for future pricing declines remain almost unchanged from the last survey. At the beginning of the third quarter, 52% of respondents expected to see future declines of 11% or more. At the beginning of the fourth quarter, that number is 53%, suggesting that future expectations of cash flow and value have continued to deteriorate (or at best remain uncertain), preventing pricing from stabilizing even after the declines in the third quarter

Expectations for when pricing will bottom out mirror expectations for when transaction volume will recover: second quarter 2010 was most common choice, but more than 10% said 2012.

The survey found that lack of access to debt financing is the No. 1 barrier to market recovery. High asking prices were the No. 2 reason cited by investors and brokers, while owners considered this less of an issue.

Uncertainty about future cash flows remains a significant factor, the survey found.