Comm. Real Estate Won't Hit Bottom Till 2010

By Tony Wilbert, Wilbert News Strategies LLC

WASHINGTON (June 18, 2009) - The public commercial real estate likely hit bottom in March, which means the remaining 90 percent of the market that is private won't bottom out until next year, according to Steve Wechsler, president of the National Association of Real Estate Investment Trusts.

The property market's public sector, or publicly traded REITs, typically leads the private real estate market by four to six quarters, Wechsler told the National Association of Real Estate Editors, which kicked off its 43rd Annual Real Estate Journalism Conference here today. NAREIT's co-authored REIT index hit a low point on March 6, dropping 75 percent from its high on Feb. 7, 2007, according to Wechsler.

"We will not hit bottom in the commercial real estate market in general until some time next year," he said.

Wechsler estimated that the total U.S. property market is valued at about $6 trillion, with public REITs accounting for 10 percent of that.

Another panelist, Jamie Woodwell, a commercial real estate researcher at the Mortgage Bankers Association, said the current real estate recession differs from the 2001 recession. In 2001, the dot-com bust resulted in large amounts of office vacancies while the retail market remained relatively stable.

This time around, Woodwell said, retail is more closely following unemployment numbers and being hit harder than the office market. "More firms still have [office] leases in place," he said.

But things will change, Woodwell said. "Real estate is a very cyclical business, especially now."

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