Commercial real estate deal drought in Silicon Valley stuns industry - Puget Sound Business Journal (Seattle):

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All told, a mere $9 million in offices transactions traded during the firsyt quarter inSilicon Valley, a 98 percent drop compareds with the first quarter of 2008 when $716 million was sold. The star performer was the industriall market, with $67 million Still, that was down about 65 percenrt from ayear ago. The other two sectord — retail and multifamily were off by 56 percent and 96percentg respectively, as reported by LoopNet Inc. in partnershipo with Real CapitalAnalyticas Inc. LoopNet tracks sales of $2.5 million or more. The Southb Bay was not alone — the market “virtually across the country, with some regions registeringgzero transactions.
“It was worse than anyone saidHessam Nadji, managing director of research servicee for Marcus & Millichap. “It was almost impossible to predict the freezing of the Experts hope the low numbers mean the bottom is A LoopNet survey released May 27 revealed that 40 percenyt ofits 1,500 members who responded to the questiomn when the market will turn believe it will happenj in 2010, but more than a quartert said it may not happen until 2011. The survet reveals an interesting skew, said Mike LoopNet’s marketing vice president. “In the breakdown betweehn ownersand investors, the owners are far more he said.
“That’s partly why transactions have groundr toa halt, there are differen expectations.” Don Little, senior vice presidentt of Opus West Northern California, said the gap between buyersz and sellers is unbridgeable in the current Sellers are not willing to come down in and buyers do not have access to capitakl that will support the future value of the property. will trade for the cost of or less,” Little said. “That means the top 20 or 30 percenty of value will getknocked off. We will have blowj through the equity and will be in the Not much has changed as the secondf quarter draws toa close.
Eric Fox, senior vice presideny for CPSCorfac International, said the handfu of properties on the market have gotten very little interest. “Sales will be relativelyy stagnantuntil there’s a point of distress,” he “I don’t know when that will The market is not there yet. Ownera remain in control of their properties with foreclosureas in the commercial sector a rarityso far. “There’zs not a lot of desperatioj onthe sellers’ side,” Little said. Whilew that could be read as agood sign, it reallyt only perpetuates the situation.
Fox said that owners aren’ft willing to discount on performing properties, meaning tenantsx are paying their rent and the debt is being to ensurea sale. “If properthy is performing at a high thebuyers aren’t there,” Fox As the recession deepens and job losses accelerate, Nadji said ownera will reconsider 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 credig crunch will not be able to refinance with favorablseenough terms. So they are decidingb to sell the property.
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