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Last night, CRE players packed the Seaport Convention Center, eager for assessments of '09, forecasts for '10, and words of wisdom from guest John Schreiber, a founding partner of Blackstone. The Colliers Meredith & Grew sponsored event drew caution flags, as most predicted a better, but still tricky, year ahead.
M&G?s Tom Hynes with john Schreiber
M&G?s Tom Hynes, with John, who says ?happy hunting season? opened last quarter for investors. Pick almost any asset class— apartments, offices, retail—and it's a great time to buy, for those who move cautiously. This year, he says, well leased properties will return to traditional values and deals for distressed real estate should be plentiful but tricky. Blackstone, with $11 billlion in ?dry powder? is still ?raising substantial capital.? As a Boston landlord with about 11M SF, John said the market has ?great long term prospects.?
Leon Ltd.?s Victor Leon at the reception with M&G?s Ron Perry
We snapped Leon Ltd.?s Victor Leon at the reception with M&G?s Ron Perry, who took the temperature of the 57M SF CBD during the market trends talk. Bottom line: revival depends on job creation and economic growth; offices get leased and built when companies have more bodies to warm seats. Key leasing transactions are beginning to emerge with financial services, law firms, and others seeking about 3.5M SF. That includes Bain?s search for 300k SF. In 2010, he says, rents will fall more, after dropping 20% in '09.Vacancies will rise to 15.5% overall. But Class A high rise space, now just 6.6% vacant, will hold strong.
Salvatore Capital's John Salvatore schmoozing with M&G?s Jim Elcock
Salvatore Capital's John Salvatore schmoozing with M&G?s Jim Elcock, suburban market guru. Brutally frank during his presentation, Jim says the recession has brought ?seismic change? to the 200M SF of suburban properties: ?Uncertainty will rule for many years.? Overall, vacancy is 22.4% but in the North submarket has spiked to 31%. The problem is sinking demand not oversupply, and future leases will probably call for the same or less space. Tenants shopping for a total of 9.4M SF are hesitant, seeking value, good pricing, and certainty that landlords are financially sound. In sum, he says, ?'09 could have been worse and '10?ll bump along the bottom.?