In 2000, the company notes, pension funds, life insurance companies and private investors were investing their paper profits into real estate.
This year, "the lack of confidence in the local and national economy caused many groups to scale back or completely cease with any further real estate acquisitions," Grubb & Ellis notes. "As a result, the challenge for 2002 will be attempting to bridge the gap between buyer and seller expectations."
The coming year will be hard for small owners without deep pockets, Grubb & Ellis says.
"Many sellers continued to have delusions of grandeur and held on tightly," Grubb & Ellis says. "While it is anticipated that large institutional owners will be able to weather the storm, several smaller owners, particularly office owners, may experience severe cash flow strain. The saving grace for many investors is the extremely low cost of capital."
Pension funds, life insurance companies and other institutional owners of real estate in Denver will be forced to re-evaluate their current positions, the company projects. That's because their percentage ownership in real estate has increased as they bailed out of the stock market.
"There could be the need to dispose of real estate holdings in order to realign their portfolio allocations," Grubb & Ellis says. "In addition, it is anticipated that several properties will be for sale at substantial discounts form larger users requiring quick downsizing. As a result, 2002 could be the year for the value-added and speculative buyer."
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