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Experts: Greatest Challenges Still Ahead

NEW YORK CITY-Expect 2009 to be a tougher year for leasing and sales, while offering some bright spots, said experts from Colliers and Grubb.

By Paul Bubny | Updated on November 12, 2008

NEW YORK CITY-There may be some differences of opinion as to exactly when the world changed for commercial real estate. Bob Bach, SVP and chief economist at Grubb & Ellis, says it happened on Sept. 7, the day that Fannie Mae and Freddie Mac went into federal receivership. William Collins, senior managing director at Cassidy & Pinkard Colliers, says the onset of the current dramatic slowdown post-dates the collapse of Lehman Brothers and began about four weeks ago. However, neither would dispute that the greatest challenges of the current market–and the greatest opportunities for those in a position to take them–are still ahead.

“2008 has been a tough year,” Collins said Tuesday at a press briefing here sponsored by the four Colliers entities that merged into a new holding company in August. “2009 will be tougher.” Sales prices in the New York area will decline anywhere from 25% in the city to 40% in the suburbs before all is said and done.

Speaking at a similar briefing his firm sponsored on Wednesday, Bach said vacancy across the commercial sectors will peak in early 2010, about the same time that rents reach their trough. Volume in the New York City metro investment sales market, which Real Capital Analytics says had already declined 64% across the asset classes for the first three quarters of ’08, will improve in ’09–but that will be due to a flood of distressed properties hitting the market.

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