"The Downturn, Then and Now"
globeandmail.com: The downturn, then and now
This article from the Globe and Mail on January 20th comes across as a cautiously optimistic piece on the state of commercial real estate in Canada. Ever the optimist, I tend to agree with most of the points generated in the interviews. The fundamentals in the marketplace are very different during this downturn vs. that last in the early '90s. Interest rates are lower, vacancy rates are lower and speculative building was more tightly controlled (in the small markets like Peterborough it was non-existent over the last decade).
While we can be hopeful that these differences, along with some outside factors like a new President in the US and a new budget soon to be released in Canada will have an ameliorating affect on the markets in general, perception is still king.
Paralysis is what I'm seeing in the market right now. Very few players are willing to get off the fence and start doing deals again. The collective breath and gentle sigh we expected has turned into a blue faced breath holding competition. Don't get me wrong, buyers are looking, but they're hesitating for longer and longer periods of time; overanalyzing and being overly critical of the product that is available.
He who hesitates is lost - isn't that how it goes?
There are some opportunities out there now that need to be taken advantage of. Who'll be brave enough to step up? Ideas anyone?
This article from the Globe and Mail on January 20th comes across as a cautiously optimistic piece on the state of commercial real estate in Canada. Ever the optimist, I tend to agree with most of the points generated in the interviews. The fundamentals in the marketplace are very different during this downturn vs. that last in the early '90s. Interest rates are lower, vacancy rates are lower and speculative building was more tightly controlled (in the small markets like Peterborough it was non-existent over the last decade).
While we can be hopeful that these differences, along with some outside factors like a new President in the US and a new budget soon to be released in Canada will have an ameliorating affect on the markets in general, perception is still king.
At Avison Young (Canada) Inc., chairman and CEO Mark Rose says that if there is a single factor that characterizes the current situation, it is a lack of insight into what happens next. “There is a crisis of confidence, which is paralyzing decision makers. They don't know where the economy is heading and as a result they can't make decisions.”
A sure sign of that paralysis is in the gap between what sellers are asking for commercial properties and what buyers are willing to pay, he says. “The result is a gap between bid and ask on properties that is the largest in memory. With a gap that wide there just is no room to manoeuvre in deals.”
Paralysis is what I'm seeing in the market right now. Very few players are willing to get off the fence and start doing deals again. The collective breath and gentle sigh we expected has turned into a blue faced breath holding competition. Don't get me wrong, buyers are looking, but they're hesitating for longer and longer periods of time; overanalyzing and being overly critical of the product that is available.
He who hesitates is lost - isn't that how it goes?
There are some opportunities out there now that need to be taken advantage of. Who'll be brave enough to step up? Ideas anyone?
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