Jones Lang LaSalle just released a forecast that both sobers and offers hope.In short, more pain to come but a commercial real estate recovery is on the far horizon.
The numbers tell the bad news side of the story.Commercial property sales during the second quarter of 2009 totaled $5.2 billion, $25.5 billion lower than 2Q08 and $109.5 billion lower than 2Q07.
On the good news side of the ledger JLL projects a slow paced turnaround beginning in 3Q10 which they expect to take a full decade to mature.
If accurate then we have another nine months of decline to endure before commercial real estate begins its rebound.That is an optimistic forecast compared to what we are hearing from most other prognosticators.Some project that CRE will not begin a turnaround for three years in a best case scenario.One advantage of a slow paced recovery is that it will have a more conservative, some would say more rational, financial foundation than we saw in the euphoria that preceded the crash.Let’s hope that no one has an appetite left for risk taking of the kind that exposed us to the current fall.
What is the bottom line on this message?Simple.Keep your seat belts fastened and watch the dashboard very closely.