The signs of churn are all around us. Some days it’s two steps forward and others it’s one step back.
Is it just me or are commercial real estate transactions picking up steam? Several big office towers, for example, have traded in recent weeks in major metros.
A second major CMBS issue has now come to market in 2010, which is a promising signal that industry might be coming to life once again.
Even Ernst & Young issued a new report last week noting “The real estate market is starting to stir. The trends point to increased transaction volumes and varied activity in 2010, including a rise in loan sale transactions.”
Obviously the biggest concern is the jobs picture, which has more elevation changes than a roller coaster ride at Six Flags. One week they’re up, the next they’re down.
In many major markets, it’s a choppy scene at best. Take Dallas for example, where the DFW metro economy has improved of late, adding 3,400 jobs in the past year and where the unemployment rate dropped to 8.2% in April from 8.7% in January.
Unfortunately since CRE generally lags the economy, office absorption in the local market was a negative 550,000 sq. ft. and the vacancy rate shot up to 18.5% in the second quarter from 18% in the first quarter, according to Delta Associates, the research affiliate of Transwestern.
That didn’t stop CB Richard Ellis Investors from buying two high-profile office buildings in the local Preston Center market for a rumored $130 million, making it one of the largest sales in North Texas this year.
The DFW industrial scene is a different story, with 492,000 sq. ft. of absorption achieved in the second quarter and 836,000 sq. ft. of space occupied this year, compared to negative 1 million sq. ft. in the first half of 2009. That’s a vast improvement, but will it last?
It looks like those choppy waters are going to be around for just a tad longer.
