The national news about the state of commercial real estate really could not be much worse. I've heard it described as the "first or second inning of a long game", meaning that the decline in prices and activity is only going to get worse over the next couple of years. Financing is probably the biggest issue; many people are on loans referred to as "extend and pretend", meaning that they are not loans that would be made today. Owners are paying fees to keep those loans in place, in the hopes that they can make it through this period with bank financing in place. Some cities have lots of foreclosures. Others have lots of empty space--Phoenix alone has 80 million square feet of empty space.
Surprisingly, however, what we're seeing in our two offices, in North Haven and in Rocky Hill, is an increase in calls and potential clients. Our listings have more showings than they've had in a long time. Our ads are bringing in inquiries. Agents are busier.
This doesn't translate right away into sales and leases, and certainly not into commissions. We have two very large transactions where the deals are done, but we have not been paid, or paid in full. There are lots of other incidences of agreements in the pipeline, but not signed. It's very common for a tenant or buyer to find exactly the space they want, yet not make up their minds to pull the trigger. Other deals fall through on financing snags, so the picture is not all rosy.
Even still, there are some types of property that we could sell much more of, if we had the inventory. That includes first and foremost small free-standing buildings of 6 to 12,000 square feet. We have one such listing that just went under contract after a furious bidding war, and will sell for over the asking price. There is also significant interest in medical space. Doctors, and it seems most other professions, all want to own rather than rent. So we're hopeful about 2010, and that seemed highly unlikely even a couple of months ago.