Goodbye 2009! Isn’t that the same thing we said about 2008?

What tumultuous times we’ve seen over the last two years. Will 2010 bring us the much needed relief our economy needs? How will real estate be affected over the coming months?

 2009 saw no new industrial product brought to the market. Credit continued to tighten, tenant activity slowed tremendously, 100% occupied properties stayed 100% occupied, and empty properties stayed empty. The absorption we did see was in multitenant buildings during the first quarter of the year in roughly 5,000 sq ft increments. Second, third, and fourth quarters saw absorption in the 5,000-15,000 sq ft range of free standing buildings. Well located properties with lease renewals this year did not experience a decline in rental rates.

Office buildings downtown were much the same as industrial properties- full buildings stayed full and empty spaces stayed empty. The smaller historic office properties that generally stay 90%-100% occupied benefited from tenants moving out of buildings that are undergoing renovation. The residential condominium market saw sales continue in the first and second quarter but slow to a trickle the second half of 2009. Residential lease property is remaining at around 100% occupancy. There were no new residential condominiums brought to market in 2009.

In an elusive quest for the lowest price, many investors let opportunities sail right past them. The so called “steals on property” that buyers were waiting for in the Mobile commercial market have not come to pass. Commercial properties in well located areas will not see drastically reduced pricing, if they even happen to come on the market. Obviously, the only cut rate pricing we have seen are on beach related properties and some hospitality properties in the Mobile area. Many investors are still in search of returns that are simply not realistic in today’s environment..

Interest rates should remain at current levels at least through the first half of 2010. Individuals and businesses with good credit will be able to take advantage of these low rates in the form of constructing/purchasing property for owner occupied use. There are still financial institutions offering a 90% LTV for such transactions.

We are hopeful that a sense of normalcy will return to the market in the 2nd quarter of 2010. Thanks to all of our clients and customers who we have served over this past year. Happy New Year and all the best for a much improved 2010.

Yours Truly,
D. Todd Drummond