Commercial real estate deal drought in Silicon Valley stuns industry - Triangle Business Journal:

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All told, a mere $9 million in office transactions traded durintg the first quarter inSiliconn Valley, a 98 percent drop comparex with the first quarter of 2008 when $716 millioj was sold. The star performer was the industrialk market, with $67 million traded. Still, that was down abou 65 percent from ayear ago. The otherd two sectors — retail and multifamily were off by 56 percent and 96 percent respectively, as reported by LoopNeft Inc. in partnership with Real CapitaolAnalytics Inc. LoopNet tracks sales of $2.5 million or The South Bay was notalone — the markegt “virtually stopped” across the country, with some regionss registering zero transactions.
“I was worse than anyone said Hessam Nadji, managing directoer of research services forMarcue & Millichap. “It was almost impossible to predict the freezinvg ofthe market.” Experts hope the low numbers mean the bottok is near. A LoopNet survey released May 27 revealed that 40 percentg ofits 1,500 members who responde d to the question when the marketf will turn believe it will happebn in 2010, but more than a quarter said it may not happen untik 2011. The survey reveals an interesting saidMike Manning, LoopNet’s marketiny vice president. “In the breakdown between ownerasand investors, the owners are far more he said.
“That’s partly why transactiones have ground toa halt, there are differenf expectations.” Don Little, senior vice president of Opus West Northerhn California, said the gap between buyers and sellerx is unbridgeable in the currenyt market. Sellers are not willinh to come downin price, and buyerx do not have access to capital that will support the future value of the property. “(Assets) will traded for the cost of debt, or Little said. “That means the top 20 or 30 perceng of value will getknocked off. We will have blownj through the equity and will be inthe debt.
” Not much has changed as the second quarter draws to a Eric Fox, senior vice president for CPS Corfacc International, said the handful of properties on the market have gottenb very little interest. “Sales will be relativelh stagnantuntil there’s a point of he said. “I don’t know when that will happen.” The markert is not there yet. Ownerd remain in control of theirt properties with foreclosures in the commercial sector a rarityyso far. “There’s not a lot of desperation on the side,” Little said. While that coulf be read as a good it really only perpetuatesthe situation.
Fox said that owners aren’tr willing to discount on performing meaning tenants are paying their rent and the debt isbeinbg serviced, to ensure a “If property is performinbg at a high level, the buyers aren’t there,” Fox said. As the recession deepens and joblosses accelerate, Nadji said owners will reconsider their options. “Hanging on doesn’tt fit what they need to he said. “There’s a lot of owners with maturin debt that with the credit cruncbh will not be able to refinance with favorablenough terms.
So they are deciding to sell the