As reported by Jon Lansner, OC Register
Pimco: No quick recovery for big properties
June 18th, 2010, 10:20 am · 18 Comments · posted by Jon Lansner
In the middle of last decade, bond traders at Pimco in Newport Beach spread out around the country to get a ground-level view of the housing market. What they found with this non-traditional research was a brewing disaster, reconnaissance that helped Pimco avoid the eventual pratfall of many mortgage investors.
This year, Pimco has repeated this front-line research with commercial real estate. Here’ s their conclusions:
Investor returning to the industry, but “optimism should be tempered” becuase Pimco thinks property pricing may be worse than commercial real estate indexesshow.
Distressed properties may be hard to sell, making a quick recovery unlikley.
Commercial real estate prices will remain 30% to 40% below 2007 peaks for three to five years and may not return to 2007 peaks until end of the decade.
Overall economic headwinds will force an broad rethinking of commercial real estate values and rents.