Baltimore?s office and industrial market held steady during what area brokers called an “average” 2007, but the credit market crunch should continue to affect commercial transactions in 2008.
This year, the profile of prospective buyers in the Baltimore area changed somewhat, as more outside real estate investment trusts and institutions were involved in transactions, said Tony Casalena, managing director of commercial real estate firm Sperry Van Ness? Baltimore office.
“The tough credit market is spilling over to private investors,” Casalena said. “You?re seeing a lot more of the private buyers being squeezed out, because they have to rely on leveraged financing and tend to have less flexibility.”
Prices have seen little change in the area. The area?s Cap Rates, a property?s net operating income divided by its sales price, have increased slightly, though most sellers aren?t budging on pricing, Casalena said.
“The buyers? expectations are getting higher in this tough credit market,” Casalena said. “In some cases, that?s leading to a standstill.”
Athan Sunderland, vice president of commercial real estate firm Preston Partners, with offices in Lutherville and Columbia, said the credit market crunch has made the commercial transaction process “much more difficult.”
“A bunch of deals are taking longer or completely going away,” Sunderland said.
Sunderland and E. Hayes Merkert, Preston Partners? executive vice president, said they think demand will be strong for Class A industrial space in the coming year, in areas like Anne Arundel and Howard counties especially, as development will slow because of increasing land prices.
Sunderland and Merkert agreed 2007 “wasn?t very remarkable” for the commercial real estate industry, but area brokers can take solace in the fact that their locations remain attractive to developers and businesses.
“It?s a cyclical market, and we?re still seeing a lot of interest in the Baltimore/Washington region,” Merkert said.
