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Opinion survey predicts 3 to 5 years for recovery.

Despite hopes that 1992 would bring relief to the nation's troubled commercial real estate market, the results of the second annual real estate opinion survey, co-sponsored by the Arthur Andersen Real Estate Services Group (RESG) and National Real Estate Investor (NREI) magazine, indicate that few respondents actually believe conditions will improve within the next 12 months.

In several instances, Metro New York respondents were even more pessimistic than their counterparts in other regions. For example, when asked how long it would take for regional real estate markets to recover, 39 percent of the respondents in other parts of the country see their own situations rebounding in three to five years. This figure jumps by almost one-third, to 51 percent, when the same question was posed to the Metro executives. Similarly, 73 percent of these respondents believe that downtown office property values will decrease, as opposed to 65% of the national respondents. And only 10 percent of the Metro group chose New York as the city with the most potential for real estate investment down 10 percent from last year's Metro poll.

The survey by National Real Estate Investor and the Arthur Andersen Real Estate Services Group reflects the opinions of 1,724 real estate executives, including developers, lenders, corporate real estate personnel, investors and other professionals in residential and commercial markets. Almost 200 of those polled were from the Metro New York region. Survey responses were collected and studied in November and December of 1991.

Other key local highlights include:

* Almost two-thirds of the local respondents believe that the real estate industry is undergoing a fundamental change. And 47 percent of all Metro executives predict that this change will result in a significant alteration of loan underwriting policies

* Over 40 percent view "build-to-suit" as the most attractive real estate development opportunity. Apartments and congregate care/retirement placed second and third, respectively. However, apartments outranked "build-to-suit" as the most attractive investment opportunity

* To survive the current downturn, local developers/owners plan to focus on niche development as well as down-sizing and rebuilding after the market recovers. Joint ventures with foreign investors or other money partners were also considered a viable alternative

* The Northeastern U.S. retains its appeal as an investment possibility, with some 35 percent of the Metro executives endorsing the region as a "most attractive investment."

Financing the Key

Issue or the 90's

Like their national counterparts, financing remains a top concern for local developers/owners, since half of this group experienced cash flow problems in 1991. In addition, 53 percent said that their experience last year in obtaining financing for new projects was very difficult. Some easing of credit is anticipated in 1992, as less than half of the developers/owners believe that obtaining financing would remain very difficult, and 26% believe it would only be somewhat difficult.
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Title Annotation:results of annual real estate opinion survey co-sponsored by Arthur Andersen Real Estate Services Group and National Real Estate Investor magazine
Publication:Real Estate Weekly
Date:Mar 11, 1992
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