Commercial buildings sector may face worse in 2009

It is getting more and more clear that the year 2009 will also not be good for the construction sector and there shall be worse than 2008, according to a wide section of experts. This view has been strengthened thanks to the recently published views of a well-known brokerage firm that specializes in that market. What has been the forecast of the firm? Don’t get excited! It is highly dejected. The report of the firm states emphatically that the turnover rate for New York City commercial buildings worth $100 million and less is expected to fall below 1.6% in 2009. Remember that 1.6% was the level that was touched during the last two recessions.

You may be acquainted with the name of the firm. It is the Massel Knakal Realty Services, which is known for its proficiency and tracks the sale of 125,000 investment properties throughout the five boroughs. The turnover rate in 2008 was 1.8%. The average is about 2.6%.

However there are strange developments and that marks the difference between these recessions. It was noticed in the earlier recessions, that there was no such demand for properties due to the great dearth of money with the people. On the contrary, during this recession, there is a good demand for properties and it is growing too but the property owners owing to this disconsolate market are not ready to sell off. On the word of Mr. Bob Knakal, the Chairman of Massel Knakal Realty Services, there will be only few transactions in this year and it will never exceed 2,000.

He also said, “Due to the overwhelmingly bad economic news, people who were considering sale of properties will decide not to put it on the market.” “It’s all psychological. We have a lot of capital patiently waiting on the sidelines for an opportunity.”

It must be accepted, due to typical middle class mindset, the market for smaller buildings is better than the market for $100 million-plus properties. The industry is counting on it to a great extent. Will this sustain?