While at a party for tenant rep brokers thrown by a large office and industrial property owner last night, the CEO of the owner said that he thinks things are about to be worse than they were in the late 80's & early 90's. He's a smart guy so I don't discount his opinion, but we're still nowhere near those days….at least not yet. I started in the commercial real estate business in February of 1984 so I've been through a few cycles now.
Things will have to get dramatically worse to come close to the 80's/90's. Then, there were only 2-3 groups bidding on property – one of them was that CEO. Prices got ridiculously low - $20.00 per square foot for high-rise office buildings in some cases. The last company I worked for was one of the other buyers at that time. We bought buildings in the $30's and $40's which later rented for $18 to $22.
Today, there are dozens, if not hundreds, of buyers with war chests in the billions waiting to pounce on distressed assets. That difference by itself should keep prices far higher than the 80's & 90's. Time will tell. Stay tuned.
