As banks are writing down their portfolios and appraisers are throwing darts to value properties, the CRE market is in a freefall. Lease rates are falling, businesses are failing and defaulting on loans while new developments are housing crickets. Investment in commercial real estate across the globe plummeted 59 percent, going from just over $1 billion in 2007 to just $435 billion, according to real estate services firm Cushman & Wakefield Inc.
North America topped the list with a 73 percent decline in investment, followed by Europe, where investment plunged 52 percent, and then Asia, where numbers fell 45 percent. While investment activity slumped pretty much across the board, the numbers weren’t so drastic everywhere; in Latin America, investment dropped by a relatively low 9 percent. 
But full recovery of the real estate market hinges on the economy. “Looking at the Blue Chip economic forecast, recovery will happen in the second half of 2009, but in any economy GDP recovers before jobs recover, and in real estate, we really care about jobs,” Stanton said. More jobs will spur demand for more office space, and will prompt increased spending at retail locations, and additional leisure and business travel. However, the anticipated economic turnaround will not have an immediate impact on the real estate industry. “Real estate recovery will lag a minimum of six months.” 
The next 12 to 18 months will present the biggest buying opportunity in decades because a lot of leveraged assets have to be de-leveraged and will be sold at big discount. As borrowers are forced to write down their investments and are forced to slash values, or lenders are renegotiating the debt on their current loans, smart investors will have a chance to snap up some very well priced assets. 
When the economy does recuperate and there’s more debt, real estate will likely recover quickly. “It should snap back,” Stanton said. “We actually had a controlled supply and demand situation; we just got hammered by the credit crisis and the recession. Presuming the stimulus package works, we’ll have a snap back because the real estate market did not overbuild. I have hope that we will get an Obama bounce.”