Real estate conditions surveyed from Tri-state, mid-atlantic regions


VOORHEES, N.J., Aug. 23, 2010 – The economic recession continues to linger, and job recovery is moving at a slower pace than expected, so real estate firms are coming to realize they need to shift strategies and work harder to generate the same revenues. Many builders have mixed-use and multifamily projects lined up, waiting for stronger activity before they can move ahead.

To get a clearer picture of how current economic conditions are impacting builders, the Strategic Alliance, a group of real estate-related companies, conducted a business survey that covered more than 1,000 builders and developers and other industry professionals in the Tri-State and Mid-Atlantic regions, as well as Pennsylvania and Florida. The survey, which was the second sponsored by The Alliance during 2010, polled real estate experts involved in the commercial, single-family, multifamily, and 50+ active adult markets.

“While most builders hoped that conditions would trend up quicker this year, there are some fundamental problems that still need to be resolved before projects can move forward,” stated Bill Feinberg, president of Feinberg & Associates, P.C. and founder of the Strategic Alliance.

Not surprisingly, 66.6% of respondents indicated that the economy has not pulled out of its slump. Although 47.3% indicated that the business cycle for the real estate market remains in a recession phase, 36.8% indicated that the market is in a recovery stage, and only 12.2% saw the cycle as severely down.

A look at the current lending landscape revealed lending terms and conditions that remained tight, reported 43.8% of respondents. In a breakdown, 26.3% described lenders as too cautious when it came to credit risk; and 17.5% claimed smaller banks are more willing to make loans than larger institutions.

The findings also revealed that 57.8% of builders saw no “positive indicators” that the commercial market is beginning to correct itself. Further, when asked to identify the most pressing challenges in developing residential real estate today, 45.6% of respondents said that demand was the greatest factor, followed by 33.3% who pointed to financing issues. In descending order, approvals/permitting, availability of land parcels, and the cost of materials were ranked less significantly.

When asked the question: “Since the recession, do you see large development firms changing the way they do business in an effort to share financial risk?” Nearly half, 45.6% said yes, there are more joint ventures. Thirty-five percent were unsure while 19.2% said the majority of companies are still working independently.

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