Though the commercial brokerage market is stabilizing, with a few bright spots in high-end apartments and the medical sector, overall, deals remain thin on the ground and tough to finance, according to a panel on the commercial brokerage market Friday at the New England Mortgage Expo at MGM Grand at Foxwoods.
The panel was moderated by Tom Hill, a commercial broker based in Waterbury, Conn., and included John Migliozzi, senior vice president of East Boston Savings Bank; Wayne D’Amico, a Connecticut-based commercial broker and founder of Propertypolitics.com, a website which advises owner and investors on how to handle political and governmental obstacles to investment; and Nicholas Gazetos, executive vice president at Savings Bank of Danbury.
Though both bankers could point to several successful deals during 2010, particularly in the surging apartment sector, even the successes were tough to pull together.
"Everybody in this room is a capitalist, and at some point we’ll see the market come together, but right now it’s still difficult," said Gazetos.
Commercial lending is still tight, with banks require developers to be experienced, and come to the table plenty of equity to put into a deal themselves before they’ll consider lending. Bankers "are going to have to show some discipline. We’re not chasing," said Gazetos, adding that transactions that may have taken place in the early 2000s with extremely high loan-to-value ratios just aren’t going to work anymore.
Panelists said that the over-development hangover from the boom is still affecting the office and hotel sectors, with freshly-built, over-leveraged properties available for bargain rates as developers are desperate to attract tenants. While such newly-developed building are able to attract tenants, the surplus is space is having knock-on effects on somewhat older developments, which are seeing increasing vacancies. A recent decision by health insurance giant Aetna to move to new offices while knocking a 25-year-old property the company had owned in order to lower its property tax bill is an example of the trend, panelists said.
