G&E Sees Soft Landing, Healthy CRE Market

Grubb & Ellis, a Chicago-based real estate services company, is projecting an economic "soft landing" for 2007 that will keep the commercial real estate investment market healthy.While G&E said it expects the volume of investment activity to stabilize this year, following five years of gains, it also expects that it will stabilize at a high level. As office markets continue to tighten in 2007, landlords are expected to have more negotiating power in more markets. Five downtown markets -- San Francisco, Seattle, Miami, Midtown New York, and San Jose, Calif. -- are expected to see double-digit increases in rents for class A properties. Given this favorable outlook, office assets are at the top of investors' shopping lists, G&E said. The firm said it expects that the housing market slowdown will have "major implications" for the retail sector because homeowners will have less home equity to tap into. In addition, retail developments targeting new residential neighborhoods will be delayed until construction picks up.