Cautious optimism exists for Wichita's commercial real estate market in 2011.
Local brokers expect the upcoming year — driven at least in part by downtown redevelopment — to be slightly better than 2010.
There are several factors that will affect how the year goes: federal tax policy, the economy and the availability of commercial credit.
"Succinctly, if there's one thing lacking in the general marketplace, it's confidence, and unfortunately it's political confidence," said Nestor Weigand, chairman and chief executive of J.P. Weigand & Sons.
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"No one can plan next year until they know what's going to happen with the tax laws."
Once those tax issues are resolved, perhaps this month, then Dan Unruh, a partner at Wichita's InSite Real Estate Group, expects a more disciplined commercial marketplace.
"I think investors, lenders and users of commercial real estate will take a much more disciplined approach to the purchase decisions or movements they make," Unruh said.
"Caution will enter into the commercial equation again, and rational, careful decision-making will return to the playbook after an absence of a few years."
Money is available from lenders — under the old rules of engagement, said Steve Martens, president of Grubb & Ellis/Martens Commercial Group.
"I continue to see credit being available for investment purchases and owner-occupied property," Martens said.
"You still need equity to put into the deal, but that's always been the case — with the exception of the last few years when everybody went crazy on how much they could borrow.
"Now, we've returned more to the normal market of 75 to 80 percent loan to value."
Wichitans should be able to see some progress on the downtown redevelopment front in 2011, Martens said.
"Certainly, one of the markets we should watch is downtown," he said. "The Goody Clancy redevelopment plan has sparked some interest in several projects."
Unruh and Martens are optimistic about 2011.
"I think that we have been able to endure wave upon wave of disappointing results from our corporations and wave upon wave of discouraging news from the standpoint of layoffs and the economy, and we're still here," Unruh said.
"The challenge right now is at what point does the economy start back up again. We typically lag behind the national economy."
People are going to continue to look for value-based opportunities, Martens said.
"And no one is going to have any interest in paying anywhere near too high a price for a property, he aid.
"But if you want to use a property for your own business or lease to someone, the return an investor can receive are some of the highest available and some of the most secure."
The economy, though, is the one unpredictable variable, Unruh said.
"A concern is the stability in the financial markets and the stability in interest rates," he said. "The ability for the Fed to balance stimulating the economy at the risk of introducing inflation into the mix. It's a big challenge and a big concern."