By Mike Fitts
mfitts@scbiznews.com
Published Feb. 4, 2010

Real estate markets are likely to be bottoming out in 2010 and the slow pace of deals will begin to revive, according to a top economist at Grubb & Ellis.

Robert Bach, the national firm’s chief economist, gave his forecast of the market’s future to a gathering of Columbia real estate professionals Wednesday morning. While values and prices might still descend further, much of the damage has been done, he said.

“This is the year when people will be peeking out of their bunkers,” Bach said.

His optimism was reflected in an instant electronic survey of the room conducted by the firm’s local affiliate, Grubb & Ellis Wilson Kibler. The survey found that 69% of those in attendance held more optimism for 2010 compared with the past year.

Commercial real estate credit will continue to be tight, but Bach said lenders are expected to extend loans to existing customers, rather than take over properties in such a market.

Credit is still a major problem for local real estate, according to the company’s audience survey. The survey found that 49% said financing is the biggest obstacle to their success right now.

Office vacancy rates nationally are near a 20-year high and could peak in 2010. Rents will continue a gradual decline, he said.

Tenants are more often looking to make new leases in their current locations at better rates, instead of seeking to relocate, Bach said.

In Columbia, office vacancies will peak by midyear, with rents reaching a low, too, according to the company’s market projection.

Nationally, employment will bottom out, with better and worse months alternating. A revival in employment and wage growth is necessary to get consumers back into spending, he said. When they do, some pent-up consumer demand could buoy retailers.

“My sense overall is that the economy will make it through this,” Bach said.