Two Wichita commercial real estate veterans say they've never seen their market this volatile.
Herb Krumsick and Steve Barrett, partners who operate out of the J.P. Weigand office at 150 N. Market, do all kinds of commercial deals around the country — warehouses, buildings, businesses.
Or they did, until the commercial credit market came crashing down.
And with the housing market still unstable, the two men said, "It's the most uncertain time ever."
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Even in Wichita and the Midwest, where conditions are as stable as anywhere in the country, they say.
Assess the state of commercial real estate today.
Krumsick: "Uncertainty is the rule of the day. Everybody you go to says, 'We don't know,' then they tell you what they think.
"I've talked to some national market people, some very strong people in the market, and they don't have a clue what's going on.
"I do believe that money will start flowing back into the commercial market. There's a lot of money on the sidelines that's been waiting a long time."
How does Wichita stack up in a struggling national commercial market?
Krumsick: "Wichita and the middle of the country is better off than the coasts because we're more conservative. Texas and Oklahoma might not get hit so bad either, some experts think.
"I think the market's starting to pick up, but on a macro basis, when you take some of the places where housing went up 100 percent and has come right back down quite a bit and may go down more; I'm worried about where housing is headed. It may just be today, but this stuff drives you nuts."
Barrett: "There aren't a lot of transactions happening, but it's hard to say all the banks are on the sidelines.
"I sold a building the other day, though, and Emprise did a loan for the business. He didn't have any trouble. It was an owner-occupied deal and he had some good juice in the deal."
Talk about how the uncertainty has affected the national and local markets.
Krumsick: "It's going into a weird stage in a sense the economy seems to be repairing. The trouble is that leasing activity is up, calls are up but everybody's questioning what's going on.
"There are two mindsets: A lot are concerned there will be a double-dip in the economy, and others think that we're bouncing along the bottom.
"Quite candidly, the banks and lenders are all extending loans. The FDIC has encouraged them to extend loans.
"I was with (local developer) Johnny Stevens this morning, and he said it's just the weirdest time you've ever seen. There's more uncertainty than action right now."
What are some of the transaction issues plaguing the commercial market right now?
Barrett: "There's such a big discrepancy between (what buyers) bid and (what sellers) ask. I don't know when they'll ever get together."
Krumsick: "I've been calling around for some people and there just isn't much property on the market.
"The guys who own it are too far under water and as long as the bank doesn't make them sell, they can sit back and hope the water recedes, so to speak.
"It's just an odd time. The value of core assets — class A stuff — is up in recent months but the rest hasn't, which really flies in the face of tradition because when core assets go up, the rest of the property follows. Not this time."
How volatile is the commercial market as we move forward this year?
Krumsick: "Quite candidly, in the last two days I've become a lot more bearish after talking to some important national financial folks.
"Two or three years ago when residential hit the deck, we all asked the question how it would affect commercial and no one knew.
"But now, you know, this residential thing with all the mortgages under water seems like a time bomb, and if it blows, it will affect commercial hard, and I know most of our industry has its head in the sand."