Bill Cawley

Can you feel it? The market is softening. My views are mainly focused on B office product, which has significant vacancy. We are about to enter an election year with a ton of uncertainty in the economic markets. I have felt for a long time that buyers were reaching, instead of staying disciplined and paying prices based on the market risk and income the property can realistically generate. Europe is very unstable; and the U.S. government doesn’t seem to have the discipline to make the hard decisions needed to reduce the huge debt problem we have in front of us.

Low interest rates have created an environment that allows buyers to be more aggressive in their valuation of assets. But in the last 90 days things have changed; buyers have started paying attention to the risk in the market and have reduced their opinion of value by 10-15 percent from mid-summer pricing. Currently, most sellers aren’t inclined to move to where the buyers feel market values are, creating a gap that has slowed the market down. Most buyers will hold the line and pricing will continue to soften.

In an election year, real estate markets tend to be stagnant, but you add the uncertainty in the world, and 2012 will be a buyer’s market like we have not seen in a long time. I have been called several times in the last few weeks by selling brokers on assets we made offers on six months ago and been offered the asset at my price or under, but our equity partners now feel the value is even lower. This feels like we are at the bottom, and it is a great time to buy.

I don’t think multifamily will feel the impact, as it is the favored asset class and continues to have the bulk of the investment dollars. Office product with vacancy and lease-up risk is where the opportunities will be.

Remember, we are in one of the best markets and economies in the country. I continue to feel that Dallas-Fort Worth will lead the country in job growth and be less affected by our unstable economic future.

I am excited to find good opportunities and value in 2012. Who knows who will win the Presidential election; either way, there will be a lot of ups and downs in our future, which will create great buying opportunities.

William R. “Bill” Cawley is chairman and CEO of Cawley Partners. Contact him at bcawley@cawleypartners.com.