Farewell 2009 – I Can't Say We Will Miss You!
It has been the year of Madoff, TARP, and TALF. It has been the year of workforce reductions and office closings, silent construction sites and unmoving cranes, bankrupt developers and unavailable financing. And if, as Warren Buffett said, it is only when the tide goes out that you can see who is swimming naked, an AWFUL lot of people seemed to have lost their swimwear.
At Warburg we downsized our staff and closed two offices. Luckily we did it early so we were able to weather the worst of the recession without too much additional pain. My brokers did a brilliant job, pulling off deals under the most challenging circumstances: contracts which took weeks (or even months) to get signed, buyers renegotiating or walking away just before the signing OR the closing, Board packages finessed as assets dwindled. Everyone worked twice as hard but made only half as many deals. I want to take this moment, as the holidays come upon us, to recognize and thank them all for their talent, dedication, and loyalty.
As the year draws to a close the story is a better one. Much of the excess inventory throughout the marketplace has been absorbed in the last three or four months, helping to stabilize prices at their new levels. Buyers who were closed out as prices skyrocketed in 2006 and 2007 have been able to re-enter the market and purchase at today’s lower values. We have reached a period of relative equilibrium, neither too much a buyers’ nor a sellers’ market. Deals are negotiated at a reasonable pace, as are contracts. The market, for the moment, makes sense.
And what of the future? How will the market fare in 2010? Stay tuned for the next blog…