Here is an interesting article by CoStar regarding commercial real estate and the disconnect between buyer and seller mentalities. I excerpted Ron Opfer's quote from the piece since I think it expresses todays concerns well.

Ron Opfer, CCIM, a broker with Coldwell Banker Premier Realty in Henderson, NV, said all asset types are attractive right now from a buyer point of view.

"You just have to use real numbers in your math and make some sort of adjustment for a market that is continuing to fall," Opfer added. "Our investors chop the reported lease rates by 25% to 35%, apply a higher than reported vacancy rate, and use a cap rate that truly reflects the current risks associated with commercial real estate. No longer can you associate the same risks with commercial real estate as you would with a money market account. From an investor point of view, the days of artificially low cap rates are gone."

"It is absolutely essential step to recovery that the CRE assets re-set at current market rates. There are CRE assets all over the country that simply cannot re-lease due to the fact that current market lease rates do not pay the mortgage. These mortgage values have to be re-set in order for the assets to offer the necessary pricing," Opfer said.

The Disconnect: Seller Side

The sellers mind set still appears to be to try to hold on and ride out the volatility until things stabilize. Or as Opfer put it, "banks are having trouble pronouncing the word 'loss.'" Thus buyers are finding it extremely hard to negotiate a deal with banks.