Four industry experts shared their views on trends affecting the Greater Des Moines commercial real estate market at the Institute of Real Estate Management’s annual market survey update luncheon last week.

The panel discussion, moderated by Gene Nelsen of Nelsen Appraisal Associates Inc., summed up the outlook for office, industrial, retail and multifamily investment properties in 2009.

“It’s a tenants’ market,” said T.J. Jacobs of Terrus Real Estate Group, referring to office space. “The recession has definitely hit Des Moines.”

With long-term tenants assuming a “hunker-down” attitude, generally signing shorter- term leases at a higher rate, and sublease scenarios becoming more prevalent, more focus must be placed on “tenant retention,” Jacobs said. To that end, he added, candid communication with tenants about topics such as credit worthiness is paramount, in addition to landlord concessions, such as money for tenant improvements.

Jacobs also foresees medical, government and education buildings being notable standouts in the coming year as the construction pipeline empties out.

Referring to retail properties, Chris Stafford of Ruhl & Ruhl Commercial Co. said 2008 will be remembered as one of “the most dramatic and chilling years,” in recent history as retailers closed hundreds of stores, laid off thousands of workers and increasingly filed for bankruptcy protection.

Though Des Moines is somewhat “sheltered” from the onslaught, he said, the market will continue to experience “see-through” retail centers in 2009, including new and existing spaces that have been vacant for months.

He also said to look for more empty tables at high-end restaurants in the coming year, adding that dollar stores and value-menu restaurants may fare better.

It will take a “smarter approach” by those in the industry to keep the Des Moines market as consistent as it has always been, he concluded.

On the industrial side, Darin Ferguson of Ferguson Commercial Real Estate Services said landlords will be fighting to retain tenants in 2009-10 and, to that end, continue to offer more incentives, such as tenant-improvement dollars, free rent and other concessions.

Ferguson said some tenants may consider relocating to lesser-quality industrial properties, with less expensive rents, rather than pay more for better efficiencies and a higher grade of construction found in newer developments.

Rick Krause of CB Richard Ellis/Hubbell Commercial outlined the state of investment properties in the metro area, saying that apartment sales in 2008 dropped 48 percent from the prior year, with just 72 transactions recorded in Polk County.

The dollar volume of apartment transactions also plummeted from $81 million to $31 million, according to Krause, with only one deal topping $5 million. The size of the average transaction also fell to $431,000 from $583,000.

Four former Regency Homes apartment projects, including Polo Club, Bennett Woods, Washington Heights and Drake Park, which have been under contract for eight or nine months but have yet to sell, are a “sign of the times,” Krause said.

He also noted that investors who made acquisitions prior to 2003 may be less affected by the market shift and are likely enjoying a reasonable return.

“If you bought prior to 2003, prices were not so inflated,” he said, adding that many people who purchased properties after 2003 “probably paid too much” them.

“Most of the sales will be distress sales” in 2009, he said, adding that he is advising most of his clients not to sell unless they absolutely have to in order to stay afloat.

Though Krause expects the credit markets to loosen in 2009, a large number of loans coming due and debt needing to be refinanced during the next couple of years will push a buyers’ market for investment properties into 2011.

“There is no enthusiasm for owning real estate right now,” he said.

All panelists agreed that capitalization rates, which measure the ratio between the net operating income generated by an asset and its capital cost, will rise in 2009, forcing down property values.