By Ben Johnson
Mar 25, 2008 12:33 PM

While the nation’s credit markets and economy might appear to be in a freefall, sellers of office properties continue to toe the line on pricing, stubbornly refusing to give up record-high valuations gained over the past three years.

But the question begs, “How long before the pressure builds and sellers slash prices?” asks Robert White, president of New York-based research firm Real Capital Analytics.

According to the firm’s newly released numbers, February office sales amounted to a measly $2.5 billion, which is a 45% decline from January, a 95% drop from a year earlier and the lowest monthly volume total in five years. While early 2007 sales figures are skewed a bit thanks to the huge privatization of Equity Office Properties Trust, the early-2008 metrics point to continued buyer skittishness.

During the first two months of the year, office sales totaled $6.8 billion versus some $20 billion in properties brought to market. The slow volume speaks to the widening bid/ask spread between buyers and sellers, with new listings outpacing closings by 4-to-1 in February and 3-to-1 in January. And tellingly, the deals getting done are considered more “core” or stabilized assets rather than value-added properties.

“There is a big difference between wanting to sell and needing to sell a property,” says White. “In the current market, sellers aren’t yet pressured into accepting too much of a discount in price which is a primary reason why volume has sunk to such low levels.”

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