Posted by Holly on November 17, 2008 at 11:44:25:
I am a broker in Alabama. Not a lot of new growth in this market. Many national retail franchises have put growth on hold. A lot of our new leases are coming from businesses downsizing to smaller buildings.
Vacanvies - Posted by luap
Posted by luap on November 13, 2008 at 09:12:23:
For those of you with commercial buildings in the office or industrial space, are you seeing or do you see an increase in vacancies do to the economy?
I’ve found a great property with 11% CAP, but I’m hesitant (scared?) to make the leap. Maybe I should stop watching the news.
Re: Vacanvies - Posted by GYP
Posted by GYP on November 13, 2008 at 12:32:12:
is CNN talking about cap rates? maybe I should start watching the news!
no one here can answer your question based on the minimal details you’ve given us. real estate markets are very localized. your market could be very strong and another market failing miserably
in MY market, office vacancies are rising, but not sky rocketing, new retail space is slow to lease and industrial seems stable. but this is my market and doesn’t tell you whether your 11% cap rate property is a good deal or not
Re: Vacancies - Posted by luap
Posted by luap on November 13, 2008 at 09:13:42:
umm yeah that would be Vacancies
Re: Vacanvies - Posted by Luap
Posted by Luap on November 13, 2008 at 15:29:46:
Thanks for the response.
Actually not looking for info on if 11% CAP rate is a good deal, I’ll take that all day long. Also not looking for info on vacancies my market, I know that as well.
What I was looking for is others experiences in their market. I know people like to say, your market localized, but what I’m concerned about is that we have a tsunami economic crisis that is going to show its effect on all markets.ie they are comparing it to the Great Depression, which would effect all markets. So just like to hear how its effecting those in their markets.
Re: Vacanvies - Posted by Mike M
Posted by Mike M on November 15, 2008 at 04:06:03:
Make sure 11% is the going cap rate in your area for office buildings. You can find this out by calling a few real estate brokers in your city.
Is there any expenses that can be reduced or vacancies to cure in this property? Buy on what the property is currently producing.
Re: Vacanvies - Posted by luap
Posted by luap on November 16, 2008 at 09:37:45:
Yes the CAP rate is above market rates. the property is a great deal and is completely vetted. Not a question of a good deal or not. As I said in my original post, just wanted to get an idea of how this economic crisis is being felt in your local markets, are you seen the effects.
Re: Vacanvies - Posted by Tom
Posted by Tom on December 04, 2008 at 18:09:03:
The person that talked about knowing your local market was absolutely correct. 2009 will be a difficult year in Commercial Real Estate. How diverse is your local economy? If you are in Michigan for example I’d say the outlook is bleak. They have lost 400,000 residents in the past few years. I am a Commercial Realtor in the Philly area and things have slowed- but deals are still moving forward and getting done. The residential sub prime mortgage default rate nationally is about 23%. The Commercial Loan default rate nationally is .05%. This is because in a commercial transaction it has always been customary to put 20% down. There is built in equity at settlement. As the economy goes so goes commercial real estate- however as any informed investor knows- you make your money when you buy. If you offer a good product and are a responsive owner I wouldn’t worry about vacancies too much. Every day leases expire- companies are looking for more space or less space and as the economy falls apart companies will want to preserve their capital and lease instead of buy. Real Estate cycles have historically been 7 years in duration and some say we are entering year 2. If you are a long term player- now is not a bad time to buy.