Posted by jjjttpm on January 01, 2009 at 20:39:22:
I think that the investors with less debt and more cash are going to make out fine. The secondary mortgage market needs to regain its legs before conventional financing can be relied upon for apartment buildings.
I would make a distinction among various classes of commercial real estate. Apartment buildings seem strong. On the other hand, unless you’re a real contrarian, I would advise anyone to stay away from retail. The changes that are occurring in that industry began before any hint of this recession and will continue after the rest of the real estate industry recovers.
I don’t know much about office properties. I would think that the jobs rate (which is not good now) would have a direct impact on office values. If you see this as cyclical, now might be the time to buy. Anyone in office properties care to comment?
Is Industrial too much for the little guy to chew?
Posted by HILLSIDE on December 30, 2008 at 06:12:52:
Your guess is as good as mine. I’d say apartments are going to continue to do well, but sellers know they’re in demand so expect to pay full market value. For the most part, in my market, things seem to be at a stand still. Buyers think properties are overpriced and sellers hope the market won’t get worse, not to mention lenders aren’t lending. I’m waiting till the 2nd or 3rd quarter of '09 to agressively start seeking deals again. None of the commercial sectors look strong to me. Retail is obviously hurting, so is office, it’s just a matter of time before industrial suffers. I think there will be good buying opportunities in late '09. Beyond that, you still have to deal with the uncertainty of interest rates, inflation, and when lenders will lend.
The experts are changing their mind on a daily basis, so asking for a
prediction on this is futile. At this stage, the last thing I have heard is
that 2009 is a good year to pick up commercial and multi-family
properties, but there may not be as many super hot deals as people
seem to think. Right now lending is tight and buyers are waiting, so a
few desperate sellers will produce a few great deals, but the vast
majority of sellers are still optimistic about this industry and prepared
to wait it out. Many expect economic recovery to start happening in
2010.
Bottom line, keep your eyes open for a deal. You might land one. But
don’t wait around either. After 2009 they expect cap rates to stay
down, not go up. You may be able to find some solid deals during
2009 , not earth shattering.
As usually, trying to time the market is wrong idea. Look for the right
locations and go there.