Multi-family: Apartment transaction volume surged 132 percent from this time last year until now (Real Capital Analytics).
Office: The U.S. office market absorbed 12.0 million square feet in 2011, which is the highest amount of absorption since 3Q07 (Grub & Ellis).
Retail: In 2010, there were approximately 1,590 retail store closings throughout the country, compared to only 538 this year (International Council of Shopping Centers).
Industrial: Approximately 78 million square feet of industrial property will be absorbed by the end of 2011 with only 30 million square feet of new product coming on line. Industrial space demand will broaden beyond warehouses. As credit loosens, small businesses will expand into multitenant business parks and flex properties (Marcus & Millichap).
Even though most of the world is still thinking apocalypse, you can’t ignore these facts. These are signs of a bottom and a commercial real estate recovery. Regardless of what is happening in our country and throughout the world, people still need a place to put their money and Commercial Real Estate and the United States will always be considered the favored flight to safety.
So, this is all great and a bottom has been established, but what are a few ways that you, an investor or business owner, can take advantage?
Most importantly, find a commercial real estate agent to assist you. There are many real estate agents out there but there are only a few that handle commercial brokerage exclusively. Don’t let residential real estate agents tell you that they know enough about commercial to do it. If they did, they would specialize in it. It’s like going to a podiatrist when you are having a problem with your heart. Another analogy is a knee replacement; if you need a knee replacement, would you go to a surgeon who has completed three surgeries or the doctor who has successfully completed over 3,000? There are many great residential real estate agents in our town and most of them are professional enough to refer you to a commercial real estate practitioner. If they don’t, ask them why not.
Look for Seller Financing. By getting the seller to finance the interested property, you will avoid any points or closing costs associated with conventional financing. Additionally, your down payment requirement will most likely be less. Banks are asking anywhere from 25 to 35 percent down and credit scores above 2,000 (just kidding, but it seems like it).
Lease Purchase Options. If you own a business and are leasing now but would like to take advantage of the opportunities out there, have your Commercial Real Estate Agent look for a property that fits your needs and is available for lease or for sale. Properties that have been vacant for a while are suggested. Your agent can then ask the owner if he would entertain a Lease Option Agreement, where you would lease the property at a certain marketable price and after a determined number of years have the option to purchase the property at a price that is negotiated today.
In the last few years, it seems like every deal has been difficult. Fortunately, together with our clients, we have been creative and have not only thought out of the box, but on top of the box, standing on the box, etc., in order to successfully close our transactions. I believe that the entire business world has changed and unless we adapt to those changes, we will be left in the dark. FBN
Written by Mark Belsanti
Mark T. Belsanti, CCIM is owner/agent of da Vinci Realty, LLC. He can be reached at (928) 779.3800 Flagstaff, (928) 254-1770 Sedona, or HYPERLINK “mailto:firstname.lastname@example.org” email@example.com.
You can view da Vinci Realty’s website at HYPERLINK “http://www.davincirealty.com” www.davincirealty.com to view his listings and read past articles.