Power Tools for Commercial-Investment Practitioners

An article in Wednesday's Wall Street Journal [available for free at wsj.com, though possibly for only a limited time. Here's the more permanent Proquest link], details how the collapse of the subprime loan market for residential real estate is spilling over in to commercial as banks are reluctant to finance new deals.

The Journal reports that the number of major commercial deals has dropped by half in the last six months as banks struggle to recover from a slew of bad mortgage debt. For the commercial market, this fall-off in activity hasn't led to a sharp drop in prices, but rather is still in the early stages of 'cognitive dissonance' where buyers are offering less but sellers are unwilling to accept that the market has turned.

Posted on December 27 at 10:05 AM | Permanent Link | Add a Comment (0)

It seems more and more cities are adopting green building standards these days. Jones Lang LaSalle says that currently 1in 7 cities throughout the U.S. already have green building programs or enhancements in place. And that number is expected to rise to 1 in 5 in the next year. Are you making sure your clients and contacts are up to speed on programs in your area? NAR has a collection of Green Building resources at your disposal on our website. And keep up to date with GlobeSt.com's new Green Outlook.

Posted on December 15 at 01:51 PM | Permanent Link | Add a Comment (0)

This week's About Real Estate from Torto Wheaton [free registration required] looks at how the credit crisis resulting from the sub-prime mess might impact commercial absorption over the next few quarters. The short answer is that while a growing risk premium might impact the real non-residential portion of GDP, there is no clear indication that the sub-prime fallout will negatively affect absorption. TWR looks at past recessions and periods of tight credit and finds mixed results:

The good news is that low loan volume did not always translate into negative absorption for [office and industrial markets]. The 1990 bust, in spite of and as a result of the drop in rents in that period, saw net absorption stay positive. 1998 was a non-event for real estate demand. Of the recent financial crises, only 2001 saw significant negative absorption...

TWR goes on to say that even 2001 is inconclusive as it is hard to separate out the impact of 9/11 from the dot com crash. Other economic fundamentals, such as labor force and job growth, appear to have a more direct impact on absorption.

Posted on December 10 at 12:29 PM | Permanent Link | Add a Comment (1)

In his keynote address to this year's CommercialSource online conference, David Frosh, President of Sperry Van Ness, says that the combination of a slowing market, more agents fighting over a shrinking pie, and the general lack of service provided to clients all will contribute to downward pressure on commissions in coming years. The bottom half of the market will help to drive rates down for everyone. Frosh doesn't necessarily see the coming slowdown as the doom and gloom it is often portrayed as in the press.

If you do the right thing, then you will be successful. The coming market change is not the problem. Agents not changing with it is the problem. You need to adjust, you need to understand that your buyers and sellers may change.

Posted on December 6 at 05:05 PM | Permanent Link | Add a Comment (0)