A Tale of Two Markets
For better or worse, investors confront these trying times.
By Sara Drummond
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the
epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the
spring of hope, it was the winter of despair, we had everything before us, we had nothing before us ….”
—Charles Dickens
The comments of commercial real estate investors from an e-mail survey of investment habits recall the opening of Charles Dickens’ A Tale of Two Cities. It is the best of times if you are a cash-rich investor eyeing some of the greatest buying opportunities of the century. And it is the worst of times if you are a building owner experiencing 75 percent vacancy and a loan coming due in six months. It is the age of wisdom if, before making acquisitions, you evaluate property yields, determine achievable debt amounts, and plan your exit strategy. But it is the age of foolishness if you buy just because you can get a property for 30 cents on a dollar. It is the epoch of belief: Everyone has faith the market will return — maybe in two years, five years, 10 years? But it is also the epoch of incredulity: Ask any seller reviewing offers. Investors have everything before them — buying opportunities well below replacement costs in prime locations. But those with no cash or financing —“We have nothing before us.”
What registers from this unscientific, anecdotal roundup of current investor habits is a tale of two markets
simultaneously occurring: Investors with cash and investors without cash. No surprise here — the cash-rich are large
institutional investors for the most part. But some smaller investors also are looking for ways to stay in the market,
although many are just “hunkering down,” trying to hold on to their assets in the face of mounting vacancies, stagnant
leasing activity, and looming loan payments. The one thing everyone seems to agree on? This sorting-out of the commercial real estate market could take a while.
The Best of Times
Despite the opportunities in some markets, few are rushing in to scoop up properties right this minute — not even investors sitting on piles of accumulated cash. “We are being cautious with our equity dollars,” says Michael Broadfoot,
CCIM, of Inland Real Estate Group, a public, non-traded real estate investment trust in Oak Brook, Ill. Given the
improving economy, “Over the next six to 12 months property values may lag projections for occupancy and rent
increases, allowing opportunistic acquisitions,” he says. However, he adds that management and leasing teams must “outperform the market perception for the assets to realize the projected returns.” In other words, the upside is in the
follow-through.
Others are buying but not before they evaluate the opportunities carefully. “Our goal is cautious expansion over the next five years. We have steadily increased our holdings in 2008 and 2009 with expectations of the same this year,” says Jacqueline Ross, president of Investment Strategies in Solana Beach, Calif. “The trick is to structure acquisitions in such a way that they can adequately sustain themselves.”
Reprinted with permission from Commercial Investment Real Estate, The Magazine of the CCIM Institute, Mar/Apr 2010, Vol. XXIX
Medical Sale/Leaseback
Price Reduction
$1,159,360 - 10% CAP RATE
In 1996, Mark Mayfield and Randy Graham started in business together and in 1999 started their own company Southern Commercial Real Estate, LLC (“SCRE”) in Rock Hill, South Carolina located 15 miles south of Charlotte, NC. With a successful track record and established entity, SCRE expanded its services and national reach on January 1, 2007, by joining forces with a nationally recognized leader in commercial real estate brokerage, Sperry Van Ness, to form Sperry Van Ness/Southern Commercial Real Estate, LLC.
- Sperry Van Ness was founded in 1987, when Rand Sperry and Mark Van Ness created a commercial investment real estate firm with one key mission: To create unprecedented value for commercial real estate investors. Today Sperry Van Ness is one of the largest, most respected and fastest growing commercial real estate brokerage firms in the industry.
- Sperry Van Ness currently has more than 1004 advisors internationally.
- Sperry Van Ness is located in more than 150 cities across the US, as well as in Costa Rica and Panama.
- Sperry Van Ness completed over $11.6 billion in sales and leasing transactions in 2007.
SVN SCRE welcomes to our team
Kelly High & Lamar Williams!
Kelly High joins the Sperry Van Ness/Southern Commercial team as a senior advisor. High brings numerous years of real estate and construction experience in Columbia, Rock Hill and surrounding upstate area of South Carolina. Kelly specializing in sales, leasing, project management and property management. Kelly is a licensed broker in both North and South Carolina and a licensed General Contractor. Her construction and property management background will broaden the scope of services offered by Sperry Van Ness/Southern Commercial Real Estate.
Lamar Williams joined the Sperry Van Ness/Southern Commercial a few months back. Lamar has been active in the real estate brokerage and appraisals in Rock Hill since 1972 and is licensed in South Carolina. Williams specializes in raw land, commercial development and sales and leasing of commercial products.
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Mark J. Mayfield, CCIM Randy Graham
Managing Director | BIC Managing Director
1926 India Hook Road | Rock Hill, SC 29732
803.325.1000 | 803.325.1214 | www.svn-scre.com | info@svn-scre.com