![]() |
Image Attribution: www.lawyersconveyancing.com.au |
In
my humble opinion - yes. I read with great interest - in this publication - the
residential real estate trends published by my colleagues - Jon Lansner, Leslie
Eskildsen, and Jeff Lazerson. For weeks now - we have noticed more houses for
sale, a greater supply of un-sold new homes, longer times on the market, and a
departure from a seller’s market into a more normal give and take environment.
So
what do residential swings have to do with commercial real estate, you may ask?
Plenty! You see - what happens residentially portends the haps in my world -
generally by 12-18 months. As an example - our residential peers experienced a
dip in 2006-2007. The commercial music stopped in 2008. So, if the theory holds
- expect a slow-down commercially sometime in late 2019 or early 2020. Full
disclosure - I’ve been wrong before.
Unfortunately,
with commercial real estate - our metrics aren’t as defined as they are with
houses - such as the number of new homes available, year over year sales, and
time on market. We track gross activity, net activity, vacancy rates, and
average lease and sale prices - by product category - retail, office, and
industrial. Therefore, most commercial real estate professionals rely on a
“gut-feel” of where we’re headed in their respective specialties.
So
what is my “gut” telling me about our dealings? Indulge me, while I share.
Listings are hanging around longer. Smart owners are meeting the
activity - regardless if the interest is below their expectations. As an
example - we recently brought to market a beautifully well located building
with complete updates and awesome features. Our pricing was aggressively high.
Bang! We got two offers right out of the gate - albeit at a significant
discount. Fortunately, our seller chose to deal. Those two were the ONLY buyers
that emerged.
Folks aren’t making stupid buys. Two years ago - no asking
price was too high. Now - establish a nutty ask - crickets!
Renewal activity is healthy. Companies aren’t
moving. Traded is a relocation in favor of - “we will just stick around for
another two to three years.” Consequently, a shadow market has emerged - which
is difficult to track. If a lease is transacted - we can generally discover the
terms. With a renewal - not so much - as this deal occurs with an owner and his
occupant - without any published availability.
Pent-up demand is waning. In a down market, a new
offering is met with a collective yawn. An up market will snatch the same building
whenever there is a sniff it may be for sale. Now, when something new hits, we
receive a few inquiries and a small percentage result in tours or offers.
The Labor Day bump. Generally - calls,
inquiries, and requests to tour all take a hiatus in the summer months. Once
the kids are back in school and the calendar adds an “ember” - things heat up.
Not this year. Labor Day has passed - right?
Certainly
in-exact. But I’m willing to trust my gut. It’s not mislead me to-date.
I’d
love to read your comments. What are you experiencing?
No comments :
Post a Comment