Net Lease Insider interviewed Richard Ader, Chairman and Founder of U.S. Realty Advisors, LLC, one of the largest owners and acquirers of single tenant net lease real estate transactions. We asked him five questions dealing with the present and future of commercial real estate, his answers proved both insightful and thought provoking.
(1) Will the commercial real estate market bottom out in 2010? I do believe the first six months of 2010 will continue to show a decline in value and rents in most sectors of the real estate market. I believe the commercial real estate market will start to bottom out in late 2010 or possibly into the first quarter 2011. A key determinant will be how the growing shadow of maturing mortgage loans is handled.
(2) Is commercial real estate’s fate tied to unemployment or any other pertinent economic factors? Commercial real estate is tied to all economic factors due to the fact that real estate iscapital intense, and supply and demand driven. Job creation and unemployment directly impact all aspects of commercial real estate: vacancies impact rents for office buildings, and we assume that retail demand will continue at lower levels which will affect both retail and distribution properties. In addition, until the real estate capital markets are re-started, new real estate development is likely to remain at the current depressed level. In the background is the potential for increased inflation, which would impact the cost of operating properties and financing properties, but may not affect rents which are more demand driven.
(3) When recovery does begin, what areas will grow first and fastest? I think the first areas to recover in the real estate market will be retail and distribution, with office being last. I believe when the recovery comes, people first will start shopping again. This pent-up retail demand will trigger distribution to meet greater retail demand (and permanent changes in retail patterns). Office space will trail the recovery, as companies will first re-occupy large volumes of currently unused space before starting to lease new space.
(4) Are there segments of commercial real estate that you find appealing even in this economy, including the net lease market? We find net leases to be appealing. Like most real estate assets, cap rates today have increased substantially compared to the over-heated markets of two years ago, and lease terms are longer. There also are opportunities to buy mortgage debt at good discounts with the objective of owning the real estate or achieving equity-type returns.
(5) Would you prefer to invest: Close to home or in a stronger metro market? If yes, what are your top two choices? I think the preference today for investments in multi-tenanted office assets should be in the stronger metro markets. Distribution should also be in the stronger distribution areas, and retail should be based on prior performance. Net leases should be driven by corporate credit. How the lessee uses the asset in its business and what alternate demand for the asset would exist if the lessee were to move out.
Posts tagged ‘Commercial’
“Honesty Is The First Book In The Chapter Of Wisdom”
When all is said and done, the best way for you to get as much out of your daily apartment and commercial real estate investment business is to use as much leverage as you can to get everything out of each day as possible. You can look at it this way. You can be highly successful without using leverage, but more often than not you will be spending every waking hour working on your business.
You know, 100 hours per week. I once read about a highly successful real estate investor in Chicago that put in over 100 hours per week. I don’t know about you but I do have other interests besides real estate. I have a family, friends, hobbies, etc. I choose not to work like a crazed man who will have a life expectancy of 45. So, if you want to go down that path that’s up to you. You may want to consider the path of having a career and a life outside of the career. If you do I have good news for you. Continue reading ‘Using the Power of Leverage to Succeed in Commercial Real Estate’ »
When you are renting and managing commercial properties, you know that along with it, comes many headaches. With the piles of paperwork, bill payments, collection of dues and preparing the monthly financial statements for board meetings, do you feel you are not getting any free time? If all your times and energy fully go on managing your property, then how do you get time to boost your business? Have you ever thought about hiring a property management company in Arizona ?
Hiring an Arizona property management company to handle all of your paper works, and bills can allow you the freedom to manage other daily operations of your commercial properties, and thus can give you the time to make plans to boost your business.
Continue reading ‘Arizona Commercial Property Management Services Can Boost Your Business’ »
Flagler is most trusted and proven full-service commercial property Florida Company. They own, manage, lease, or have under development approximately 13 million square feet of Class-A office and industrial space located in strategic markets throughout the state. Flagler also own 4,400 acres of Florida land, of which 1,650 are entitled for up to nearly 19 million square feet of development. In addition, Flagler provides world-class third-party services including brokerage property.
Continue reading ‘Florida: Full Service Commercial Real Estate Company’ »
Plans for a National High Speed Rail Network – HS2 for short – have attracted controversy since their announcement and will continue to do so even after the Ministry of Transport’s final report before the end of 2011.
Continue reading ‘High Speed Benefits For Commercial Property?’ »
Most of the people go for mortgage when they have financial crisis. Everyone looks for lowest interest rates provided by lenders, banks and credit unions. It is well known that credit is granted as per one’s monetary capability. So usually people look for good commercial mortgage broker Ottawa to get the best deal. There are many benefits of these mortgage brokers some of them include:
Continue reading ‘Advantages of Commercial Mortgage Broker Ottawa’ »