The collapse of the commercial real estate market has been forecast so many times in the media that anything but an implosion would be a disappointment to some investors, says Edward Kearney, managing partner of Kearney Commercial Realty Inc./Sperry Van Ness. But that thinking ignores the cyclical nature of real estate.
“No one knows whether the market in West Palm Beach will get worse or creep up this year,” says Kearney, who has experienced several real estate boom-and-bust periods. “Investors that wait and wait could make the same mistakes that buyers did when the market was booming.”
The West Palm Beach market topped out in 2007. The industrial vacancy rate was then 4.7 percent, for example, leading many buyers and sellers to believe that a weakening of the economy would not cause much harm to the West Palm Beach market.
Today, the picture is much different; warehouse space goes begging and construction projects are at a standstill.
“The same thing happened to office and retail properties,” said Ed Kearney of Kearney Commercial Realty. “Space was at a premium and sellers were dictating prices. Today, even local governments are trying to unload their office space.”
Buyers, sellers and their advisers had expected prices to keep going up, Kearney said. They ignored history, just like speculators in the residential market convinced themselves that home prices could never fall.
“Anyone who lived through the late 1980s and the downturn in 1990 knew in 2006 that the run-up would one day end,” said Kearney. “While no one expected such a sharp downturn, veterans of the industry like me knew that price increases had become unsustainable.”
An understanding of how the Palm Beach real estate market works will help buyers in 2010, said Kearney of Sperry Van Ness. Investors that expect commercial real estate prices to keep dropping will be disappointed when the downward trend ends and they miss out on the best buying opportunities.
“Make no mistake, high unemployment and a beaten-down residential market are depressing commercial property,” Kearney said. “We will not see a sharp rebound in rents or prices. But the odds that values will continue to fall are growing smaller and smaller.”
About Edward Kearney and Sperry Van Ness
Edward Kearney is managing director of Kearney Commercial Realty Inc./Sperry Van Ness with an extensive background in various aspects of commercial real estate including investment analysis, landlord and tenant representation, and property tax abatement. SVN is a leading national brokerage firm that markets commercial real estate properties to an investment and brokerage community of more than 100,000. Kearney welcomes investors, brokers, and others with an interest in the Florida commercial real estate market to contact him today by calling 561-616-6262, or visiting http://www.svnpalmbeach.com for more information about the services he provides.
For more information about Edward Kearney and Kearney Commercial Realty Inc./Sperry Van Ness, please visit http://www.svnpalmbeach.com/website/SouthFloridaOfficeSpace-west-palm-beach.html