Commercial real-estate investors plan to double investments worldwide, according to a recent study. There will be $315 billion available for purchases during the year, according to a forecast by real estate adviser DTZ Holdings. But that may not be enough to revive the market.
“Property values have fallen considerable but there may be more to come,” says Ed Kearney of the Florida commercial real estate brokerage firm Kearney Commercial Realty/Sperry Van Ness. ‘But many owners are still hoping for better times and a return to the values of a couple of years ago. I think that the longer these market conditions persist the greater the chance that owners will give up and sell, thereby accepting the market losses.”
Money coming into the commercial market today is looking for either turn-around situations that can be purchased at huge bargains, quality properties with good tenants in place at reasonable cap rates or owner-user opportunities, Kearney says.
About 30 percent of capital raised will target specific countries, with the Great Britain and the United States at the top of the list, said DTZ. Overall, foreign markets will do better.
Buyers will look for bargains, according to the DTZ study. Investors will consider the property’s value rather than the type, geographic market or class. The focus on price may pose challenges in some parts of the country, especially the West Palm Beach market because of the number of bank foreclosures that could suddenly be up for sale.
“The big question now is whether banks will release their troubled assets ahead of other property owners,” said Kearney, who is managing partner Kearney Commercial Realty/Sperry Van Ness. “If the banks try to go first, other sellers will have to emphasize quality and upside potential over price. The right broker can make the case that it’s better to take a higher-quality property at a premium because the property is in better condition and has better-credit tenants.”
DTZ says that third-party managed funds are the largest category of investors. They will provide about 60 percent of the capital. Institutional investors will invest about 28 percent of the total.
There is one caution in the report. DTZ says that because so many property owners are having trouble extending or refinancing the debt on their assets, some of the money might go into balancing the books on properties. That could decrease demand for property, Kearney warns.
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.