Commercial Market on the Rise
I know you’re concerned about the housing
market. Everyone is and, let’s be honest, no
one is really sure where things are going to
go. But I thought I’d lift your spirits just
a bit with this little piece of news.
According to the latest reports, the
commercial real estate market may show a
significant upturn in 2010.
Well, let’s clarify a bit before we go on.
The declines that the commercial market have
been showing this year (and what hasn’t been
showing decline, right?) have started easing
off slightly. This comes from the Real Estate
Research Corporation (RERC) in their latest report.
They mention that we can’t look for amazing
growth during the first quarter of next year,
but we can expect a recovery to begin during
the second half. Despite appearances, says the
report, including bank foreclosures of high-
end properties and worries of bank failures,
there are definite signs of improvement. Essentially,
the time to get in is now, while prices are
declining.
The buying and leasing opportunities in this
market will prove extremely profitable. The
report points to increases on a "quarter to
quarter" basis (despite 12-month declines) of
transaction volume, including office, retail,
apartment and hotels.
The RERC has established a 1-10 rating system
for investment potential, with 10 showing
optimal investment conditions. Interestingly,
apartments led the pack with a rating of 5.5
in the third quarter of this year.
*** Is this a virtually untapped market for
us short sellers? Have we not focused
enough on the apartment sector?
Here are a few trends to watch out for in the
coming year:
1) Credit will remain limited with
foreclosures coming fast and furious.
2) Consumer spending will stay down while
folks pinch their pennies.
3) Vacancy rates will still surge for a while.
4) Construction will stay slow early on.
But don’t worry, sales volume and transactions
are eventually expected to increase and money
will start moving into the commercial real estate sector.
So aim high next year, keep your sights on the
next big opportunity, and have a great new
year!
-
Kelly Harper
