News from Commercial Real Estate Workshop!

I recently attended the Commercial Real Estate Workshop of the Midwest (CREW) held here in Omaha. Some of the newsworthy information gleaned from this meeting are:

1. Retail landlords are making some very good concessions to get tenants to stay in place and are being much more generous with allowances to get tenants into their buildings.

This means that if you presently have a lease with a retail or office landlord, a review of your lease may find some areas where you can negotiate some savings from your current landlord. If you are contemplating a renewal or a new lease, you should enlist the services of a seasoned commercial real estate agent to be sure you get the best deals available. It is typically not in your best interest to merely contact the agent on the sign, as he or she has a vested interest in keeping the landlord very happy with the deal.

2. Several bankers presented information at the meeting with the message, "yes we have money, but you can't have any".

Basically these bankers are saying that they have a lot of capital but they are being very select in how they lend it. Non-recourse loans are basically a thing of the past, loan to value ratios are dramatically lower (60-65 percent), and debt service coverage ratios have gone up. All of this means that if you are planning to buy commercial or investment property, you will need a guarantor that has exceptional credit, a sizable down payment, and cash flow to cover at least twenty five percent over the cost of the loan.

3. There are exceptional deals on commercial and investment real estate available in all parts of the country.

If you have the cash for a down payment, good credit, and a well thought out and documented business plan, there are some great deals on real estate, and you can get the money to finance it. Capitalization rates have climbed meaning lower asking prices. As commercial notes come due, the value is no longer there as cap rates have risen and net operating income (NOI) has dropped. Property owners will find themselves with a more difficult time getting refinanced, and banks don't want to own the real estate. This scenarios creates an excellent opportunity for those with the means and desire to acquire real estate at substantial savings.

4. It is no longer business as usual.

Virtually everyone that spoke at the the CREW meeting agreed that commercial and investment real estate owners, brokers, and investors can no longer do business as usual. There is a lot of uncertainty in the marketplace, with tax considerations, and with wall street. It will take a while for confidence to return and even when it does you must have a broker that has the ability to stay in touch with national as well as local issues. You need a broker that has the training and understands IRR, NOI, GOI, cap rates, basis points, tax issues, and a host of other terms that will impact your commercial and investment property decisions.

As a member of the RE/MAX Commercial network, I have access to some of the most advanced technology available and over 95,000 agents around the world. My membership in the CCIM Institute and as a CCIM designee puts me in the company of the top five percent of all commercial real estate agents in the country. I not only have the tools and the connections, but I have the willingness and ability to speak to commercial real estate agents around the country and with specific expertise that I may need.

I look forward to working with you in all aspects of commercial and investment real estate.