CRE in Savannah is slow and steady. I am fielding more inquiries than ever for leasing, and the leases I complete are for longer periods of time (3-4 years vs. 1 or 2 years). Transaction attorneys at Lee, Black, Hollis and Rouse and busier than a partner there says.
Three recent news articles report market activity to watch though.
Summary: Real estate recovery continues, but at a slower pace. Not all segments will recover uniformly, but they are recovering.
Key Quotes:
The U.S. office market absorbed a little less than 1 million square feet during the quarter - far below the 8.6 million square feet averaged over the prior six quarters.
Nearly two-thirds of the 45 markets tracked demonstrated stable or declining leasing volumes.
Technology expansion and startup activity gained momentum in almost every market with prospects for growth.
Energy-heavy markets posted some of the largest leases and witnessed sales momentum and speculative new construction.
Despite declines in leasing volume, 57.8 percent of the markets saw gains in tour velocity and active tenants compared to the previous quarter.
Sales activity and volume was evenly distributed among geographies with nearly one third of markets reporting an uptick in sales.
Construction remained low across most markets; however, activity has increased from 18.1 million square feet under development to 33.7 million square feet.
Second, CMBS Slump As NY Fed Commercial Mortgage CDOs May Be Sold. This means the rumored sales of CRE collateralized debt obligations (CDOs) caused the value of CMBS to decline. This video explains CDOs really well. If CMBS decrease in value, it becomes harder to refinance them.
Third, Commercial Real Estate Woes Fueled Recent Bank Failures, two of which were in Georgia. As said in a previous post, if there is diminished (or no) cash flow or if real estate values are increasing as planned, then the notes aren't repaid and the banks can be at risk. Too much exposure to bad loans means the bank fails.
Savannah is doing well in its own little bubble, we just don't need the larger economy to burst it.
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