Has Commercial Real Estate Bottomed?

Has CRE hit the bottom? Is it starting to get better? These are the questions Jeff Reeves tries to answer in his latest article.

The problem with this question is that it leaves off a key component- locality.

I think that broad national stats are reassuring, but essentially worthless. Yes, Reeves is writing for a national audience and I don't fault him that. But CRE, like all real estate, is an inherently local business.

Miami and Washington, D.C. have had a great year. Charleston I am told had a so-so year. The Savannah market was on fire- blazing- all 2012. And as soon as the first dredging shovel hits the bottom of the Savannah River, West Chatham is going to explode with development.

A frequent question similar to the article's title was "When will the other economic shoe drop?" Well, again, where are you expecting a shoe to fall? There was no one humongous shoe, but a million little ones. Each market was affected differently.

Reeves' article uses office as a measure of CRE health- and it is an excellent choice. When companies hire, they need a place to do work, so office vacancy rates are a direct correlation to the health of U.S. employment.

National office vacancy rates could not sink past the 17% mark all year. So things aren't getting worse, they might get better or they could stay the same for a while. Half way through 2012, Savannah's office vacancy rate got just below 20%. Not great having 1 out of 5 offices vacant. But downtown Savannah's vacancy is around 9%.

But in an incredibly risky $30 mil gamble, the Cay Building was built downtown and pre-leased 96% at $35/SF. That's 96% of 71,000SF. Wow.

Would I buy an office building for an investment? Not unless I had a lease agreement in place with a tenant who would lease said building. Otherwise if I wanted to buy office space low and have potential to sell high I'd invest in an office REIT.

Invest smart, not spec. Think local, not general.

Update on 1/16/13. Genesis Capital also weighs in on office markets as a sign of market health.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Fiscal Cliff Hogwash

I don't claim to know it all, but when I read JLL reports projecting increased growth and the benefits of the fiscal cliff, I have to wonder if as an industry we only see the trees and not the forest. Which also happens to be on fire.

Core markets (D.C., Chicago, L.A., New York, Atlanta, San Fransisco, etc) that are seats of industry and goverment will almost always do well. And there are smaller markets, like Savannah, that have the real estate throttle wide open.

The problem is that articles glossing over the fiscal cliff, Patient Protection and Affordable Care act, Up-Eurs Zone volitility, etc. make a key error. They presume that decreased uncertainty will equal increased economic growth. Such is not the case.

In his acceptance speech Obama did reduce uncertainty and make some very specific tax proposals. In particular, he promised to:

• Raise the top marginal income tax rate to 39.6%.
• Raise the top short-term capital gains tax rate to 39.6%.
• Raise the top long-term capital gains tax rate from 15% to 20%.
• Raise the top tax on dividends from 15% to 39.6%. There will also be an additional 3.8% tax on dividends as of January 1.
• Replace the alternative minimum tax with the "Buffett Rule." That means the highest income-earners will pay a minimum 30% tax rate on wages, interest, dividends and capital gains.
• Raise the estate tax rate from 35% to 45%.

Every day bits of "Obamacare" are translated into Treasury code and released to the public. These new rules are not reported by media, but their effects are. Layoffs, decreased hours, diminished bonuses, hiring freezes are now daily reports.

In unrelated news, inflation has ticked up, jobless claims are up, poverty rates are spiking.

How can going over "the fiscal cliff" possibly help commercial real estate or the economy as a whole?

The authors gush "Continued low interest rates will prompt people to buy!" True, but lending standards are still tight because banks don't want to lend money if they can't make a decent profit. They'd rather keep the cash in excess reserves for the Fed to pay them interest on.

"Less uncertainty in healthcare means more real estate deals!" I've lost two medical office deals due to the new certainty of taxes and regulation in the last month.

Let's get real about the fiscal cliff: there won't be one. Obama owns this budget deficit now. He must act on it or his legacy will be mud. When has Congress ever had a problem compromising to let federal spending continue?

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Keys to understanding opportunities in real estate

By David Sherman | October 2, 2012 10:04 am as seen in http://www.pionline.com

Summary: The savvy commercial real estate investor knows that properties with stable, long term tenants that produce  reasonable (an amount determined by individual criteria) fetch top dollar. Other properties with slightly more risk (expiring leases, high maintenance, vacancy, refinancing needs, etc) are dirt cheap. The goal is to find the mispriced riskier properties, install new management and add significant value, and then sell as a safe investment for a nice profit. Investors are duplicating this process with properties from single family homes to skyscrapers.

Key Memorable Points:

Income is expensive, but bricks are cheap.

As traditional debt capital remains limited, new sources form.

A steady supply of overleveraged assets will continue to come to market.

Fundamentals have bottomed out in most major markets.

Mispriced risk creates attractive investment opportunities.

Read the full article at Keys to understanding opportunities in real estate

A. Joseph MarshallColdwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

In commercial real estate, the other shoe(s) are falling

Portland Business Journal by Rance Gregory, Morrison Street Capital

Date: Tuesday, September 4, 2012, 10:57am PDT - Last Modified: Tuesday, September 4, 2012

Yes, we've all been reading about colossal 1 ton shoes that will fall on the commercial real estate market. And yet it hasn't happened the way we've been expecting it. Rance Gregory explains why.

Summary and Key Quote.

Commercial real estate simply does not mark-to-market as quickly as do stocks and bonds, no matter how many derivatives the industry puts in place to make bets on the direction of the market or how badly some wish it would be so. In reality, commercial real estate has been a slow-motion train wreck for the past five years. There has been real damage and pain, but it has occurred largely out of view, in loan workouts, consensual foreclosures and complex recapitalizations, resulting in paper writedowns and real losses.

Why then hasn’t the crash been loud and sudden? Why do many have the feeling the industry is recovering or has recovered? It seems many industry veterans were expecting to fight the last war, remembering a saving and loan collapse and a consolidated government-sponsored (RTC) fire sale of troubled assets. Instead, the actual mechanisms involved provided banks with additional capital (TARP), or worked on healing the background credit markets (CMBS) through programs such as TALF, PPIP, etc, in the hopes of stabilizing the system and providing time for the industry to work through its problems in a more organized way.

The answer is that it wasn’t one giant shoe, rather many thousands of smaller shoes, dropping one loan at a time, scattering across a diverse commercial real estate landscape, leaving behind alternating spots of utter destruction and patches of renewal.

 You can read the full article at In commercial real estate, the other shoe(s) are falling

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Reports Say That Despite Supports, Commercial Real Estate is Recovering at Slow Pace

Posted by Alex Ferreras on August 27, 2012 in Real Estate

Summary: The headline announces slow CRE recovery across the board, but the text reveals that this is in specific markets. Slow job creation growth and lending restrictions has slowed commercial real estate growth in some areas. Otherwise, increasing demand and favorable lending supports CRE growth across the board.

Things are still positive with vacancy decreasing in varying degrees across industry segments (office, industrial, retail, etc). Multi-family is of course very positive with late coming investors jumping on that bandwagon. Multi-family lenders are flooded as a result.

What could slow things down? Drama in Up Eurs Zone, the "fiscal cliff" everyone is talking about, fall out from the November elections and decreased lending by community banks are making everyone cautious about the future.

Read the full article at Reports Say That Despite Supports, Commercial Real Estate is Recovering at Slow Pace

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

The Perfect Storm For Commercial Real Estate Investing

From ValueWalk
July 10, 2012
By: Jacob Frydman

Summary: If one has impeccable timing, buying any investment vehicle will be profitable. If one doesn't, consider these three synchronous events for investing in real estate.

1) Buying debt on property is the cheapest it will ever be. Interest rates are artificially supressed longer than anyone expected.

2) $1.2 trillion in CMBS have been and are coming due. The financial industry has been hoping rising property values will save the day. But that isn't happening except in very specific real estate markets with specific properties. So get ready for more foreclosures to depress values.

3) The "Up Eurs" zone crisis is driving money to alternative investments. Et voilà, real estate.

The article I'm summarizing concludes with "Buy into REITs!" I showcased an article like this before, but the difference between this article and that on is that there is a light at the end of the tunnel! Buy low, add value (literally, revenue) and sell high!

Read this opinion piece in it's entirety at The Perfect Storm For Commercial Real Estate Investing

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Commercial real estate refinancing is expiring

Published: Monday, May 7, 2012 at 7:37 a.m.

Summary: The U.S. Small Business Administration's temporary 504 refinancing program will come to a screeching halt Sept. 27. Unless Congress extends the deadline, small businesses with owner-occupied commercial properties might be less able to pay off balloon mortgages coming due. Others will miss the opportunity to lock in current rates below 5 percent.

Key Quotes: Lower property values along with tighter credit are a double whammy for business owners trying to refinance. But under the 504 refinancing program, borrowers can get up to 90 percent of value. What is more, most transaction costs and qualified working capital, projected for the next 12 months, may be included.

The maximum loan amount is around $9 million to $10 million, depending on the type of property and how much risk the first mortgage lender is willing to take. The approximate minimum is $250,000.

Read the full article at: Commercial real estate refinancing is expiring.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

U.S. Federal Reserve Beige Book: Atlanta District

The following is the text of the Federal Reserve Board’s Sixth District-- Atlanta.

Real Estate and Construction

The majority of residential broker contacts reported that home sales exceeded the year earlier level in late February and March. More than two-thirds of the brokers indicated that sales met or exceeded their expectations. Florida contacts noted strengthening sales, particularly in South Florida markets. Many noted that inventory levels across the District continued to decline on a year-over-year basis and, in spite of this, home prices were flat to slightly down compared with a year ago. The outlook among brokers for sales growth remained positive, with most anticipating modest year-over-year gains over the next several months.

The majority of homebuilder contacts reported that new home sales and construction rose modestly during late February and March compared with a year earlier. Similar to brokers, builders also noted that home price declines abated somewhat and new home inventories continued to decline on a year-over-year basis. Contacts observed that multifamily construction remained robust across much of the District and new projects continued to be announced. Over the next several months, homebuilders anticipate sales and construction to be flat to slightly up compared with a year ago.

Most commercial real estate contacts indicated that conditions continued to improve slowly in the region. Contractors noted a slight improvement in demand, but the market remained very competitive and overall activity remained at low levels. Commercial real estate brokers continued to report modest improvements in demand, mostly for class A space in urban markets. Some reported that businesses have become more willing to move ahead with lease plans. Rent concessions continued to be noted with several brokers reporting that rates have begun to stabilize; however, longer leases were reported which included generous tenant improvements. The outlook among contacts was a bit more positive than previously reported, but most contractors and commercial real estate brokers continued to anticipate that activity would improve slowly this year.

To read the full report see U.S. Federal Reserve Beige Book: Atlanta District

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Three recent speed bumps for commercial real estate.

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.

First, U.S. Commercial Real Estate Market Experiencing Decelerating Recovery according to JLL. 

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. 

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Commercial Real Estate Over-Leveraged, Neidich Says

Over-leveraged: To borrow too much money and be unable to make payments on the debt.

To state the obvious, in the real world you need cash to pay off debt.

In Washington, D.C. and Wall Street, you just need a bunch of suckers.

It is no surprise to anyone in CRE that $1.2 trillion in commercial loans have been coming due since 2010.

But what is a surprise is that the banks that would've failed when these notes came due, haven't. The country hasn't been crushed by bank failures because the gov't and Wall Street have been trying to refinance the loans to buy the borrowers some time. But to do this, the gov't had to eliminate massive tax penalties for investors who refinanced these loans, which the Treasury Dept did in 2011 by changing the rules regarding REMICs.

Just like residential borrowers who are refinancing their homes, commercial lenders are doing the same with investors who own malls, office towers, warehouses, etc. At the insistence of the Federal Reserve, banks have been giving the borrowers more time to pay the loans while they hope and pray property values return to normal. And in addition, banks have been "asked" to do troubled debt restructuring. This basically means, let's find ways to make a bad loan not look like a bad loan. My friend, who didn't exactly give permission for me to quote her, says that as VP of her bank, it is good practice for a bank to have 100% in reserve for a non-performing loan. However, it is now difficult to tell just how much of a bad loan is actually bad.

Why? Well this is because if a borrower can't make monthly payments, the bank examines the property's cash flow. Under new Federal guidelines, a bank can now say, wow, 50% of the property is making money and 50% isn't. Therefore, only 50% of the note is distressed, so we only need to keep 50% of the bad note in reserve. At this point a bank would have two options: write down the note and take a loss or reconfigure the terms of the debt and keep a little more in reserves.

But back to reality; if a note isn't being paid because there is no cash flow, then it is over-leveraged. It doesn't matter what percentage of the investment is or isn't making money.

I would love educated comments on this opinion piece.

3/27/12 Also see $362 Billion In Commercial Real Estate Debt Maturing This Year

What Matters For Commercial Real Estate: Supply And Demand

Investing 2/24/2012 @ 12:23PM by Brad Thomas

Summary: Sam Zell told CNBC that simple supply and demand shows why commercial real estate "must come clean by 2013" meaning that we must put the majority of distressed real estate behind us by then. Zell says our problems can be summarized in one word, "demand". The author says our problems are summarized with another word: "jobs".

Key Quotes:

Zell said, "We have built nothing since July of 2007. That’s the good news. So we’ve had no additional supply. The bad news is that we’ve also had less job growth and less demand. So literally, the existing facilities are getting filled up, but at rates that don’t reflect new cost. So I think (commercial) real estate still has another couple years to get its act together.”

Regarding multifamily housing, combine[...] surging demand from renter households that are postponing decisions to buy homes because of the flagging for-sale sector, and you’ve got a great combination. That’s why vacancy rates dipped by 280 basis points in 2010 and 2011, ending at 5.2%, the lowest vacancy rate in more than a decade.

For office properties it’s a little less ideal. Anemic job growth means less demand for office space, but supply growth was halved from 2004 to 2008, compared to 1998 to 2003. As a result, office properties have less of a glut to deal with.

Retail properties have it worst.

According to Trepp, LLC, the third quarter 2011 distress levels for construction/land is 16.28%, commercial mortgage is 4.85%, and multi-family mortgage is 3.57%. As Zell referenced, distressed assets should continue a linear decline in 2012 and 2013; however, distressed land will not be as responsive to the overall recovery. The commercial real estate markets are still flooded with distressed assets and expiring loan maturities.

Read the full article at: What Matters For Commercial Real Estate: Supply And Demand

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Commercial Real Estate: A slow grinding path

Atlanta Business Chronicle by Michael Bull, Bull Realty

Date: Friday, February 10, 2012, 2:08pm

Summary: Each major commercial U.S. real estate sector is expected to improve given that: job growth continues, the European debt crises are resolved and the presidential election doesn't scare investors.

Key Quotes:
Apartments should be the strongest asset class this year.

The national industrial market has experienced seven consecutive quarters of positive net absorption, and the sector will again experience improved fundamentals in 2012, as some corporations bring manufacturing back to the U.S. and the Panama Canal is widened. Note that Savannah will not immediately benefit from a wider Panama Canal.

Unlike past downturns, the CBD markets are rebounding better than their suburban counterparts. In particular, medical office properties will continue to be a favored asset class. See also A prescription for Atlanta commercial real estate investment (and Savannah).

The retail market was hit hard by the recession, but is getting back on its feet.

Read the full article at: Commercial Real Estate: A slow grinding path

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Need more office buildings? Not likely, U.S. told

Chris Acheson
Monday, Feb. 6th, 2012

Summary: The Building Owners and Managers Association concluded at a meeting last month that the U.S., apart from special markets like New York, Chicago, etc., does not need new office space. This does not mean the office space market is doomed, but will see a demand to retrofit existing spaces.

Key Quotes:

“We don’t need another office building,” says Martha O’Mara, a symposium panelist, lecturer at the Harvard University Graduate School of Design and managing director of Cambridge, Mass.-based commercial property consulting firm Corporate Portfolio Analytics Inc.

“Our traditional idea of an office space and the idea that as the number of office jobs increase, it will lead to an increase in demand for office space, just doesn’t hold any more.” The reason, according to Dr. O’Mara, is that most companies already occupy about 50 per cent more office space than they actually need, while technology has drastically changed the post-war work model.

Read the full article at: Need more office buildings? Not likely, U.S. told

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

U.S. demand for commercial real estate loans up, but lending standards not loosened

From TheReadDeal
January 31, 2012 04:00PM

Summary: While demand for commercial real estate loans are up, lending restrictions from banks reflecting federal policy are not loosened. This is problematic for seekers of new loans and those wanting to refinance.

Key Quotes:
While nationwide demand for commercial real estate loans is up, banks are not loosening lending constraints, it would appear, reviewing figures from the Federal Reserve’s quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices report, released yesterday.

The five- and seven-year commercial real estate loans originated during the boom are beginning to come due in 2012, and many observers have speculated that even borrowers who are not distressed could have trouble refinancing in the current climate. New regulations such as those that demand higher equity ratios, are constraining banks’ lending.


Read the full article at: U.S. demand for commercial real estate loans up, but lending standards not loosened: Fed Report.


A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

US Commercial Property Investment Up 57% in 2011

By +Liam Bailey for ipinglobal.com

Monday 30 January 2012

Fuelled by exceptional growth in retail property and low-rise apartment investment, American commercial property investment grew 57% year on year in 2011 according to the latest data from Real Capital Analytics.

The data shows that more than 14,700 properties, each worth at least $2.5 million changed hands in 2011, with retail property investment up 91% compared to 2010 and low-rise apartment investment up 70% compared to the previous year. This was in spite of the fact that turmoil in the MBS market curbed finance leading to a slowdown in transactions in the second half of the year. However, the office and hotel sectors did see an effect from this, with transactions falling sharply in the final quarter following large year on year growth in the previous six quarters.

According to the firm the rise was fuelled by debt-laden owners selling off assets acquired during the boom years at low prices, at the same time as investors were seeking increased yields from income-producing properties.

"Buyers have started to broaden their horizons both geographically and by property type," the firm said.

This is by far the most positive data we have seen on commercial property investment in the US last year. Normally when you see such large growth it is because of an exceptionally poor performance in the previous dataset, but this is not the case here; we know that US commercial property transactions held strongly in 2010.

Read the full article at: US Commercial Property Investment Up 57% in 2011
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Commercial Real Estate Sees Seventh Consecutive Monthly Price Increase in November

Summary: CoStar reports a 6% monthly gain in November 2011 by measuring 738 repeat sales in that month. Distressed sales as a percentage of these repeat sales also decreased. This indicates that the U.S. commercial real estate market is slowly improving.

 Key Quotes: Demonstrated in graphs today.

A repeat sale index approach measures changes in price for specific commercial properties as they re-sell over time. It basically tracks price differentials. I think this approach excludes re-sales within a single year, but don't quote me on that. Can some alert reader verify that? It is a good approach because it calculates the statistical significance of price increases rather than going by reported appreciation.

Read the full article at: Latest CoStar Commercial Repeat-Sale Analysis: Commercial Real Estate Sees Seventh Consecutive Monthly Price Increase in November

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Commercial Real Estate Still Recovering

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Commercial Real Estate Sectors in U.S. Performing Well in 4Q, Says CBRE Report

Posted by Michael Gerrity 01/10/12 10:43 AM EST

Summary:

• U.S. Office Vacancy Rates Drop to 16% in 4Q, 2011.
• Industrial Availability Continues to Decline; Now 13.5%.
• Retail Availability Holds Steady.
• Apartment vacancy Falls Amid Robust Demand.

Key Quotes:
The office market improved steadily throughout 2011, ending the year with a vacancy rate down 50 bps from year end 2010, at 16%.

Industrial availability ended 2011 at 13.5%, a 80 bps decline from prior year end. With most local markets seeing improved availability in Q4, it appears that modest economic growth is continuing to spur demand for industrial space.

At 13.2%, Q4 2011 retail availability - while unchanged from the previous quarter -- was 20 bps higher than the rate at the end of 2010. However, the stabilization of retail availability during the second half of 2011 marked an end to the relentless increases that characterized the retail real estate market since the recent recession.

Q4 2011 results highlight the continued strengthening of apartment fundamentals, fueled by occupancy gains as more former homeowners elect the rental option. The Q4 2011 vacancy rate of 5.3% was a 70 bps drop from Q4 2010. 

Read the full article at Commercial Real Estate Sectors in U.S. Performing Well in 4Q, Says CBRE Report.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

2012: Better? More of the Same? or Total Economic Chaos?

CoStar News Readers Give Us Their Best Bets for What's Coming in the New Year By Mark Heschmeyer
January 4, 2012

Summary: The industry leaders predict growth, stagnation and collapse of the commercial real estate market place in the United States in 2012. The leaders with positive outlooks focus on particular cities. The leaders with moderate outlooks focus on sector performance. For example, Grubb and Ellis project a 25% increase in CRE sales, assuming that the GDP grows by 2.5% and 125,000 new jobs are added each month. Dismal outlooks are based on the broad U.S. economy.

Each person backs their position with strong arugments, leaving CoStar to split the difference and posit that 2012 will be just like 2011- modest, timid growth. Because Savannah relies on its port, and because the logistics CRE market is projected to see growth, I think Savannah will be fine. I personally think the most dismal outlooks will come to fruition not all once in 2012, but most likely further down the road.  It seems that all of us "Debbie Downers" recently read "When Giants Fall" and expecting the worst.

Key Quotes:
Among the top expectations: Banks and servicers will continue to jettison the worst performing assets and seek to workout recapitalization opportunities on the better-quality assets. Similarly, institutional property investors will also continue to reposition their portfolios away from secondary markets in favor of core stable assets in primary metropolitan markets.

Multifamily properties will continue their hot streak as pent up and new demand will keep vacancies low and spur continued new construction and property retrofitting of older other property type buildings.

And, both U.S. political inaction/posturing in an election year and world economic uncertainty will continue to weigh down true recovery.

Read the full article at 2012: Better? More of the Same? or Total Economic Chaos?

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

U.S. Scores High on Property Investment in 2012

By SiliconIndia, Tuesday, 03 January 2012, 03:59 Hrs

Summary: The U.S. is the top choice for commercial real estate investors because of stable supply and demand, improved property fundamentals, increased foreign investment and the repeal of FIRPTA.

Key Quotes:
As per the 20^th annual survey conducted among the members of Association of Foreign Investors in Real Estate (AFIRE) , the best property to invest in U.S are Multifamily (such as apartments and duplexes ) then comes Industrial, Office, Retail and Hotel.

U.S. remains the best option for capital investors as they get high return of investment (ROI).

“Foreign real estate investors have made clear there is considerable pent-up demand for U.S. real estate awaiting better real estate fundamentals and relief from FIRPTA regulations,” said James A. Fetgatter, chief executive officer of AFIRE. “If the investing environment improves, the U.S. is poised to return to its ‘safe haven’ status.”

Read the full article at U.S. Scores High on Property Investment in 2012.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga