the transformation of cre investing

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INVESTOR APPETITE

 Compare where  we are today vs the market peak in '07.  There is tremendous desire to put capital to work in the commercial real estate market.

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(Affordable) MARKET SUPPLY

Investors are increasingly unable to locate assets that meet their investing criteria and are traveling to secondary and tertiary markets... because their local markets (eg. NYC metro) only offer cap rates below 5%.

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Get the full picture

Our SVP of research services sums it up nicely HERE.

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to sum up:

the way I see it...


SELLERS:

  When it comes to  maximizing the proceeds of a sale, it always comes down to EXPOSURE. 


It makes sense that using the local agent (local MLS) vs using a national firm would result in different results, right?  

  • The local guy is going to get the word out to the county - this should work for smaller properties 4-8 units where the investor  is a local guy with a smaller amount of capital.  
  • The national firm, on the other hand (which has offices in all of the major cities along the northeastern coast- not to mention the rest of the United States) will immediately share the info with all of their offices (and thousands of investor clients) who are looking for a local, regional or national opportunity to invest. (translation = mucho exposure)  


It also makes sense that when picking a National commercial real estate firm you would want to know who does the most business, right? (hint - see slide above).  Those that do the most business are the ones that have the most properties that the largest numbers of investors scrutinize daily.   


Bottom Line: Utilizing a  firm that can reach the most investors that are looking for secondary/tertiary or national market opportunities will result in the most offers = higher price and better terms



BUYERS:

  No matter what asset type you are looking for, there are markets (secondary, tertiary and national) that will provide you with equal or superior returns to what you see in your local markets.  


Investors of all transaction sizes are now looking for superior offerings within a few hours or a day's drive from their location (secondary and tertiary markets).   They feel that they can easily get to the property as often as needed because of it's proximity to their office/home.

  • If you can't find a local investment that fits your investment criteria, expand your search 1 -4 hours drive.  You will find significant differences  in returns once you look outside of your primary market
  • We are seeing dramatic cap rate differences (eg. Manhattan vs eastern PA or upstate NY)


We typically see that the investors that are most likely to take advantage of the national opportunities are those looking for a net leased property or a larger property (office building, apartment complex) that has management already in place.  

  • Net lease properties and properties with management in place are perfect for those in a 1031 exchange and want to minimize or eliminate management responsibilities
  • Net leased properties (especially NNN offerings) are a favorite choice of those in  1031 exchanges  (Note - we do more 1031 exchanges that any other firm) because it basically means a check in the mailbox every month (and the only thing that has to be managed is figuring out how to spend it)


Bottom Line: Utilizing a national firm that provides access to a huge variety of national investment opportunities will simplify your investment search/ 1031 exchange upleg.

Did you get through it all?

If so , congrats, I hope it made sense and helps.

If you want clarification on any of the below, just click the link and it will send me an email to get back in touch with you:

  • northeast real estate market
  • asset types/returns
  • national/regional opportunities
  • property search
  • property sale
  • property valuation
  • How Marcus & Millichap  operates
  • How I operate
  • Why the Mets consistently let me down