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Entries Tagged as 'Investment Real Estate'

New Commercial Loans Expected to Increase in 2013

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In commercial real estate, financing is always an extremely important component of the game. Financing makes properties easier to buy, easier to sell, and the availability of good, solid financing definitely does its own part in helping to support commercial real estate property values.

With this in mind, in a report issued in November of this year, Deutsche Bank declared that it expects the issuance of Commercial Mortgage-Backed Securities (CMBS) to increase by a full 50% in 2013, totaling to approximately $60 billion in new loans that are expected to be issued within this arena.

For the commercial real estate industry, this is great news!

CMBS represent approximately 23% of all of the loans currently in place on commercial real estate within the United States. An increase of this amount in the issuance of these new securities would then represent the greatest total annual amount of CMBS-type loans that will be issued since the financial meltdown of 2008, which is a very good sign for the direction that commercial real estate is now heading in.

When lenders begin making financing more easily available to borrowers, more buyers will come into the market. As an example of this, when a property is available for sale for $1,000,000.00, but no financing is available to purchase it, the buyer then needs to come up with all cash out of their own pocket. This in itself will reduce the number of potential buyers for the property, as fewer people will be willing to now purchase the property for all cash.

But when available leverage begins to increase with more financing becoming available, and buyers are now able to purchase the property with let’s say 25% down, instead of having to come up with the entire $1,000,000.00 purchase price, more buyers will then become interested in buying the property. This then leads to the seller receiving multiple, competitive offers from more buyers, helping the seller to then obtain a higher price for their property. While at the same time, buyers end up purchasing and owning more properties that they would not have been able to purchase without the availability of this new financing.

In short, this greater availability of good financing is helpful to both buyers and sellers, and it helps to restore both liquidity and an ease in doing transactions within the marketplace again.

In their November report, Deutsche Bank commented on CMBS 3.0, the new program now being utilized to deliver CMBS to the commercial real estate community, by stating the following:

"In our view, it is nearly impossible to over-estimate just how important CMBS 3.0 is to the health of the commercial real estate market."

 In addition, there is more good news for the entire CMBS market. The vast majority of legacy CMBS loans maturing in 2013 should now be able to be refinanced. Deutsche Bank estimates that $34 billion of these loans will be refinanced, that approximately $5 billion of them will be extended, and that only $1 billion of these loans will have to be liquidated. This is a substantial improvement over the current year where only about $1 billion worth of these loans were refinanced, $500 million worth of them were extended, and approximately $4 billion in value were liquidated.

CMBS-type loans have grown to become an important component within the overall availability of financing in commercial real estate. With the way that good financing has been tougher to obtain for commercial properties within recent years, it’s exciting to see that this segment of the market is now poised to expand significantly in 2013.

This is a guest post from one of our OfficeFinder Memebrs in the Atlanta area. Contact the Author

 

Investment Real Estate , Office Space

Report: Office Market Has Unquestionably Turned the Corner

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Colliers recently published it's 4th Quarter 2010 Office Highlights report for the US and Canada.

Summary:

  • Office Markets Look and Feel a Lot Better - But Higher Rents Still Some Way Off.
  • U.S. office vacancy rate down sharply - U.S. office market has unquestionably turned the corner.
  • Office occupancies up for a third consecutive quarter.
  • Rent picture again mixed.
  • Office construction slows to a trickle.

Some other interesting results:

  • Highest US Downtown Office Vacancy Rate - San Jose/Silicon Valley at 27.9% (down from 35% the previous quarter)
  • Highest US Suburban Office vacancy Rate - Las Vegas at 38.6%
  • Most Absorption for 2010 - Washington DC metro area at over 4.1 million square feet (Midtown Manhattan a close second at nearly 3.6 million square feet)
  • Lowest US Downtown Vacancy Rate - Raleigh/Durham at 5.3% (with a 33.8% suburban vacancy rate)
  • Averages -  Downtown Vacancy Rate 16% - Suburban Vacancy Rate 18.3%

More on Office Vacancy Rate

Investment Real Estate , Las Vegas Office Space , New York Office Space , Office Rental , Office Space Negotiations , Office Vacancy Rate , Silicon Valley Office Space , Washington DC Office Space

Google Rumored to be Buying 2.9 Million Square Feet in NYC

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It appears that Google may be ready to expand into New York / Mnahattan office space ownership in a big way. According to the New York Post they are looking to purchase the office building at  111 Eighth Ave. building, one of the largest office buildings in Manhattan.  The 18 story office building takes up an entire block between Eighth and Ninth avenues from 15th and 16th streets and has 2.9 million square feet of office space. The rumored price is $2 Billion dollars, which at $690 per square foot is a good deal compared with the $1,500 per square foot prices of 2007.

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Buying Office Space , Investment Real Estate , Manhattan Office Space , New York Office Space , Office Space

Commercial Condos - Beware the Condo Association

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If you happen to live in a condo, then you'll easily understand why a small business considering purchasing a commercial office condo needs to know about how and when to interface with the Board of Directors of the condo association. However, if you own a small business but have never dealt with a condo board, then you should be aware of the rights and obligations involved before purchasing an office condo.

Just as with any type of building there the common spaces that are mutually and equally shared, a commercial office condo is operated based on the Bylaws developed and adopted by that condo board. One of the requirements outlined in those Bylaws is how often the Board of Directors must meet, what repairs or changes require board approval and what repairs or maintenance can be done by the management team of the commercial condo.

Of course, you want to understand the other portions of the Bylaws as well because these binding agreements control how you can or cannot use the building. For example, you would expect to see in a set of Bylaws that any damages done to common areas by visitors to your office condo are your responsibility. You might also expect to find clauses which prevent owners from drastically changing the exit doors to their condos and other similar restrictions on use or changes.

The Board of Directors of a commercial condo association is made up of elected officers that are owners or designated representatives of owners of units in the building. When a commercial condo is first completed and the building opened for purchase of units, the board may be made up of the developer and other designates that have direct interest in the development. However, after a period of a year or once there are sufficient owners to build a sound, responsible board from, officers are elected from the owners.

You may think, at first glance, that control of everything is given to the selected owners that are elected to the board of directors. This really isn't true at all. The board can, without bringing a motion before the condo owners association members, take care of some expenditures and other business as outlined in the Bylaws. But all major changes are brought up as business during a Condo Association Board of Directors’ meeting, which must be announced formally in plenty of time for owners to notice and attend. In other words, you get a vote in any actions which might impact your business significantly.

In mixed use properties there may be more than one Association involved. Master associations and sub-associations should be used when the users of the units in a single condominium are restricted to significantly different uses. An example would be a condo that has a combination of residential, retail and office uses. In those situations there could be more opportunities for deadlock votes. For that reason dispute resolution to include mediation should be include in the Bylaws.

The best way to interface with the board of a commercial condo association is to attend, or have a designated representative attend, each meeting of the Board of Directors. This way, if any unexpected business is brought up, or if you need to bring up an issue, you'll have your ownership represented.

If you know you need to bring up a topic before the board, it should be sent in writing well before the meeting to the President of the Board of Directors so that it can be placed on the agenda. Taking an issue up on the fly can backfire and fail to get your issue noticed.

An even better way to keep up with what's going on with the board and to interface your business with them is to agree to hold a position on the board of directors. Most condo association board meetings are not lengthy and are critical to the maintenance of the lovely commercial condo office you purchased into.

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Buying Office Space , Commercial Condo , Investment Real Estate , Office Building Sales , Office Space

Commercial Real Estate Loan Delinquency Rate at an All Time High

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Delinquencies for commercial-mortgage-backed securities have topped 9 percent for the first time.

The Trepp National CMBS Delinquency Report shows that 9.05 percent of about $694 billion in commercial loans that back outstanding CMBS were 30 days or more delinquent as of Sept. 28 versus 6.49 percent at the beginning of 2010 and just 0.38 percent three years ago.

Source : Wall Street Journal (09/29/10)

Commercial Real Estate , Investment Real Estate