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Archive for Real Estate Economy

The alleged “double dip”, threat or opportunity in real estate?

Well located real estate acquired with conservative financing has historically resulted in long term benefit for the investor. In today’s market, even if the “double dip” does occur, utilizing this strategy can offer investors a buying opportunity that will create significant wealth. Real estate is a long term hold and while this article discusses the challenges associated with flipping, it seems to be pointing out the problem that caused real estate values to plummet in the first place.  Investors saw real estate as easy money”…simply buy and the cash will come rolling in. Acquiring a property to flip, unless it is part of a strategy associated with a sophisticated investment fund, is risky. Buying  property based upon solid fundamentals that will lead to long term growth and profit.

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US Commercial Property Service Companies rebound in the Second Quarter

Service companies like Jones Lang LaSalle and CB Richard Ellis are great barometers of market conditions. They may not necessarily indicate that a market is improving, but increases in revenue and profits certainly indicate that there is increased deal flow. A greater number of transactions indicates that there is liquidity in the market related to investment sales and financing. Increase leasing activity can also indicate corporate growth or at least decision making. Whatever the case may be, an increase in the number of transactions occurring in the commercial real estate market place is a positive sign.

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Per Apartment Realty Advisors, “The markets are now virtually unanimous in announcing the apartment recovery.”

Effective rents are up or not changed in all markets and occupancies have risen in 73% of the markets ARA monitors when compared to last quarter. Just 15 months ago they reported that “23 out of 24 markets had decreasing effective rents” and “occupancies are unchanged.” 

“Existing product offered for sale is bringing many, many qualified offers. More buyers are focused on Year 3 cap rates rather than a going-in target; sort of a replacement for the rent trending dinosaur. Developers, often public REITs with owned land, are targeting new construction in markets like NY, DC and Southern California where acquisition discounts to replacement cost are disappearing.”

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Dr. Peter Linneman, Director of Real Estate at the Wharton Business School, summarizes his Summer 2010 report.

Dr. Linneman estimates 3 to 3.5 million new jobs a year through 2013. But where does that get us? With population growth and recovery of lost jobs…right about 7%.

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How far have commercial real estate values recovered?

Green Street are widely respected for their in-depth market knowledge. They believe that Buyers and Sellers of commercial property are striking handshakes at prices that are substantially above the current deals that are closing.

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