U.S. commercial real estate yields are near the highest level relative to Treasury bonds on record, a signal to some investors it’s time to buy property.
Capitalization rates, a measure of real estate yields, averaged 7.22 percent in the second quarter, based on an index calculated by the National Council of Real Estate Investment Fiduciaries. That was 429 basis points, or 4.29 percentage points, higher than the yield on 10-year government bonds as of June 30, according to data compiled by Bloomberg. It’s about 475 basis points higher than Treasury yields as of yesterday.
That spread...
> > > > > > CMBS Delinquency Rate: Smallest Jump Since 2009 - Increase of 17 Basis Points in June to 8.59% > Commentary: The delinquency rate for commercial real estate loans in CMBS showed signs of moderating in June. While the rate was up 17 basis points, that was the best reading since July 2009. > > View the full report here. > For the nine months prior to June, the rate of increase in delinquencies averaged 39 basis points per month (after backing out the Stuyvesant Town impact in March). The lowest increase prior to June was February’s 23 basis point jump....
CNBC.com Article: US House Passes Landmark Financial Reform Bill The U.S. House of Representatives on Wednesday approved a landmark overhaul of financial regulations but the Senate put off action until mid-July, delaying a final victory for President Barack Obama. Full Story: http://www.cnbc.com/id/38027454
CNBC.com Article: Weak Economic Reports Support Low Rates Pledge New claims for jobless aid rose last week while consumer prices notched their largest decline in nearly 1-1/2 years in May, suggesting rates will remain ultra low to nurse the fragile economic recovery. Full Story: http://www.cnbc.com/id/37755611
Yesterday, we had the opportunity to meet with Darla Longo, James Koenig and Dave Consani from CBRE Ontario. They are three highly respected brokers in the market.In our meeting; we discussed the industrial market in the Inland Empire (IE). It was a very optimistic meeting in regards to the market showing positive signs of a recovery. Industrial inventory in the >350,000 sf is low (12 properties in total) in the IE West. Over half of these properties are under contract. Owner/Users are taking advantage of historically low interest rates and the abundance available space....
Tuesday, we had the opportunity to attend a conference on ”High Performance Green Building Retrofits” at the UCLA Ziman Center for Real Estate. #LEEDNotable statistics and facts in regards to LEED certified GREEN commercial buildings are as follows:
8-9% decrease in operating costs
7.5% increase in value over non-LEED certified
2% increased cost to design and construct a new GREEN building
6% ROI increase over non-LEED certified
3.5% increased occupancy
3% increase in rental rates per sf
These statistics were mainly based on office. The point to be made is that...
We have read the Quarter 1 Los Angeles industrial real estate market reports from CBRE, VOIT and Grubb & Ellis. Here is a snapshot.Vacancy has increased for the 10th consecutive quarter. “During the quarter, the Greater Los Angeles industrial market experienced a direct vacacy jump from 3.0% at the end of the fourth quarter 2009 to 3.5% at the end of the first quarter 2010”-CBRE. “As expected, market growth has been negative as more tenants reduced their occupancy needs or vacated existing space.”-CBRE. Average lease rates have continued to fall but are slowing...
‘Zombie Buildings’ May Limit Options for Tenants
Tough road if you invested in office within the last 5 years
“Now that the values of many properties purchased during the peak of the market have fallen below the balance due on the loan, some landlords are too capital-constrained to offer the tenant improvement allowances and other concessions necessary to attract tenants in today’s marketplace,” said Robert Bach, senior vice president and chief economist.”
Global Viewpoints: ‘Zombie Buildings’ May Limit Options for Tenants
I was able to tour the Port of Long Beach industrial area yesterday with Blake Tippet from Grubb and Ellis. Blake, thank you for the time and of course lunch at an epic Mexican place (Lucio’s). After recent reports of port traffic being up over 20% from last year in exports and imports, I felt it was a great time to visit the port area and see first hand how the market was responding. In summary, the market is definitely soft with a large amount of vacant buildings and quite a few buildings coming to market in the near future. The few major players in the area have remained active...
We would like to thank everyone that has replied and commented on our recent newsletters. The purpose of these newsletters is to bring an opinion to the market and not just reiterate the sea of sameness coming from leading news sources. In response to many of our readers; this week we plan to shed some positive light on the market. Many of us may feel like this gentleman pictured below however now is not the time to grab a cardboard sign. We are seeing positive market data being released and plan on seeing some great buying opportunities coming later this year. There is $1.4 Trillion of debt...