Commercial real estate crisis a buyer opportunity

There may just be some great deals to be had for commercial property investors. Is now a good time to start a business?

One mans loss is another's gain, with commercial real estate that  old adage holds true as well. With prices dropping and more foreclosures in the commercial real estate sector and incentives for employers and business expansion coming about it just may be. 

“Here come the real estate vultures”

“(Fortune Magazine) -- These are tempting times for real estate bargain hunters. Whether it's the tony house down the street with an asking price that keeps dropping or office space at a deep discount, if you have the means, there are deals to be had. Individual investors snapping up foreclosed houses have helped boost home-sale figures sharply in recent months (although prices have remained depressed). And now some real estate investment trusts are raising money to fund acquisitions of distressed commercial properties.”

By Michael V. Copeland 
June 22, 2009
Fortune Magazine Full Article here

“Distress among commercial real estate mortgages in New Jersey is intensifying”

“with more properties in the state going back to the lenders. Some industry insiders say a crisis may be in the works if the economy continues to falter.

You’re certainly seeing an increasing rate of foreclosures, and of lenders taking back properties,” said David Bernhaut, executive vice president at the East Rutherford office of Cushman & Wakefield, a commercial real estate brokerage. “It’s distress that everybody feels and senses.

New Jersey currently has nearly $3.6 billion of distressed commercial assets, according to Real Capital Analytics, a New York-based research and consulting firm. Distressed assets include those in foreclosure or bankruptcy, have been restructured or modified, or have been taken back by the lender through foreclosure. “

So can now be a great time for the commercial investors to begin peaking their heads out? I would say that it depends on your financial ability to maintain the property if it should experience a lower than normal occupancy for a while.

“Lenders are currently lending at a 50 percent to 65 percent loan-to-value ratio, compared to 70 percent or 75 percent five years ago, said Kenneth Pasternak, chairman of KABR Real Estate Investment Partners LLC, a Paramus-based opportunistic real estate investment fund. Meanwhile, real estate is being appraised at values that are off by 25 percent of what they were five years ago, he said.”

 

Source: NJ Biz Article by Evelyn Lee 11/9/09
Full Article here: Fearing a commercial Real Estate crisis

This may just be putting current owners between a rock and tight place presenting the kind of opportunities and deals investors generally look for.

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