“We are not interested in the possibilities of defeat; they do not exist.” — Queen Victoria, Former Queen of the United Kingdom
June 6, 2016 Kelsey Ramírez ,
Whereas the residential real estate market continues to recover gradually, the same cannot be said for the commercial real estate market, where prices rose much quicker, according to a study by Goldman Sachs.
Recently, regulators expressed concern for the potential imbalances in the CRE market.
Keeping rates too low for too long might encourage excessive risk-taking and unsustainable gains in commercial real estate, said Eric Rosengren, Federal Reserve Bank of Boston president.
CRE generally refers to retail, office, industrial, lodging and multi-family properties.
This chart shows the difference between commercial and residential prices:
(Source: Federal Reserve Board, Standard & Poor’s)
So what’s the difference between the two markets? According to Goldman Sachs’ study there are several factors. To begin with, the fall in construction was not as hard in the CRE market as it was in residential. Whereas it dropped by 2.8% for residential, it only dropped 1.6% in the commercial market.
Here is a chart that shows the smaller boom but smaller fall in the CRE market:
(Source: Department of Commerce)
That being said, whereas CRE prices look expensive relative to rents, according to CoStardata, commercial rent caps, the ratio of net operating income and prices, dropped to historic lows. Earnings yields on other assets such as equity and bonds declined significantly, therefore from an asset pricing perspective, CRE prices don’t look as rich.
This chart shows the CRE versus residential markets compared to bond rates, the cap rate and earnings-price ratio:
(Source: CoStar)
“The upshot of our analysis is that the housing recovery has been characterized by a substantial divergence between the slowly recovering residential market and the swifter recovery in commercial real estate, where prices have picked up more substantially,” Goldman Sachs Economist Daan Struyven and Vice President Marty Young wrote. “Our models point to deceleration of price gains going forward, particularly in the CRE sector.”
That being said, the company said it does not see the market declining in prices nationally any time soon.
Kelsey Ramírez is a Reporter at HousingWire. Ramírez is a recent journalism graduate of University of Texas at Arlington. Ramírez previously covered hard issues such as homelessness and domestic violence and began at HousingWire as an Editorial Assistant.
SEE IT ALL:
http://www.housingwire.com/articles/37197-commercial-real-estate-prices-hit-historical-peak
FROM ME:
Are you ready to sell your Commercial Building in Phoenix – Maricopa County , please call me.
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http://walter-unger.com/why-phoenix-2/
Phoenix Commercial Real Estate and Investment Real Estate: investors and Owner / Users need to really know the market today before making a move in Commercial Properties or Investment Properties in Phoenix / Tucson / Arizona, as the market has a lot of moving parts today. What is going on socio-economically, what is going on demographically, what is going on with location, with competing businesses, with public policy in general — all of these things affect the quality of selling or purchasing your Commercial Properties, Commercial Investment Properties and Commercial and large tracts of Residential Land in Phoenix / Tucson / Arizona. Therefore, you need a broker, a CCIM (Certified Commercial Investment Member) who is a recognized expert in the commercial and investment real estate industry and who understands Commercial Properties and Investment Properties.
I am marketing my listings on Costar, Loop-net CCIM, Kasten Long Commercial Group. I also sold hundreds millions of dollars’ worth of Investment Properties / Owner User Properties in Retail, Office Industrial, Multi-family and Land in Arizona and therefore I am working with brokers, Investors and Developers. I am also a CCIM and through this origination ( www.ccim.com ) I have access to marketing not only in the United States, but also international. Click here to find out what is a CCIM: https://en.wikipedia.org/wiki/CCIM
Are you ready to sell your Commercial Building in Phoenix – Maricopa County , please call me.
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Interactive Map Of All 10+ Unit Apartment Listings in Metro Phoenix
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Interactive Metro Phoenix Map of New Apartment Construction by Completion Status
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4rd QTR 2015 GREATER PHOENIX APARTMENT OWNER’S NEWSLETTER Kasten Long Commercial Group.
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Apartment Vacancy Rates – Greater Phoenix Area – 50+ Units (Stabilized) 2013, 2014, & 2015
http://klcommercialgroup.com/wp-content/uploads/2016/03/Vacancy-Rpt-Q4-2015.pdf
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AZREIA Market Update | March 2016
Walter Unger CCIM – walterunger@ccim.net – 1-520-975-5207 – http://walter-unger.com
2016 Official Arizona Visitors Guide
http://walter-unger.com/why-phoenix-2/
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Timeline of Phoenix, Arizona history
http://en.wikipedia.org/wiki/Timeline_of_Phoenix,_Arizona_history
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http://en.wikipedia.org/wiki/Phoenix,_Arizona
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Facts of Arizona – year 1848 to 2013
http://walter-unger.com/?p=9507
Feel free to contact Walter regarding any of these stories, the current market, distressed commercial real estate opportunities and needs, your property or your Investment Needs for Comercial Properties in Phoenix, Tucson, Arizona.
walterunger@ccim.net 1-520-975-5207
Check out my professional profile and connect with me on LinkedIn.
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http://www.easymapmaker.com/map/28cb3b8b3206c377a6f282d980dc7974
http://www.easymapmaker.com/map/955edc17e00b08ce270fb7afb1523cc2
Kasten Long Commercial Group tracks all advertised apartment communities, including those advertised by other brokerages. The interactive map shows the location of each community (10+ units) and each location is color coded by the size (number of total units).
Click here for Map of Apartments for Sale (10+units)
Walter Unger CCIM, CCSS, CCLS
I am a successful Commercial / Investment Real Estate Broker in Arizona now for 20 years. If you have any questions about Commercial / Investment Properties in Phoenix or Commercial / Investment Properties in Arizona, I will gladly sit down with you and share my expertise and my professional opinion with you. I am also in this to make money therefore it will be a win-win situation for all of us.
Please reply by e-mail walterunger@ccim.net or call me on my cell 520-975-5207
Walter Unger CCIM
Senior Associate Broker
Kasten Long Commercial Group
2821 E. Camelback Rd. Suite 600
Phoenix , AZ 85016
Direct: 520-975-5207
Fax: 602-865-7461
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