We are meeting with all our clients, past and present. What we learn is transforming our business.
KHREC: What does Kay Harris Real Estate Consultants (KHREC) do? Clients: All facets of commercial real estate: finding the right fit for whatever clients need whether sellers, landlords, buyers, tenants or just businesses who use real estate. You are also framing transactions, advising, consulting, providing a reliable one–stop resource for real estate questions of all kinds, recommending and facilitating, mediating expectations, uncovering alternatives, finding win–win solutions, taking away the surprises, following–up on transactions long–term, overseeing improvements and repairs, managing the process, partnering with clients to achieve their goals, taking it "to another level," going above and beyond expectations.
KHREC: How is the current financial market impacting your company? Clients: More than ever, we need to know what the market is doing. We are done downsizing. We need to know our options.
KHREC: How do you want to receive that information? Clients: E–mail, but make it easy to see at first glance. Send us your newsletters. Then phone or meet with us.
KHREC: OK. What are your goals this year? Clients: Survival. Maintaining current clients and growing our business. We need to dig out from under. Really looking at our expenses. (We conclude these meetings asking how we can achieve their goals together. That’s where we see our Business expanding in scope. Look for "how" in next issues of this newsletter.)
Information on Current Market: Activity: Since April, more people are looking at properties than all of 2009. Nevertheless, many/most are still "sitting tight" or making the decision to utilize that capital earmarked for real estate to keep their companies alive.
Prices: We have seen persistent pressure on prices, sale and lease. Landlords who have tenants are offering significantly reduced rents to keep them. Landlords who have vacancies are willing to pay moving costs, upfront free rent, and significant improvements in order to attract tenants. Prices as low as $3.00 (or less?) per square foot net (base rent) for warehouse and $6.00 per square foot net for office are offered in some situations. Sale prices of industrial buildings to investors are in the $30–$40+/– per square foot range, depending on alternations required, are the norm today: The few users there are may pay 20%–50% more if they can finance the purchase.
Condition: Buyers and tenants say first impressions are more important than ever. Owners should expect to GET one chance only to put their best foot forward. Property staging, so effective for home–sellers, is now a requirement for commercial property owners.
Time on Market: No matter which brokerage concern has the assignment, it is not unusual for owners to see their properties marketed for two years or more before finalizing a transaction. In between they may walk away from potential deal terms that did not fit their requirements, or had buyers who could not get financing, or tenants whose business needs change mid–stream. It is a time for owners to be optimally flexible.
Financing: A handful of lenders are talking about doing deals. Their requirements are stringent, and loan to value ratios tough. Their common practice may seem to come just short of "first born children" along with other collateral not always agreeable to the borrower.
Forecast: Expect the market has "bottomed" out and will be improving quite slowly before full recovery perhaps five years from now. Much, depends upon the availability of capital, the profitability of the company, the aggressiveness of the lender. All lenders have had their hands slapped for imprudent loans. None will be taking chances, risks of any kind, going forward. Perhaps the investor is right who does not expect to see any profits for five years.
We appreciate your loyalty in these trying times, Feel free to call with any question for a quick response and visit our past issues (below) of trends and observations about this market. 952–915–4444 or www.kayharrisre.com.
