Recently Robert W. Baird & Co, a NYC-based, 97 year old private equity firm, interviewed 45 REIT management teams across the US about the state of commercial real estate in 2012. The verdict? “More of the same” according to the Baird report.
A total of 95% of the REITS said that they do not expect a recession in 2012 but that GDP growth will not climb above 2% and that a 2012 election may not bring relief. There are too many long term challenges including “deficit reduction, and middle class erosion”. We add to that continuing problems with employment and a highly regulated lending industry, both of which are very challenging to the commercial development environment and do not encourage expansion in the manufacturing and industrial sectors.
The real positives for 2012 are the multi-family and self-storage properties that are at a 30% premium to the market. That means the big Commercial Mortgage Backed Securities sectors that are coming due, hotels with over $20B and healthcare with 19% of its mortgages maturing will increase the level of volatility in the broader markets for commercial real estate.
With all this chaos, there must be some opportunity. A buyers’ market is clearly on the 2012 horizon. Preparing for these acquisition opportunities will take the right amount of forethought and access to capital. It will take some planning and support from professionals like our engineers to remove as much of the risk as possible. We can do that through:
- Feasibility Analysis-helping your team think through the best design and use of project,
- Permitting Review-making sure that your plan is ready to be approved,
- Environmental Review-checking to make sure that your plan does not have a fundamental environmental problem that will negate financing or regulatory approval.
Let us help you manage the acquisition opportunities in 2012.