The Inevitable Decline of Commercial Real Estate Values

By
Real Estate Broker/Owner with Investor Realty Group, LLC BK3075919

 Since the beginning of 2007, commercial real estate values in many parts of the country have declined anywhere from 30% to 50 %. While this has caused financial pain and loss for many. It is widely believed that once we reach an equilibrium, a pent up demand for commercial properties will return. But for now most of that capital remains on the sidelines.

  The quicker we get there, the better off we will all be.  Rents and values will once again be much more aligned.  Vacancy rates will drop and businesses can again increase bottom line profits after fixed expenses such as rents are stabilized.

  One of the primary reasons the recovery is being held up are the banks that do not want to write down the value of these assets.  In general, they are choosing to look the other way and in many cases extend existing loans that are coming due rather than confront a new lowered value.

  Until the valuation and financing issues are more completely addressed by financial institutions, we will continue to see a stagnant commercial market in many parts of the country and purchases will remain on hold.  

 Commercial short sales are now being considered (much like those utilized in the residential markets) to purchase commercial properties at current market values.  Short sale auctions are also being discussed as a method to maximize sales value through the auction bidding process.

  For more information on commercial valuation, short sales and auctions, please contact Troy Fowler at 305-754-2888 or visit www.Auction-Generation.com

 

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  1. Scott Gephart 02/02/2010 04:26 PM
Topic:
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Tags:
commercial
recovery
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commercial valuation

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Rainmaker
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Coldwell Banker Cutting Edge
Coldwell Banker Cutting Edge - Grants Pass, OR
"Your Proactive, Trusted Real Estate Advisor"

Commercial is going to have a tough year, in my area you can't drive down a street with a for lease/for sale sign.

Jan 31, 2010 12:48 AM #1
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Rainer
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