Craig Trbovich Commercial Real Estate –
If it wasn’t for my mother, I would have never listened to Barbara Streisand as a child. I was more interested in The Beatles and The Stones at the time. But while writing this, I was reminded of Streisand’s song The Way We Were and thought back to 2007-08.
So I ask you to search the corners of your mind to the peak of the last cycle and think about how far along in the recovery are we. As a comparison, here are the average sales per square foot prices in Q1 2008 to keep in mind as you look at the tables below: Office – $273.85; Industrial – $74.27; and Retail – $117.28.
2013 lease rates still have more room to recover in the current cycle, creating opportunities and upside for investors. The Q3 Investment Sales are presented below based on moving averages from CoStar and similar to the recent leasing results posted in my blog (http://craigtrbovich.com/?p=830), the Office market is also showing strength on the sales side with the average cap rate declining and average sales price per square foot increasing 17%.
The Industrial Warehouse market velocity has been slowed by decreasing demand, improvements in the office and retail markets drawing capital into those sectors and a lack of availability of multi-tenant investment properties. For example, there are currently only 127 of 3,700 multi-tenant industrial warehouse properties listed for sale in Phoenix market. And a recent article from CoStar reported on a current trend toward office as investors start to sell off their industrial properties in the search for greater returns. (http://t.co/rmuJAObp2g).
While the Retail sales numbers do not look outstanding, vacancy rates have continued a steady decline as absorption has steadily increased. This trend will eventually put upward pressure on rental rates over the next 12 months and we should see improving cap rates and price per square foot numbers in the Retail sector.
As you can see, the market is still recovering and working back to a new peak. And I remember music from a long time ago that fortunately also comes back again.
For a no obligation analysis of your property, please call me at (408) 522-2799 to “TrboCharge” your investment real estate today.
Office
|
12 Months Ended Sept 30, 2013 |
12 Months Ended Sept 30, 2012 |
Change |
|
| Cap Rate |
6.99% |
7.37% |
(0.38)% |
| Price per SF |
$148.75 |
$127.51 |
$21.24 |
| Total Sales (number) |
150 |
125 |
25 |
| Total Sales (dollars) |
$1,338,836,727 |
$736,532,752 |
$602,303,975 |
Warehouse
|
12 Months Ended Sept 30, 2013 |
12 Months Ended Sept 30, 2012 |
Change |
|
| Cap Rate |
7.95% |
6.35% |
1.60% |
| Price per SF |
$60.42 |
$57.38 |
$3.04 |
| Total Sales (number) |
212 |
215 |
(3) |
| Total Sales (dollars) |
$669,258,719 |
$679,727,726 |
$(10,469,007) |
Phoenix Retail
|
12 Months Ended Sept 30, 2013 |
12 Months Ended Sept 30, 2012 |
Change |
|
| Cap Rate |
8.49% |
7.73% |
0.76 |
| Price per SF |
$87.41 |
$110.29 |
$(22.88) |
| Total Sales (number) |
196 |
170 |
26 |
| Total Sales (dollars) |
$705,557,847 |
$624,089,399 |
$81,468,448 |
Source: CoStar Analytics, Investment Sales Over 15,000 sf.