Tuesday, December 13, 2011

Reflect On Change In The Commercial Real Estate Industry

Dan Pryor writes for GlobeSt.com: Commercial Real Estate Investing Strategies for the 'New Normal'
With the holiday parties before us, and the rotten financial news about the state of Europe keeping investors cautious, perhaps it is time to reflect on change in the commercial real estate industry.
Some points for consideration mentioned:
  • We are in a balance sheet recession that likely will limit economic growth for 5+ years. Ubiquitous acquisition strategies targeting 15% to 20% IRRs driven by terminal valuations may not be viable;
  • Projections for new tenants in vacant space and lease renewals remain challenging with a potential slowdown in the U.S. economy. Consider focusing your investment thesis on cash-on-cash returns supported by existing leases;
  • Segment your asset projected cash flows and handsomely value in-place leases and whack pricing related to vacant space and lease renewals;
Read the entire article at GlobeSt.com

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