September 22, 2011
This week’s OBP Perspective is provided by Tom Powers:
We are at our company’s national meeting sharing insights on the commercial real estate market: where it is, where it’s heading and all the hows and whys related to why it is what it is. Only problem is that for every person who says that things are looking up, someone else has the opposite perspective. Neither are wrong.
It appears that core type properties are still in high demand – after all, 8-10% levered yields look awfully attractive compare to 10-year treasuries. On the other side of the coin, anything non-core is garnering limited interest. Debt, or lack-there-of is a major factor in this.
It continues to be a very bifurcated market and as long as interest rates stay low, the economy remains stalled and everyone lacks confidence in the direction of our country -economically and politically- we expect demand for core product, with returns well above alternative investments, to remain strong and everything else to continue to have a tough rode to hoe.
Meanwhile, at least things have improved enough that we can have company meetings again!