Iron Hound Management’s Robert Verrone talks about distressed loans amid the economic slowdown in this virtual interview by TRD. He talks about deals that didn’t close in the middle of COVID-19, then moves on to the process of dealing with existing loans that are distressed due to effects on the commerce in the respective properties. This is a pretty candid discussion of the lending environment before and during the pandemic to the date of this interview in late April.
NOTE: The sale of this property closed in September, 2022. Contact the broker for information on the sale of the prospect of buying or selling similar properties.
Allowed by Right: SINGLE FAMILY RESIDENCE; COMMUNITY RESIDENCE; TWO FAMILY RESIDENCE; MULTI FAMILY HOUSING; DORMITORY; HOME OFFICE; LIVE – WORK; BED & BREAKFAST; INN; HOTEL; OFFICE; ENTERTAINMENT ESTABLISHMENT; FOOD SERVICE ESTABLISHMENT; GENERAL COMMERCIAL; PLACE OF ASSEMBLY; RECREATIONAL ESTABLISHMENT; RECREATIONAL FACILITY; RELIGIOUS FACILITY; LEARNING CENTER; PRE-SCHOOL; RESEARCH FACILITY.
Allowed By Warrant: Administrative Process – CRC (Coordinated Review Committee): AUTO-RELATED COMMERCIAL ESTAB.; MARINE RELATED COMMERCIAL ESTAB.; OPEN AIR RETAIL; COMMUNITY FACILITY; COMMUNITY SUPPORT FACILITY; INFRASTRUCTURE AND UTILITIES; MARINA; PUBLIC PARKING; TRANSIT FACILITIES; CHILDCARE; COLLEGE / UNIVERSITY; ELEMENTARY SCHOOL; MIDDLE / HIGH SCHOOL; SPECIAL TRAINING / VOCATIONAL.
Density: Per Miami 21, the density per acre for T5-O land is 65. This would indicate 41 units for this 0.63 acres. A buyer would need to verify this and all details during due diligence if not easier. We can make an intro to an architect familiar with the site, Michael Noll, to discuss development potential for multifamily or any use.
Google Map of 70 NE 80 Terrace, Miami, FL 33138:
Google Satellite View of 70 NE 80 Terrace, Miami, FL 33138:
Google Streetview of 70 NE 80 Terrace, Miami, FL 33138:
NOTE: This property is under contract with a non-refundable deposit in place. Contact me to discuss other similar properties to purchase.
This is a nicely appointed 3,967 square feet free-standing office building located in the desirable Coral Gables central business district one block west of The Plaza Coral Gables development. Previously utilized as a surgical center, the property is ideal for medical or dental use with sinks in numerous exam rooms, or could easily accommodate other professional uses such as attorneys, architects, and accountants. Property possesses a complete surgical room and an enclosed garage/storage area.
Google Streetview & Map:
Certainly these could be characterized as the “duh charts” in this environment. Business is obviously down, and uncertainty is up. That is not news. It is nonetheless interesting to see this all graphically represented. It also serves to remind one that that uncertainty means only what it means, not certain. Put differently, it simply means the there is a wider than normal range of potential outcomes, and half of those are better than the median of them.
The Executive Committee guides the Miami DDA’s efforts to fulfill its mission to grow, strengthen, and promote the economic health and vitality of Downtown Miami, which of course benefits area commercial real estate investors. This is a video recording of its Executive Committee virtual meeting held on June 18, 2020.
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In this two part video series, CCIM Chief Economist K.C. Conway, CCIM, MAI, CRE, joins the host of America’s Commercial Real Estate Show to discuss what to expect move forward. Among the discussions expectations for jobs, property values, and economic recovery timing. He notes he is particularly concerned about leisure and travel, which he notes is 10% of global GDP, believing there is more pain in this sector to come. He believes unemployment will remain at 10.5% in the first half of next year as structural damage hinders a full recovery to pre-coronavirus levels.
The chart above shows the number of commercial property sales in Miami-Dade county, frequently considered as the general Miami, Florida metro area, for both improved and vacant land that were recorded in the Miami Realtors MLS from January 2018 to May 2020. Though MLS only picks up a portion of commercial property sales, and thus is not fully representative, it nonetheless can be utilized to view trends, particularly where significant. In this chart, one can see that closed transactions declined by about two-thirds in April, then essentially stayed the same in May 2020, increasing ever so slightly.
This surely reflects the continuing effect of COVID-19, which was declared a pandemic on March 11, 2020. This drop in sales is not a surprise to anyone, I would think. The pandemic has had a stun gun type effect on various sectors of the economy; commercial property is no exception.
In April, I noted that the slowing might not be the worst of it given that it remained early. I commented then that anecdotally speaking general transaction related activity dropped nearly 100% for about a one month period, but seemed to be recovering as I was writing that. This leads me to a couple of might-be-light-at-the-end-of-the-tunnel observations.
Commercial property inquiries, a crude metric I personally track, but a metric nonetheless, have rebounded completely from their precipitous drop. Inquiries are not transactions, but they are the feeder for them, thus this is good. Also, a big part of the rebound may be personal, as this metric was in a strong uptrend prior to the coronavirus.
That closed sales in May did not fall further from April levels, in fact even increased, though by “hanging chad” margin (anyone in Florida in 2000 gets it), is further encouraging for anyone wanting valuations to hold up.
Finally, that the ratio of closing price to list price still has not significantly declined is also somewhat encouraging for this cause. In fact, it was down a touch versus the month of April, but remained in its range of 95-ish to 98-ish percent. A technical stock trader might look at this and say it is testing resistance at 95%. A practical person might simply expect this average to be affected by sellers that want to sell and of a sudden find their pool of buyers more limited. In any case, that it remains in a range is notable.
Last month we noted that though one month does not say much it was worth noting that commercial properties traded at a somewhat normal price in relation to listing price in the COVID-19 affected month of April. Now we have, as can be seen in the chart above, another month with this ratio holding fairly steady. It is slightly lower that the prior month, only slightly, and remains still well above lows set in prior years. Note this is for all sales in MLS entered as improved or commercial land, dubbed Commercial, Industrial or Commercial, Business, Agricultural, Industrial Land in Miami-Dade county in that system. The prior month was not isolated the Miami-Dade, thus there may be a slight difference.
Surely much of the effect of coronavirus is felt in reduced sales volume, not in sales price versus list price, thus there is only so much water to add to that proverbial half-empty/half-full glass of water. What this continues to represent, however, is that sellers are not slashing prices.
In this timely video, Brian Bailey, Real Estate Subject Matter Expert at the United States Federal Reserve Bank in Atlanta, discusses his views on commercial real estate in these COVID-19 affected times. As we continue our coverage on what’s next for the real estate industry, this show is certainly enlightening. He discusses what is going on in the banking system with regard to workouts and lending, then goes on to compare this economic environment and potential of it to the recession of 2009. He talks about temporarily relaxed guidelines for troubled debt restructurings, seemingly allowing more room for restructuring loans troubled momentarily.
The effects of coronavirus are clearly evident in the April unemployment rate spike in Miami-Dade as of April 1, 2020. At 11.95, the level of unemployment has yet to reach the 12.4% level reached in August 2009. Given the effects of coronavirus on commerce, however, the May 1 numbers, once released, will surely exceed that 2009 number.
Almost to the minute I posted about how commercial property inquiries had gone over a cliff, noting it as worthy of duh-chuckle categorization, inquiries began to rebound. This one could go in the category of “Whuuut?”
As I mentioned in that prior post, if you know me, you know I’m a data hound. I collect and manipulate data, including various types of selling activity, manually logged as a matter of habit, consistently imperfect. One is commercial property inquiries. These dropped off to near zero with COVID-19, no huge surprise. What is somewhat surprising, however, is that they’ve, at least for the moment, seemingly completely rebounded. To be sure, an inquiry isn’t a transaction, but is isn’t nothing either. Thus, this development is welcome.
The chart above shows the 20-day moving average of new commercial property inquiries. This is the sum of various kinds of new inquiries, which in actuality I track more specifically. The year had started off with a bang, as can be seen, which is more a culmination of my efforts over time than a statement of market conditions. Once coronavirus hit, however, this metric went into a dive, with the 20-day average dropping to about 10% of what it was pre-COVID. Since then, however, it has recovered to about the same as the average for the prior year. Go figure.
This second chart is exactly the same data, but with 2020 plotted over 2019 to compare period versus period. The red is 2020, which one can clearly see has of a sudden exceeded levels in 2019. The year of 2020 had been considerably stronger for me in this area, thus this isn’t really a fair comparison for 2019, but with coronavirus having such a negative effect otherwise it is nonetheless a welcome sight.
What do I make of this? I’d mentioned in the prior post that it seems safe to assume there will be some post-pandemic increase in inquires. I’m reasonably certain that is not what this is. Instead, this is likely a rebound to half or so of what this would have looked like absent COVID-19. Regardless, hey, I’ll take it at this point. As this very moment, it likely doesn’t mean much. It does mean there is room for optimism. I only hope that extends to everyone and all things. Here’s hoping.
