Category: Analysis

Quantifying the Effect of Rent/NOI Growth on IRR

Apr 05, 2024 - Analysis, Negotiating - 0 Comments - Standard

Investors often consider commercial property primarily on the cap rate (net operating income divided by price). In most cases there is the expectation of NOI (net operating income) growth and appreciation over time. These expectations are seemingly considered as benefits, with no consideration given to them as incremental return. In this post, we seek to […]

Video: Blackstone Global Co-Head of Real Estate Nadeem Meghji on the Current State and Future of Commercial Real Estate Nationally, Generational Buying Opportunity

Mar 02, 2024 - Analysis, Observations - 0 Comments - Standard

The Discussion: Analyzing the Current State and Future of Commercial Real Estate; Insights from an Industry Leader The commercial real estate sector has experienced significant turbulence over the past two years, marked by a historic rise in interest rates and mounting pressures on office buildings. These challenges have led to widespread negative sentiment and headlines. […]

Chart: Adjusting Value Perceptions for the Recent Inflation Surge

Mar 01, 2023 - Analysis - 0 Comments - Standard

I’ve had a few buyers say something to me along the lines of “I’m going to wait for prices to drop to where they were.” When they mention a level, I notice that it tends to be a value from about five years ago. They could be right; this post has nothing to say about […]

Chart: Commercial Real Estate Quarterly Price Index Moves, Calculated Standard Deviation, Empirical Rule Observations Utilizing FRED Data

Jan 18, 2023 - Analysis - 0 Comments - Standard

Board of Governors of the Federal Reserve System (US), Interest Rates and Price Indexes; Commercial Real Estate Price Index, Level [BOGZ1FL075035503Q], index levels retrieved from FRED, Federal Reserve Bank of St. Louis; Series BOGZ1FL075035503Q, January 16, 2023.The chart herein shows the quarterly change of the Commercial Real Estate Price Index from the Board of Governors […]

Considering Holding vs. Selling & Reinvesting Underdeveloped Land

Feb 10, 2022 - Analysis - 0 Comments - Standard

We previously posted an article comparing holding vacant land vs. selling and reinvesting the proceeds. A similar situation that we often run into is that of underdeveloped property. Such property is generating income, but as a percentage of market value income well under market rates. This happens as the land value becomes greater than the […]

Chart: Miami-Dade Commercial Property Estimated Turnover 2016 to 2020

Jul 01, 2021 - Analysis, Trends - 0 Comments - Standard

The question comes up as to how frequent a commercial property trades in the Miami area. Many take a guess at this, but which I’ve never heard of anyone else really making an effort to truly quantify it. I’ve taken a swing at it here. The Methodology The value of what trades as a percentage […]

Visualizing the CRE Market Timer’s Thought Process

Apr 01, 2021 - Analysis - 0 Comments - Standard

These probability distribution charts are the topic of this article. The first is a normal distribution of returns using a combination of a cap rate of 5% and rent growth of 2% (and assuming an unchanged cap rate a year later) further assuming an annualized standard deviation of returns of 6.5%. The second is how […]

Video: GSU’s Jon Wiley, PhD and Lynn Mckee on Opportunity Zones and the Office Market

Apr 01, 2021 - Analysis, Office Property, Opportunity Zones - 0 Comments - Standard

The Conversation: Understanding the Current Landscape of Commercial Real Estate & Opportunity Zones; Insights from Experts In the ever-evolving world of commercial real estate, navigating the complexities of market trends, investment opportunities, and shifting dynamics requires a keen understanding of various factors at play. Recently, on America’s Commercial Real Estate Show, experts Jon Wiley, PhD, […]

Quantifying the Effect of Rent Growth Assumptions on Commercial Real Estate Cap Rates

Mar 25, 2021 - Analysis - 0 Comments - Standard

When considering changes or potential changes in commercial real estate capitalization rates (cap rates), market participants tend to most commonly think of interest rates. However, rent growth assumptions also affect cap rates as the more one expect earnings to grow over time the less return an investor is willing to accept now. This is just […]

Interactive Map: Land Sales psf by Miami 21 Zoning Code

Mar 12, 2021 - Analysis - 0 Comments - Standard

To use this effectively, you’ll want to filter by zoning. To do that, you’ll need to access this on Google Maps directly using the link later in this post. First, however, read the following: This map was made by using publicly available sales from 2018 to 2020, filtering out sales types such as multi-parcel sales […]

Video: Integra Realty Resources’ Viewpoint 2021; Economic Outlook, Capital Markets, and Interest Rates

Feb 25, 2021 - Analysis, Trends - 0 Comments - Standard

Integra Realty Resources CEO Anthony Graziano discusses his firms  Viewpoint 2021 report. In this second video, he discusses how industrial property performed during the pandemic, how changes in policy with a new presidential administration may affect industrial assets. He then goes on to discuss multifamily property performance during the pandemic and their status now. From […]

Video: How COVID-19 is Impacting Commercial Real Estate

Oct 28, 2020 - Analysis - 0 Comments - Standard

In this video from Yahoo Finance, Doubleline Capital Portfolio Manager Morris Chen joins Julia La Roche and Zack Guzman of Yahoo Finance to discuss in some detail the latest commercial real estate outlook amid COVID-19. They talk about the variance in pain among various commercial real estate sectors as well as the offsetting positives of […]

Holding Highest and Best Use Maximized Vacant Land; Worth Forgoing Income?

Oct 05, 2020 - Analysis - 0 Comments - Standard

  A vacant land owner, where the property that has seemingly topped out its HABU (highest and best use) potential, is forgoing potential income from reinvestment of potential sales proceeds (of the vacant land) for no apparent benefit. In other words, if HABU is topped out, there is not a higher value HABU to come, […]

The Compelling Math of Owning vs. Renting Commercial Property for Businesses

Sep 15, 2020 - Analysis - 0 Comments - Standard

I find buyers commonly debating total monthly cash outlay to own versus that of renting in year one. Though I admire the cash-is-king disciple of this, I would submit that the projected net cost to own compared to that of renting is so attractive that it offsets the typically small differences in cash outlay at […]