Bargain hunters are starting to sniff around commercial real estate markets, though retail real estate remains under a heavy cloud.
Apartment and office buildings in Washington, D.C., New York City, San Francisco and Boston are sparking a bit of interest -- a signal that the bottom is nearing.
“While we may not have bottomed completely, investors are looking at fundamentals and future prospects,” says Alan Pontius, managing director at Marcus and Millichap Real Estate Investor Services. “Investors are no longer trying to time the market.”
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Average prices for commercial real estate are likely to keep slipping, though, dragged down by declines of up to 20% in Atlanta, Las Vegas, Phoenix and other areas with a hefty surplus of space. Brighter spots, where prices will flatten out this year, include Los Angeles, Austin, Texas, Washington, D.C., Portland, Ore. and North Carolina’s Raleigh-Durham area.
“The good news is that the freefall we saw in 2009 is over,” says Robert Bach, senior vice president at Grubb & Ellis, a commercial real estate advisory firm.
On the retail front, store closures this year will again be more numerous than usual, though fewer than in either 2008 or 2009.
Rents will soften further, sliding by about 4% after space improvements and other concessions are taken into account. Odds are it’ll take about five years for rents to regain their 2008 highs, even though minimal space will be added -- only 12 million square feet in strip malls this year, for example. That’s 20% more than last year but less than half the typical annual increase over the past decade for the “necessity based” outlets.
Retailers that have the capital are being extremely picky about new space, taking over vacant locations only in prime spots. Big chains are using their funds to redevelop existing stores -- making them better draws, rather than adding space.
For weekly updates on topics to improve your business decisionmaking, click here.
-
Seven Ways to Reduce Taxes on Social Security Benefits in 2025Social Security Minimizing taxes on Social Security is an essential consideration for many retirees.
-
Sherwin-Williams Is a Sleeper of the 100,000% Return ClubSherwin-Williams has quietly carved out a massive return for shareholders over the years.
-
Donald Trump Tests His LimitsThe Kiplinger Letter President Encounters Legal Obstacles in Pursuit of Ambitious Agenda.
-
Another Down Year for AgricultureThe Kiplinger Letter Farmers brace for falling incomes, widening trade deficits
-
What To Know if You’re in the Market for a New Car This YearThe Kiplinger Letter Buying a new car will get a little easier, but don’t expect many deals.
-
How AI Will Impact Our Lives in 2025 and BeyondThe Kiplinger Letter Now that breakthrough artificial intelligence is here, the next decade of computing will be dominated by AI.
-
What Could Derail the Economy This Year?The Letter While the outlook for the U.S. economy is mostly favorable, there are plenty of risks that bear watching.
-
Three Ways President Trump Could Impact the EconomyThe Letter Some of Trump's top priorities could boost economic growth, but others risk fueling inflation.
-
Europe Faces Economic and Political Headwinds Next YearThe Letter Challenges for Europe: Potential tariffs, high energy prices and more competition from China will weigh on the bloc in 2025.
-
Don't Sleep on Japan's Economic TransformationThe Letter After almost three lost decades, Japan — one of the world's biggest economies — is finally showing signs of life.
