"Cash is King" shout Commercial Agents

Cash is King versus the Battered Commercial Real Estate Market. This is the sentiment from Commercial Real Estate professionals affiliated with CCIM Institute.

The liquid position "Cash", tops other investments such as Office Buildings, Apartments, Retail Centers and other commercial properties.

According to the survey conducted, this is the first time in 6 quarters that the CCIM Institute rated anything higher then Commercial Real Estate. Cash garnered a 6.7 rating (Out of possible 10), whereas Commercial Real Estate received 6.1, bonds got 4.4 and stocks brought up the rear at 3.4.

The below data is somewhat worrisome from a Commercial Brokerage point of view, but ultimately, it can be the best thing for your clients in some cases. Obviously, each case is specific unto itself. We think this is in fact a terrific time to maximize your cash holdings and acquire commercial real estate at competitive prices and terms.

The rating of investment conditions was a key finding of the Fourth Quarter 2008 RERC/CCIM Investment Trends Quarterly, a national commercial real estate market report. Findings covered the three-month period ending September 30.

“CCIM designees and candidates seemed to agree with their institutional counterparts, suggesting investors sit and wait out this credit crisis and that the shaky economy needs to stabilize before critical investment decisions are made,” the report noted.

CCIM members surveyed rated every property sector lower than the previous quarter in terms of investment potential. The apartment sector – the only safe haven for investor dollars – earned the highest investment conditions rating at 6.2. Since the first economic salvos hit the economy in 2007, Third Quarter of 2007, apartments have led all property types in this category.

Apartments also led the other key property types in two other categories: return versus risk, where it scored a 6.1 rating, and value versus price, where apartments scored 5.0. The value versus price analysis indicates survey respondents maintain the value of apartment properties are equal to the price paid. Investment conditions for the other main property types – offices, industrial, retail and hotel – all scored below a 5.0 rating.

In light of the gloomy outlook, the report offered some optimism for commercial real estate.

The value of private equity commercial real estate will continue to decline, “however, the severity of price corrections will vary greatly by property quality, property type and property location,” it stated. “And, where these are challenges, there are also great opportunities, including purchases of distressed or performing assets that have overcorrected.” From a regional perspective, the East was rated as having the strongest regional economy at a 5.0 rating, followed by the South (4.7), Midwest (4.5) and West (3.9).