Mark Stacy

There was a hearing of the Joint Economic Committee (JEC) today on the following topic:

Commercial Real Estate: Do Rising Defaults Pose Systemic Threat?

Follow this link to the U.S. Congres JEC's Website for testimony and video: http://tr.im/rBH8

I also read a very nice opinion article from David Bodamer, Editor-in-Chief of Retail Traffic. It is worthy of a Re-Blog as it also offers links to several other press articles on today's hearing of the Joint Economic Committee. James Helsel, Partner, RSR Realtors, Harrisburg, PA and importantly Treasurer, National Association of Realtors(NAR)gave testimony as did the Associate Director, Division of Banking Supervision and Regulation, the Federal Reserve Board of Governors, Head of CMBS and ABS Synthetics Research, Deutsche Bank Securities, and the President & Chief Executive Officer, The Real Estate Round table.

A snipit of the article is shown below followed by a link to the full article.

Commercial Real Estate-a Ticking Time Bomb?

David Bodamer July 9th, 2009

In a committee hearing in Congress that just ended, Joint Economic Committee Chairwoman Carolyn Maloney said that commercial real estate is a "ticking time bomb." That comment alone has generated a Dow Jones story, an Associated Press story, a blog entry at the Washington Post, a Reuters story, a CNBC story and a Bloomberg story.

For the full story of Mr. Bodamer's article follow this link: http://tr.im/rBdy

For any of your Commercial Real Estate needs in the Greater Akron, Ohio area including the Ohio counties of Summit, Stark, Portage, Medina, and Wayne, please get in touch with me.

NAI Cummins Real Estate (330) 535-2661 x 142 or by email MarkStacy@NAICummins.com

My Blogs: http://markstacy.activerain.com/

Twitter? Follow me http://twitter.com/NAICumminsMark

Check out my Commercial Listings:

http://showcase.costar.com/markstacy@naicummins.com

www.Listings.Loopnet.com/MarkStacy@NAICummins.com

New to Commercial Real Estate Investing? Some common mistakes to avoid...

It's been said that the best time to invest in real estate is in a down market. Well, what are you waiting for? Commercial real estate prices are at all time lows and interest rates are still very attractive. Admittedly banks are very hesitant to make loans, especially on investment property. Investors in a strong financial position that have a good relationship with their bank are having success. If you are new to real estate investing you need to be somewhat cautious in choosing the right property.

I came across a Blog recently that addressed this very issue. It's title is 6 Beginner Mistakes with Real Estate Investing by Ryan Moeller. Ryan's advice, although taken from a Residential Realtor's point of view, has merit for the newer Commercial Investor as well. It can be found by following this link:

http://www.realreturnrealestate.com/index.php?option=com_wordpress&p=31&Itemid=110

Some of the more common investing mistakes he mentions include "falling in love" or getting emotionally attached to a deal. This is easy to do especially on your first few deals. Make sure that it is a good business decision and be prepared to walk away from a deal at any point if the numbers do not work. He also mentions "Buying in War-zones" as a common mistake. Too often properties seem priced too good to be true possibly because they are in a depressed area surrounded by vacant buildings and foreclosures. You have to remember the "Three L's" of real estate: Location, Location, Location! Another thing mentioned in the Blog is the mistake of having only one exit strategy. Try not to pin your hopes of success with a property on only one course of action. Problems can often arise that can lead to financial disaster if you are not prepared for them. Ryan says it best; "..buy below market properties that cash flow. That way you can sell retail, wholesale, lease option, seller finance, refinance, even rent and hold."

Thank you for posting the good tips Ryan! Hope everyone finds it useful as well. I welcome your comments, let me know what you think. Good luck and may all of your investments be profitable ones!

For any of your Commercial Real Estate needs in the Greater Akron, Ohio area including the Ohio counties of Summit, Stark, Portage, Medina, and Wayne, please get in touch with me.

NAI Cummins Real Estate (330) 535-2661 x 142 or by email MarkStacy@NAICummins.com

My Blogs: http://markstacy.activerain.com/

Twitter? Follow me http://twitter.com/NAICumminsMark

Check out my Commercial Listings:

http://showcase.costar.com/markstacy@naicummins.com

www.Listings.Loopnet.com/MarkStacy@NAICummins.com

What is the Silver Lining? Possible Lower Tax Valuations Next Year

I realize that falling RE property values is a big concern to property owners everywhere. Especially the one's trying to sell their property right now. If you are able, this is a great time to purchase Commercial Real Estate. Borrowing constraints can be difficult but not impossible and rates are very good. The silver lining for those owners planning on possessing their property for the next few years might be found by having a Property Tax Re-Assessment at the beginning of 2010. I know of many that have already done so this year with good success. If you missed the deadline to do so this year, good. Remember that property tax schedules are always a year in arrears. Therefore a re-assessment next January will look at property values in January of 2009. According to some in the appraisal industry, values this year are more than 20% lower than in 2008.

I received a very nice email from Gary Barker who is a commercial appraiser colleague in the local Akron, Ohio market. His company is called Akron Appraisal Group, Inc. His comments about tax valuation and assessments are worth sharing. Additionally he also provides his opinion as to the reason for the lower values relating to vacancies and CAP (Capitalization) Rates. In his email he reprinted a small article from one of his trade publications. that article can be found by following the LINK below:

http://www.appraisalinstitute.org/ano/current.aspx?volume=10&numbr=9/10#7243

The email from Mr. Barker is as follows:

To friends, clients and colleagues,

Below is an article I received today from an appraisal trade magazine (Appraisal Institute Appraiser News Online Headlines, Last Updated: May 6, 2009, Vol. 10, No. 9/10).

This is a great illustration of the issue of tax valuation. While many feel their tax value is too high it is important to point out that taxes paid this year (2009) are based on the value as of January 1, 2008. Next year taxes will be based on value as of January 1, 2009. The below research suggests that across the board values have decreased substantially over the last 12 months. While that presents little relief at the moment, next year's tax bill should be lower.

I suspect most (yes...most) commercial property owners should appeal their tax valuation in 2010 based on the market value on January 1, 2009. I advise taking a very careful snapshot of your property right now. What is your occupancy rate? When was your last tenant signed and what was the rate? What are your monthly expenses?

Why have values changed so much? Mostly because of increased vacancies and increased cap rates. When it comes to the science of appraisal those two numbers have a powerful impact on value. All else being equal - a small increase in the vacancy rate and a small increase in market cap rates will create a significant decrease in value.

Commercial RE Prices Continue to Slip; Down over 20 percent from 2008

Based on the Moody's/REAL Commercial Property Price Index prices of commercial real estate are down 21.2 percent from a year earlier and down 17.9 percent from two years ago. The Index, which is based on repeat sales of the same properties across the U.S. at different times, fell 0.6 percent in February to 150.63 from 151.58 in January.

The index is a good measure of where commercial property prices are going. The largest year over year price drop (February 2009 vs. February 2008) was reported in industrial, with a 13.9 percent decrease; followed by apartments, with a 13.6 percent decrease; office, with a 13.5 percent decrease; and retail, with a 8.5 percent decrease. Also, according to the report, sales volumes in February were down 67 percent from the year ago period and most of the sales (90 percent) were for assets under $15 million.

According to Zack's Investment research, these trends indicate there might be many owners who bought at the height of the boom underwater on their mortgages and that there could be a rise in defaults, due to the risk that such "underwater" owners possess.

With financing still scarce and fundamentals going south, prices are likely to continue falling, which could mean fewer transactions as owners are reluctant to take losses. However, lower dollar deals are getting done vs. large transactions; financing for smaller properties is easier, which should make price drops in the >$15 million class less severe, according to Zack's.

Hopefully you have found this information useful. Let me know what you think.

For anyof your Commercial Real Estate needs in the Greater Akron, Ohio area including the Ohio counties of Summit, Stark, Portage, Medina, and Wayne, please get in touch with me.

NAI Cummins Real Estate (330) 535-2661 x 142 or by email MarkStacy@NAICummins.com

Twitter? Follow me http://twitter.com/NAICumminsMark

Check out my Listings:

http://showcase.costar.com/markstacy@naicummins.com

www.Listings.Loopnet.com/MarkStacy@NAICummins.com

Is this my 15 Minutes of Fame?

Hopefully not... but, I was pleasantly surprised to open the Winter 2008-09 issue of the Northeast Ohio Office Buildings Magazine and find that I had been quoted by Jay Miller in his Market Survey article titled "Surveying the Market: Uncertainty Finally Reaches Cleveland". In this article Jay, the highly reputed Crain's Cleveland Business government and economic development reporter, accurately depicts Akron as an exciting marketplace for Commercial Real Estate brokers. He lists several positive happenings in and around Akron, most if not all have been lauded in my previous blogs. I was quoted by Jay as saying "It's been a little bit more of a struggle [in the last four months of 2008]", and "Deals are happening though, and we're optimistic. It doesn't do any good to think otherwise." True, so true. Deals are continuing to happen and those agents/brokers that refuse to keep an optimistic attitude will surely struggle in the months to come. Even in "Down" markets Tenants and Buyers are there. Smart Tenants take the opportunity to find better quality or more efficient locations. Smart Buyers (and qualified Buyers) take the opportunity to purchase properties at well below "normal" strong-market prices. As reported, our market in Northeast Ohio is not overbuilt and by its conservative nature remains relatively stable as compared to the rest of the country. Stay tuned for more positive Akron area commercial real estate news!

Mark Stacy -NAI Cummins Rea Estate

Low office space vacancy rates in Akron, Ohio, can this be true?

I am happy to continue my series on the Akron, OH commercial real estate market by relaying some positive news on our office leasing market. In today's Akron Beacon Journal reporter Paula Schleis penned an article on the lower office space vacancy rates in our area. In the article (see link below) she reports that Team NEO's (aera economic development group) recent findings show that vacancy rates for Class "A" office space in our 16-county region fell from 19 percent in 2003-2004 to about 12 percent now. Currently Team NEO also finds that Class "B" space is at 13 percent and Class "C" office space vacancy stands at 9 percent. In the specific Akron, Ohio area, the combigned vacancy rate is reported at 8 percent, down from 12 percent in 2007.

The article points to the medical sector as a big contributor towards the improved office leasing market and lower vacancy rate. Mike Wojno, of Wojno Development is quoted in the article describing the new medical projects he has been involved in along with the growth in and around the designated Akron Biomedical Corridor.

Hey Paula, did you read Part 3 of my series of Blogs on the Akron, Ohio Commercial Real Estate Market from September 22? (See link below ) You must have because in it I laudded the Akron area hospitals for their recent growth and even referenced Wojno Development's new Acute Care Facility. I love positive news so the more the merrier! As stated before, this is terrific news for the growth of our region. We are truly seeing good things happening in our area.

I welcome your comments and suggestions. Let me know your take on the Commercial Activity in your region. More installments to come, stay tuned...

Thanks,

Mark Stacy - NAI Cummins Real Estate

Here is a Link to today's (9/29/2008) Akron Beacon Journal article on area office vacancy: http://www.ohio.com/news/top_stories/29873659.html

Here is the LINK to Part 1 of my Akron Series Blog: http://activerain.com/blogsview/631507/The-Akron-OH-Commercial

Here is the LINK to Part 2 of my Akron Series Blog: http://activerain.com/blogsview/674536/The-Akron-OH-Commercial

Here is the LINK to Part 3 of my Akron Series Blog: http://activerain.com/blogsview/703470/The-Akron-OH-Commercial