Neil Victor

Neil Victor, CCIM is Senior Advisor with Sperry Van Ness Huntsville Office. Being part of the SVN organization offers us the most comprehensive commercial real estate marketing tools in the industry such as CCIM , Site To Do Business, Alabama Commercial Information Exchange, NALCOM, Listing Link and many other value propositions. We are happy to share this information with you.

Written By Maulik Shah, AVP-Sperry Van Ness | Better Capital Partners

It is a known fact that CAP rates have been rising all over the US. However, many people believe that utilizing a blanket cap rate for all property types is hurting the market.

Nationwide properties are losing their values, but there are several property types that have been performing fairly well. If you’re an investor, don’t simply believe that a properties lower CAP rate is to good to be true.

Here is an example utilizing two fast food (franchise) restaurants located in the same city/market. The market should be open to the possibility that one location could perform better than the other. One location could have a lower cap rate based on their current profit and loss statements.

There are numerous factors that are calculated into these valuations. One of the most important is the location of the property. If there is one property in a high traffic and densely populated area and a second property in a lower traffic area, causing lower sales, how can the same CAP rate be justified for both the properties?

Even within the same city a property can be worth a lot more if there is a lot of traffic that can help increase sales for that particular restaurant. A property’s surrounding area should be taken into account when it is being valued, rather than using a blanket CAP rate. Just a little something to think about!

Eric Better | Principal & President

Sperry Van Ness | Better Capital Partners

Nationwide | All Property Types

1575 Westwood Blvd., Suite 201 | Los Angeles, CA 90024

O: 310.231.8979 | M: 310.418.5261 | F: 310.388.0447

www.svnbcp.com | ebetter@bettercapitalpartners.com

Sperry Van Ness International has specialist's in all disciplines of commercial real estate brokerage. Members of the Sperry Van Ness Multi Family Team, Auction Team, Sale-Lease back, Asset Recovery mini-storage team and other teams are comprised of Commercial Real Estate professional brokers of the highest caliber who are experts in their fields. This site is maintained by Neil Victor, CCIM, and the Sperry Van Ness Huntsville Alabama office.

Property Prices Continue Dropping

Oct 19, 2009 - CRE News

Commercial property prices, as measured by the Moody's/Real Commercial Property Price Indices, or CPPI, are now 40.6% down from their October 2007 peaks.

The all property-type index fell 3% in August to 114.06, which is down 32.8% from a year ago. It marks the 11th straight month of decline in the index, which is calculated based on repeat sales of properties.

The national office index value actually increased in the second quarter by 4.1% from the first quarter to 128.96. But it's down 27.4% from two years ago. Each of the remaining property sectors - industrial, multifamily and retail - saw declines in the second quarter when compared to the first. Industrial values were down a whopping 20.4% from the first quarter to 131.3; multifamily was down 16.3% to 131.93, and retail was down 7.9% to 138.3.

And each of the regional indices tracked by the CPPI was down, with the greatest decline seen by apartments in the South, whose index value fell by 44.2% in the year ended June, to 82.86. Values are now 48.7% lower than in October 2007.

Florida apartments also continued to get clobbered, falling in value by 39.8% over the 12 months through June to 111.53. They're now 48.3% below their level two years ago.

Apartments in the East performed best, falling in value by only 6% over the year to 182.47. Their values are now down 10.5% from two years ago.

Meanwhile, the number of repeat sales used to calculate the CPPI remained relatively low, at 73 deals with a value of $950 million. That's of a total of 377 deals totaling $4.8 billion. July saw 74 repeat sales totaling $1.2 billion and June saw 87 deals totaling $1.1 billion. The index hit a low in May, when only 52 deals were recorded. In its analysis of the data, Moody's Investors Service noted that property prices today are lower than they would have been if, starting in December 2000, they increased only by the pace of inflation. They are now at the same level they were in June 2004.

Copyright © 2009 Commercial Real Estate Direct, a service of FM Financial Publishing LLC. All rights reserved.

Neil Victor, CCIM is Senior Advisor with Sperry Van Ness Huntsville Office. Being part of the SVN organization offers us the most comprehensive commercial real estate marketing tools in the industry such as CCIM , Site To Do Business, Alabama Commercial Information Exchange, NALCOM, Listing Link and many other value propositions.

Neil Victor, CCIM is Senior Advisor with Sperry Van Ness Huntsville Office. Being part of the SVN organization offers us the most comprehensive commercial real estate marketing tools in the industry such as CCIM , Site To Do Business, Alabama Commercial Information Exchange, NALCOM, Listing Link and many other value propositions.

Words of Wisdom from my colleague Eric Better, at SVN:

Capital markets cannot and will not grow due to a lack of credit and refinancing resources. During the last downturn in the markets, it was through CMBS that the market saw new sources of capital. The government has introduced a new program that is designed to ease the burden of troubled mortgage securities that have been placed upon the banks. The government plans to match the investments and provide a loan program for investment banks to buy the discounted troubled securities.

Many people will view this as a bailout for the companies who created the problem, giving them another way of making huge sums of money. A newly introduced government program, Public-Private Investment Program (PPIP), was created to generate $12 billion to purchase troubled mortgages and CMBS. Compared to the $50 billion maturing in CMBS markets in the US and $3 trillion worldwide, this is a very insignificant amount, but the positive in all of this is that there are actions being taken to remedy the situation.

The goal of these initiatives is to jump-start transactions to remove troubled assets off company books. While it is still unclear if these actions will be enough to salvage the markets, one thing is clear, foreclosures will rise. As more borrowers see their cash flows decreasing and find it difficult to make the payments on their loans, they will have no choice but to foreclose. To solve this problem the FDIC will have to sell assets from portfolios of banks that have been taken over by the agency. Before the agency can do this, it has to restore confidence in investors and give them a reason to buy these troubled assets and securities. With the collapse of the markets it is clear that self-regulation does not work. With CMBS being an integral part of jump-starting the markets, many feel that the recovery will still take some time.

You will find Nationwide Multi-Family interest rates in the 4-5% range and commercial interest rates can be as low as 5.25% with select programs still offering non-recourse financing.

Eric Better | Principal & President

Sperry Van Ness | Better Capital Partners

Nationwide | All Property Types

1575 Westwood Blvd., Suite 201 | Los Angeles, CA 90024

O: 310.231.8979 | M: 310.418.5261 | F: 310.388.0447

www.svnbcp.com | ebetter@bettercapitalpartners.com

Sperry Van Ness International has specialist's in all disciplines of commercial real estate brokerage. Members of the Sperry Van Ness Multi Family Team, Auction Team, Sale-Lease back, Asset Recovery mini-storage team and other teams are comprised of Commercial Real Estate professional brokers of the highest caliber who are experts in their fields.

Neil Victor, CCIM is Senior Advisor with Sperry Van Ness Huntsville Office. Being part of the SVN organization offers us the most comprehensive commercial real estate marketing tools in the industry such as CCIM , Site To Do Business, Alabama Commercial Information Exchange, NALCOM, Listing Link and many other value propositions.

Sperry Van Ness International has specialist's in all disciplines of commercial real estate brokerage. Members of the Sperry Van Ness Multi Family Team, Auction Team, Sale-Lease back, Asset Recovery mini-storage team and other teams are comprised of Commercial Real Estate professional brokers of the highest caliber who are experts in their fields.

Neil Victor, CCIM is Senior Advisor with Sperry Van Ness Huntsville Office. Being part of the SVN organization offers us full all a large variety of commercial real estate marketing tools such as our CCIM and Site To Do Business.

From the CEO of Sperry Van Ness:

Kevin Maggiacomo | President

Sperry Van Ness | Corporate

18881 Von Karman Ave | Irvine, CA 92612

Cell 949.231.7757 | Fax 949-271-4614

maggiack@svn.com | www.svn.com

Some not so widely reported labor data for you here…

Temporary labor statistics are leading indicators of unemployment statistics as companies are more apt to hire temp help before taking the plunge to ramp-up their full-time staffs. Changes in Temporary worker demand shows up in unemployment numbers 6-9 months later.

The good news, Temp worker demand declines slowing down and in the trough, which will later translate to leveling off in unemployment.

The company responsible for the study is Palmer & Associates, headed by Greg Palmer, who is also a member of the Sperry Van Ness Board of Directors.

Sperry Van Ness International has specialist's in all disciplines of commercial real estate brokerage. Members of the Sperry Van Ness Multi Family Team, Auction Team, Sale-Lease back, Asset Recovery mini-storage team and other teams are comprised of Commercial Real Estate professional brokers of the highest caliber who are experts in their fields.