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Jack O’connor- Where’s the Comm Real Estate Market?
February 24, 2012 @ 12:00 am EST
This morning’s program was a bit unusual. The speaker that was on the announcement was Jack O’Connor. Jack assembled some people for a panel and they were important and knowledgeable people that helped round out the subject.
Among them were Andrea Lohneiss, an economic officer with NY State.
Peter Curry, Attorney with Farrell Fritz PC
Jim Carpenter Sr VP NY Community Bank
Tom Murray Managing Partner (moderator) AVZ CPA’s
The commercial and industrial real estate business does not operate in a vacuum. Each participant verbalized what effect they were seeing from their point of view. And the fact is while the economy is improving there is still sluggishness in the recovery.
The good news is that properties are relatively cheap and the banks have plenty of cash to loan. In addition interests are at historically low levels. According to O’Connor properties that would sell for $125 per foot can now be bought for $70 per foot. On the other hand buyers must be very credit worthy and be willing to put up substantial down payments.
Another factor is pent-up demand. The long recession has frustrated any forward motion, yet demand continues to build. As business improves and confidence builds recovery should accelerate.
Andrea Lohneiss told us that the low end of the market is not improving as fast as the high end real estate
Jack pointed out that the statistics on vacancies is skewed by the way vacant space is measured. Spaces of less than 20,000 feet are not counted.
Jim spoke about non-judicial foreclosures. The process where it can be used, is quicker and cheaper to execute. The goal is to clear up most of the foreclosures so they don’t undue weight on the market.
The question of available money for multiple family dwellings came up. Good news, here again. The bad news is that there is often opposition to workforce housing that are usually provided in these rental properties.
I pointed out that workforce housing has a symbiotic relationship to industrial and commercial real estate. The needs of industry demands that employees have a reasonable cost housing. The elements go hand in glove. Most towns and villages want businesses within their jurisdiction so they can benefit from the tax revenues. The local governments, driven by organized opposition, oppose the housing that business needs for employees. The result is that an old problem gets older without signs of it abating.