I have noticed that Stark & Associates has gotten busier in the past few months in Northern Nevada in the Commercial Real Estate market... Specifically in Reno and Sparks.

Our lease rates are attractive and I think this has contributed to firms moving around town to lower overhead costs.

I also have noticed that the sale properties are starting to move better than in 2009. It seems banks are starting to lend a little more and the cash deals are still out there.

Is anyone else seeing this trend in their commercial market? What kind of deals are getting done(Office, Industrial, Retail, Investment, Land)?

Hey Earl,

Here is how the Georgia market is shaking out. Most land is at a dead standstill.The reason is there are so many commercial pre-foreclosures,loan resets,& foreclosures that are existing buildings that land has no demand until that distressed inventory goes away.Some small corners and A locations are still moving dirt but anything off the corner or speculative is dead.In one county alone out of the 28 county Metro Atlanta Area there are over 479 commercial land listings for sale between 1-4 acres!

Retail only 100 percent full class A properties are selling for a low cap.Fractured projects are trading really low maybe 40 cents on the dollar because of the hold times involved to get performing.

Many are looking for class A or B at 50 percent or more occupancy where they can put a property management company in that specializes in turning around properties. Then flip it after a year or two in a stronger market. If the property is really old and occupancy is less than 50 percent you are looking at a cash deal and then refacing the shopping center if the location is good.Retail is having a little longer turn time here because of the inventory available versus the demand.

Multifamily is heating up right now big time.Usually 3 types of investors I am seeing. Ones looking to buy 40 percent to 0 occupied and pay cash maybe 10 to 20 cents on the dollar.

Others looking for 50 percent or more occupancy to install a PM company and get up to 90 to 95 percent levels and flip in 1 to 1 years.

Then the last is for long term hold investors looking for A properties in an A,B location or up to a C class building in an A location for acquisition.

Purchasing strategies I am seeing for the most part are.

Private finance up to 85 ltv where the buyer is putting down 15 percent.

Conventional finance with buyer putting down a percentage as cash.

Buyer paying all cash.

Buyer wanting to assume the note and put some or no cash into the deal.Many lenders ARE NOT allowing this as the note rate on the loans are really good and they want the buyer to apply for a new loan so they get another set of fees or get cashed out of the low interest loan so they can re-lend the money at today's higher rates.

Buyer wants to get an ltv of 85 from conventional or private finance but wants the sellers to hold a 15 percent second.
Used to a seller could sell off a second at closing to a note buying company for 50 cents on the dollar.Now nobody wants to touch them and you will be stuck with the note.If the buyer goes into foreclosure or BK you will get most of the note wiped out.
This is why most note companies haven't purchased a second position note in over a year. The only time they would touch a second note is if say the property was worth 2.5 million and the purchase is 1.5 with a seller carry back of 300k. In that case the note holder feels there is enough equity to protect their position in case of problems.

Anyways that is what I am seeing in good ole GA.

Land here has been very slow too. Construction has overwhelmingly been government or TI oriented.

Stark & Associates focuses primarily on Office and Industrial here in Reno and the surrounding areas, and that is where the momentum seems to be. Deals are getting done even though they may take longer or be smaller than ideal, there are a lot more than in 2009.

I have noticed that sellers have been getting creative on financing (Owners holding seconds or even firsts). Additionally the SBA has stepped up for several transactions.

The foreclosures have also helped the lease market (from a broker's perspective) because buyers picking up distressed properties at less than 60% of market allows for lower rental rates to while turning a profit on the investment (those have been cash deals).

Standalone buildings (whether Commercial/Retail or Office) have been garnering a lot of interest. Pricing has been the driver in this market and it seems like the buyer-seller gap is starting to shrink.

Hi,i am showing trends of commercial real estate in northern Nevada -2010

Investments : Investments sales nationally were very week in 2009, reflecting investor’s uncertainty and lack of product priced to attract buyers. Distressed sales did spread from land to the entire investment world. High debt service, maturing loans
, increased vacancy and reduced rents will continue in 2010 with owners capitulating and REO actively being dumped from lender’s balance sheets.

Office: To determine the health of Reno-Sparks, Colliers worked with the Center for Regional Studies and used a “Coincident Index”. Each recessionary period was followed by a period of construction. The current recession, which began in the summer of 2007, had pushed the office vacancy to an historic all time high since the Reno/Sparks market has been tracked. A bright spot in the “Coincident Index” is our region appears to have pulled out of the recession in September of 2009. However, we will not feel the turnaround immediately. It is estimated that it will take approximately four years with no new construction at normal absorption levels to return to a balanced market of 10% vacancy.

Retail: Northern Nevada retail continues to show softness. According to the National Association of Realtors, the national retail vacancy rate at the end of 2009 was 12.6%. Northern Nevada was not so lucky. At the end of 2009, total vacancy registered 16.4%, an all time high! 2009 saw significant Retailers closed their doors in the Northern Nevada market that included Gottschalk’s, Circuit City, Longs Drugs and Sports Authority amount many others. 2010 has not started well either with the closing of Safeway at Firecreek Crossing, four Hollywood Videos and on Bully’s already adding 80,000 square feet back to the market.

Industrial: The Theme for 2010 is basic: Business Retention and Customer Service. 2009’s industrial real estate market saw several top companies closing or reducing their Northern Nevada footprint shedding jobs and putting space on the market
for sublease.

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