The past few weeks in the commercial real estate market have seen the long-awaited influx of foreclosures into the multifamily asset class. It is not pretty to say the least… I had multiple conversations with multi-family owners and multi-family brokers (not to mention our ongoing consulting engagements to help distressed properties), and it all paints the same picture: The multifamily owners are hurting, everyone is bleeding, and it’s probably not going to get much better in the next 12-14 months. What does it mean for the commercial real estate market in general and for retail specifically? Well, it means these assets will come on the market overpriced. Investors and banks always try to recover their original investment so they will price it at that but most of these properties are not worth the note price which means the first ones to take the loss will suffer the least amount of loss. Are there still buyers for multifamily, sure! There are unexperienced buyers that will follow outdated models sold to them by one of those “gurus” out there and there are also deep pocket investors that will be fine bleeding a couple of years or until the market turns. The real sharks though, are still not in the water. Not enough blood in the water for them to make a move just yet. This will drive some challenges in the short term with financing commercial assets, not just multifamily. Bank that carry higher percentage of defaulting multifamily loans will be much stricter with their loan guidance going forward. This will impact all borrowers, not just multifamily. Will retail be impacted? Generally not by much but we do see a clear delineation and a two-speed market in the DFW Metroplex. The newer, higher-quality, retail is full and commanding high rents while the older retail takes longer to lease and has a higher vacancy rate than the market average. Read more about the retail leasing conditions in our Eureka Retail Velocity Index Report As we do every week, we took time and reviewed all the commercial listings that came on the market and curated this hand-picked list representing the top opportunities we identified as the best value. If you wanted to keep up to date on retail real estate news, we have a LinkedIn Newsletter you can subscribe to.
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