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Where is Value?

 

 

 

Alton Webb & Associates Commercial Real Estate - Monthly Update - January 2010

Where is value?  This is an essential question for real estate and the economy in 2010.  If we know where true value is and can assign a numerical figure therein, we will have the foundation for starting over again.

Once the market floor is established, confidence will be revived & folks will start buying again.  As long as value floats aimlessly, so will the market.  Unfortunately, we still have uncertainty and a moving target for deal-making in the commercial arena.  Yet, good news awaits as we've seen the beginnings of positive movement in residential property sales - home credits seem to have assisted kicking off this process.  We believe commercial real estate trends will follow residential trends, which could mean a better commercial market by 3rd to 4th quarter 2010.

Cost for new construction, renovation, and finish work remains steady while ccomparable sales lag.  Currently, a large gap resides between the two.  As an example, I may pay $750,000 to build an office building today, but the comparable sales of existing property in the last 12-15 months show a value of $625,000.  This will work itself out in due time. 

Investors and small businesses are furthered & created during times of struggle.  Don't be like Mark Twain, who said, "I was seldom able to see an opportunity until it had ceased to be one."  For example, we have an investor who knows how to own & operate multi-family property.  He is buying 8-12 unit buildings for $100,000 less then this time last year, yet still collects the same amount of rental income as he did then.  This requires him to spend or borrow less money & actually make more.  

Like our investor, we must take it upon ourselves to re-establish the market.  Encourage others!  Values will begin to settle and solid footing will be created for 2010 and beyond.

The above is merely opinion, subject to change or error, & not warranted by Alton Webb & Associates.

Settler's SOLD!

Mack Johnson, a sales representative in our office completed a successful commercial real estate transaction yesterday.  He represented the ownership entity in the sale and closing of Settler's Retail Center in Taylorsville.  A significant deal for our teamand Mack.  Way go to bro - Very proud of your diligence, persistence, and integrity.  Keep it going!

Good work Happenin'

Yesterday our team helped host a "business after hours" for the cancer care provider in our community - Louisville Oncology -Norton Healthcare.  Great turnout and lots of friends & business folks stopping by to support the good work happening.  Was most touched by the conversation I had with a cancer survivor who was told that he wouldn't make it, but in fact is doing quite well now.  He's lost his hair, but not his heart.  It was very inspiring to see him step into public & share with others.  Most of all, his story & affirmation of answered prayers was powerful.  How brave is that?     

Mid 2009 Commercial Real Estate Update

The first six months of 2009 were challenging.  Banks & credit tightened, Buyers had less confidence, & risk tolerance was completely absent.

Now, we see some signs of recovery.  Our team sold a downtown building last week, leased a small shop space this week, hope to finalize a retail center deal, finishing up a warehouse distribution lease, and negotiating a fairly significant industrial building deal among other activities.  Our hope is to keep working in a creative matter & assemble some transactions this summer & into the fall.  

With Sellers & Landlords continuing to recognize marketplace status, we feel things will keep turning.  If interest rates increase to offset a rising concern of inflation, it will only make the environment close to impossible.  Meanwhile, the opportunity is great for investors, buyers, & tenants.  Let's make a deal!    

Anti Food Court

Recently stopped in at a regional mall's food court.  These things can be a disaster & it was...the worst meal ever.  On prior trips, I remember a diverse selection & hot food.  The original operators are gone & new franchisees make the most of what they have.  The birds are flying around in the ceiling and it seems the only reasonable choice is the Asian Buffett for $4.99.  (At least they let you try before you buy!) 

The 2nd floor food court used to be a fun trip up the escalator. No longer.  Real estate is always changing.  Especially retail.  Timing and trends are important.  Today, restaurants can have a sole location, with better environments, more visibility, & offer higher quality.  In the food court you never know when you might get hit by a random bird, sit @ a dirty table, or be able to locate a child seat.  Count me out for the courts of food.   

The Winds of Change?

Things in the office are better this week.  Could this be a sign that it's turning?  Let's hope so. I think the real change is in Sellers/Landlords.  They are becoming more realistic & understand the market is tough.  If an offer is reasonable - The time is now to make a deal.

It's a nice change, for the past few years, Buyers have had absolutely no leverage in negotiation.  The issue may now be, they have too much.  Hmm, It seems in the real estate business you have tons of supply with little demand or loads of demand and no supply.  All about positioning & timing. 

It's going to take sales folks working hard & people taking risk to get us out of this mess.  Keep going!  

Mack @ ICSC

One of our team members, Mack Johnson is out in Vegas at the ISCS Convention.  Over 2 million sf of exhibitors! He's drumming up commercial/retail business and trying to further the cause of our clients & economic development in KY.  This year the attendance is down by half, but still over 25,000.  Being a contrary thinker, I'm in agreement with Mack - It's a good time be there!  On behalf of Alton Webb & Associates, thanks for your hard work & dedication.

Office View

Here at the office on a rainy Monday.  It helps that I have a window, even if it's not the nicest day.  When we first started our company, I was in the basement of Dad's house around the back/dark corner.  No view.  Not the best environment to make cold calls & dream.  But, I have no excuse now! 

Attached is my current view from the first floor of our office building.  Yall can see that the window can be raised for a breeze.  My view also permits an advance warning when solicitors drop in unannounced, warm sunshine, or a quick chat with a friend walking by.  How bout yours?      

Positive News!

I'm pleased to announce that our team had two closings today!

First, we assisted a client purchase a retail investment property in Simpsonville, KY (pictured).  FYI - Great opportunity is available in this economy.

Secondly, we helped a group of doctors locate a professional lot to construct a new medical practice building.  FYI - Banks are still lending money at good & competitive rates.

Be encouraged, stay positive, & turn off the news - Praise God, things are happenin!      

Thankful Cleaning

Today our team went to the local pregnancy resource center to help do a little cleaning & encouraging to the good folks there.  Not much assistance was needed, that place was spic & span already.  We probably spent a couple of hours vacuuming, mopping, dusting, folding donated clothes etc. 

It didn't seem like a big deal to us.  But, after we prayed together at the end, it was obvious that Jan (the ex. director) was very appreciative.  We were all moved by the depth of her faith & the burden she has for the unborn. 

What a remarkable place of ministering to others in the name of Christ - Not just in words, but by deeds - now that's church.  I am especially thankful to celebrate Walker's first Thanksgiving & his life this year - It made the trip even more special to know that gracious souls like these are moving to love, care, & help others make the right choice.  

Jan is quick to say, "Everyday is literally a walk of faith."  May God Bless & keep the ALC Pregnancy Resource Center!  

To learn more watch this.