Where is the Upside in Commercial Real Estate — Time for Caution

Commercial real estate markets throughout the country are seeing record prices for A+ investment property.  Institutional investors are chasing returns with interest rates still being at historical low’s and alternative investments offering miniscule opportunity for growth.  This strong push for returns coupled with a tighter supply has also contributed to higher prices.

What about B and C property?  Are those property types seeing the same push on prices with investors willing to take on more risk?  In some instances, yes.  Property that presents upside through re-development or re-positioning in the market is being sought out by more investors and prices are on the uptick…. in good, first tier, large markets.  What about the secondary and tertiary markets?

In an interview with GlobeSt.com, Jacob Frydman, CEO of United Realty, briefly touches on these markets.  His views are not without merit.  Smaller markets are generally thinner due to population sizes, economic drivers, and diversity of the overall economy in the city/market.  Economic recovery and expansion may not have as a dramatic effect on values as compared to first tier markets but as the economy turns, the effects may be worse in some instances.

The Savannah MSA is considered to be one of those secondary markets.  Our view on Savannah is quite a bit different than the blanket, macro view most investment grade clients must apply.  Where is the upside in commercial real estate in Savannah?  Is it time for caution?  Our answer to the second question is always “YES”.  What does caution mean to PIER Commercial Real Estate Brokerage?  It means approaching every potential acquisition or development opportunity with the same basic mandatory questions.   The analysis behind the answers to these questions provide our clients with invaluable market knowledge that is not as readily available as it is first tier/larger markets.  We provide this information to our clients along with other specific analysis customized to their goals and the deal which bolsters the comfort level in a final investment/development decision.

We believe it is a good time to for investors looking to acquire or sell investment property in the Savannah Metro market.  Well located B and C property is commanding greater prices than in the past but price levels still allow upside for a new owner.  PIER Commercial Real Estate Brokerage, LLC has been actively working in the Coastal, GA/SC markets for over the past 15 years.  We are intimately familiar with the nuances of each sector of the market and can help provide background to the key answers for investment decisions.

Please give us a call to discuss your goals.  We can also be reached by email at info@piercommercial.com

 

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5105 Paulsen Street
Savannah, GA 31405


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