I Don’t Want To Be The First But I Certainly Don’t Want To Be The Last
We were recently talking to a local investor that we’ve done business with over the years. In fact, we currently have two units available in one of their multi-tenant parks. The conversation was typical market updates, inquiries, tours, general activity type speak. He listened and responded with, “Has anyone dropped the price to get a tenant”? No, we responded. His reply, “Well, I don’t want to be the first but I certainly don’t want to be the last!” The ending comment was to reconnect in two weeks’ time. Followed by the suggestion that, If we don’t get any real leasing activity, we may have to be the first.
We’ve sent nothing but “Highest Sale Price” or “Highest Lease Price” marketing material for the past several years but it seems the party is over. The speed and depth of the correction is T.B.D.
Causes being, inflationary pressures, slowing retail demand for goods and services, all time high lease and sale rates and unless you’ve had your head in the sand for the last 12 months, increases in interest rates. The benchmark for many commercial loans is the 10 Year Treasury, which is nearly double the rate it was 12 months ago, 1.68% vs 3.5%.
With all that said, we don’t have sufficient data points to show trends but leasing and sales activity has slowed considerably and we anticipate lower lease and sale pricing forthcoming.
What’s this mean to you? Well, if you’re considering a sale or have an upcoming vacancy, prepare yourselves for more time on the market, lower lease rates and giving concessions to make deals.
Do you have any availabilities coming up this year? Are you considering selling your building? If you answered yes, we’re here to help with any strategic real estate planning!