Dr. Randy Anderson, Chair of Real Estate at the University of Central Florida, spoke last month at the Realtors Commercial Alliance last week. See the full article on World Property Channel.
Although this forum isn’t entirely unbiased and may tend towards an optimistic outlook, it’s worth highlighting some of the points in the article.
- According to Dr. Anderson, “One of the keys to investing in real estate is to buy when prices are below replacement costs..”
- The best deals are not always in the “trophy” assets and the pricing spreads between “A” and “B” assets are wider then historical norms, suggesting that there are solid risk-adjusted returns where investors are not normally looking.
- He points out that “retail spending is higher now than before the crash,” implying pent up demand is beginning to be released.
- Many investors underestimate capital expenditures in soft markets, particularly in office markets.
- The widening of the Panama Canal (estimated completion in 2015) is going to have an impact on the flow of goods around the US, affecting industrial property values in port cities up and down the East Coast. This should hold true particularly for Florida.
- Every 1% decrease in home ownership adds more than 1 million new renters. This growth in the rental population continues to put upward pressure on multi-family properties.
Optimism is refreshing, caution is healthy. With more than $600B in commercial mortgage maturities coming in the next couple of years, there will be no shortage of decent acquisitions at prices significantly below replacement costs.