Getting a Second Look

Investors clamored to Florida in the middle of the last decade, rushing to buy commercial real estate with rapidly rising values. They’re back again, this time to pick up the pieces of a broken market.

Paul Bubny’s story at GlobeSt.com about Spanish developer Espais Promocions Immobiliàries pursuing US expansion mentions an eye toward distress opportunities in South Florida. Barcelona-based Espais established a beachhead in New York City in 2006 by acquiring a successful Manhattan condo project.

Don’t Believe the Anti-Hype

We’re hearing a lot lately about how Florida might never return to the good old days of booming commercial real estate values and stabilized occupancy. The experts aren’t buying any of that.

“Florida has always been very volatile in its cycles. We’ve always gone down hard, but we’ve always come back strong,” Larry Richey, senior managing director with Cushman & Wakefield in Tampa, told me for an upcoming article in Real Estate Forum. He sees absolutely no reason why the Sunshine State can’t rebound and regain as quickly as in past downturns.

Industrial Isn’t That Bad … Yet

A veteran industrial broker has a few things to say about Susan Ruby’s recent column for GlobeSt.com observing whether the industrial sector has bottomed out in Florida. Ted Bywater, chairman of Orlando-based Bywater Co., has a deeper perspective on the sector dating back to the mid-1970s downturn.

“In those days, there was almost no business. No one was moving into town and no one was expanding,” Bywater recalls. Even after an Orlando economic development group placed ads in the Wall Street Journal offering warehouse space for sale as low as $7 per square foot, there were still no takers, he says.

Waiting for the Next Big Deal

While getting ready for the long Independence Day weekend, I got caught up on a little industry-related reading and saw this article from Gulf Coast Business Review that says commercial real estate sales volume between Tampa and Naples has fallen 82% from last year. Now, before you say “no kidding, Chester” or any variation thereof (which I admit was my initial reaction), it’s important to note why deal velocity has fallen off so much.

Turns out it has little to do with the continued frozen capital (really, in this heat?) and more to do with the continuing bid-ask gap between eager buyers and reluctant sellers. Kyle Burd with Orlando-based Eola Capital even remarked that a deal got spiked over as little as a 2% difference. Somebody at the table would have covered that out of pocket back in the crazy money days.

Schwartz’s Happy Homecoming

For a fellow who isn’t even a native of Tampa, people here certainly treat Jeff Schwartz like one of their own. The former ProLogis CEO was given a near-royal reception by the crowd attending last week’s meeting of the Real Estate Investment Council.

Schwartz showed up only a little late to his Feb. 10 speaking engagement, planned well in advance of his resignation last November (kudos to REIC officer Julia Rettig for keeping it on the calendar). He flew up from Miami that afternoon, but his suitcase didn’t make it so he had to dash to a local mall to buy a dress shirt to go with the jacket and jeans he wore for the occasion.

Grove Sound-Off: Buy Now or Wait?

Trevor Hall of Colliers Arnold in Orlando brings up a really good question: How do commercial real estate brokers convince investors that now is the right time to buy? “Most of them are convinced that if they wait nine months, they will be able to buy at 15% cheaper,” Hall says.

There are a lot of opinions on this, and I’m pretty sure if you ask five different brokers you might get six different answers. Who wants to give theirs here?

Foreign Money Washing Ashore

Like it or not, stateside bidders for properties currently on the market are in for some new competition. Monday’s edition of The Miami Herald offers a pretty good article about foreign investment in Florida commercial real estate, citing a few recent deals that you may have read about previously on GlobeSt.com.

The possible trend was cited during our RealShare South Florida conference last September, and now it appears to be happening as predicted. An interesting point in the Herald article is that foreign investors have a lot more patience in buying buildings with the potential for distant future returns, rather than counting on any short-term ROI that domestic buyers are constantly chasing.

Grove Sound-Off: Obama and CRE

Now that Barack Obama will soon take up residence at the White House, presidential prognostication can turn in a different direction. Specifically, what impact will the new Democratic leadership have on commercial real estate in Florida?

Speculation on the subject was under way well before Tuesday night’s election returns became clear, even in spite of our fair state’s efforts to muck things up again (it’s practically tradition by now). One CRE executive from South Florida tells me he thinks the investment market will “freeze in its footsteps” until Obama fully discloses his formula for capital gains taxation.

So, what’s your take on the Obama Administration’s effect on CRE?