As we enter the second half of 2011, it is obvious to me that economically we are treading through tougher waters again.
The optimism building as we moved through the first half has ebbed somewhat among many. Sixty to 90 days ago there were some very good properties coming to market, as owners felt better about those in the investor pool and their ability to perform. While that ability still exists among buyers, there is suddenly a dearth in higher quality properties coming to market.
An issue I have been counseling my buyers on recently, and I shared this at a PCRE staff meeting this morning, is one of "waiting for something better to come along." There is an old Seinfeld joke that I thing applies. In his standup routine Jerry Seinfeld talks about why men want to control the TV remote, and are constantly changing channels. He says, "Men don't want to know whats on TV, they want to know what ELSE is on TV."
In talking to peers in the industry across the nation, and through my own experience, we are seeing some buyers find a property that fits 90 percent of what they are looking for. But they are unwilling to write an offer because they think something a little better will pop up next week, or next month. What ends up happening is another buyer swoops in, gets the deal in contract and closes. The initial prospective buyer then has "shoulda coulda woulda" complex, and compares every future opportunity to the one they let get away.
And trust me, I know about something valuable you want inadvertently getting away. It eats at you. Consumes.
For you buyers, or agents, please heed the following. If it make sense, do everything you can to get that lease or purchase offer written. There are other buyers, in particular REITs, that are snapping up everything in sight. They look at the long-term hold and are buying for future value. And they have deep pockets. There are many properties out there right now, some good, some with a lot of "hair." Run your numbers, make your evaluation. If it works, don't waste time trying to decide whether to write an offer. I will guarantee you, someone else is looking at it and WILL, and they will wind up first in line.
Sure, CRE is still weak. But it will improve.
Its a little like consumers who are continually shopping for a new computer because they are waiting for the next great development/enhancement to come out. Only they never buy because they are constantly looking for yet one more great enhancement to come out. In commercial/investment real estate, those who sit and wait, thinking something better will come along next week, will be sadly disappointed. Because the one they want may slip away because they waited too long.
The gems may present themselves right now. If so, act.