Tag Archives: commercial real estate

What’s in store for the Commercial Real Estate Market in 2017?

05 Jan

 

Equity markets typically disdain uncertainty yet, as of this writing, the S&P is up about 6% since the US election even with the anticipated uncertainty that a President Trump administration brings. The S&P increased over 13% in 2016 (including dividends). One thing that does appear to be certain is rising interest rates. US Treasuries are up 50 basis points in December alone. “Investors are hurrying to dump government bonds in the US, Asia and Europe pushing prices down, according to the Wall Street Journal.”*  Logically, such dramatic rise in interest rates would typically pull in the reins on the real estate sector. The residential market however remains brisk as we witnessed the month of November experience the highest level of sales in 18 years. This can be explained by pent up demand caused by diminished supply and the millennials finally entering the market.

However, experts say the boom that commercial real estate has enjoyed over the last few years was driven by investors desiring better returns than what they could find in bonds, but now that dynamic could be shifting as safe government bonds start to offer yields more in line with real estate returns, and without all the risk. A dramatic pull back in equity markets, such as the historic fall at the start of 2016, could alter this scenario. Indeed, as mentioned here previously, the stock market may be due for a correction. Investors have been betting that the Trump administration and Republican controlled Congress will boost infrastructure spending, cut taxes and relax regulations that negatively affect businesses. Countering this statement, the Fed is expected to raise the Federal Funds Rate, the rate at which banks and other depository institutions lend money to each other, an additional 3 times in 2017 to 1.25%. Still this remains below historic levels. As lending rates rise and, in turn, increase in Treasuries, demand for investment property shall wane. My observation is that investors have in fact have become more cautious recently. In addition to concerns of rising rates, there is increased skepticism of the level of property valuations. Investors will continue to scour the market for deals and have a preference for well located commercial real estate with sound fundamentals. A steady flow of 1031 exchange investors will continue to permeate the market in 2017 and specific asset classes such as industrial real estate shall remain strong. Investors should continue to keep a close eye on the direction of interest rates.

Buyers of commercial properties by end users will be less skittish than investors. In my August 17th blog post, I referenced several economic indicators that were positive. This remains the case today. Indeed most economic forecasters see faster growth ahead: unemployment is low, albeit with stubbornly high numbers of workers remaining on the sidelines, GDP is up, consumer confidence (at a 13-year high in December) and spending is rising. The 2016 holiday sales increased 4.9% over last year – the largest increase in a decade. I have continued to see a correlation between the direction of the economy and commercial real estate fundamentals. So with a stronger economy, we will continue to see increasing demand by end users searching for properties to purchase. Similar to the residential market, there is generally limited inventory of properties for end users. This dynamic will continue through 2017. If you are an end user seeking to acquire property to accommodate your facility requirements, pounce on opportunities that are a good fit. Interest rates, while having increased about 50 basis points, remain at historically low levels enabling a compelling reason to own versus leasing space.

Please contact me to sort out and find the best solution to your specific commercial real estate requirements.

Warren Brown, President, Boston Commercial Properties, Inc.

*Source: 11/23/16 Bisnow

Selecting a Full Service Commercial Real Estate Brokerage Firm

23 May

The most effective commercial real estate brokerage firm provides a full spectrum of services to its clients. Companies that require assistance with leasing or purchasing of properties and relocation can benefit from working with a firm that will assist with its search for property, i.e. tenant representation, and provide guidance throughout the relocation process.

A fully qualified tenant representative focuses on the client’s best interest, has thorough knowledge of the relevant marketplace, and deep experience in the industry. With the client’s best interests in mind, the tenant representative will provide the client with recommendations to procure the best solution to solve the client’s real estate objectives. An effective tenant representative will negotiate on the client’s behalf to secure the most favorable deal terms as well as augment the client’s legal team with review of lease and purchase and sale documents to avoid pitfalls in such contracts.

A full service tenant representatives job is not done when a lease is signed or a sale is closed. The client has the sometimes daunting task of relocating its business. This can be a stressful, time consuming and overwhelming task. A skillful tenant representative has the capabilities necessary to provide assistance to the client throughout the moving process. Such capabilities include the following:

  • Relocation scheduling and budgeting.
  • Facility planning services and financing of tenant improvements.
  • Obtaining the most professional vendors at the best pricing.
  • Provide guidance with purchasing of furniture, phones & IT.
  • Provide assistance with installation of Fixtures, Furniture & Equipment.
  • Guidance with miscellaneous items such as data storage management and new hires.
Real estate costs are typically the second highest cost on the expense side of a company’s P&L.  Identifying and finding the best solution for our client’s real estate requirements is critical to the success and profitability of the company. Boston Commercial Properties understands this and takes its client’s needs seriously.​ Please contact me to further discuss your real estate needs.
Warren Brown, President, Boston Commercial Properties, Inc.

 

287 Auburn St., Auburndale Village, Newton

03 Feb

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Type of Space: Office

Size: Approximately 4,500 sf plus basement and attic

Sale Price: Market

Features:

Well located in Auburndale Village
Charming, three level office building
Seconds from Route 128 and the Mass Pike
Steps from Commuter Rail Station and walking distance to Riverside Station on the Green Line
12 parking spaces
Recently renovated with interior fit up, new windows and mechanical systems.
Many restaurants, shops and services in close proximity.

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