SWEEPIN’ THE CLOUDS AWAY

Sure, our headline references Sesame Street’s 40th birthday today, but sunny days really are coming back to real estate. The first half of the year may have been the low point in transactional velocity, but going forward, we should see an increase in opportunities, says Marcus & Millichap’s Edward Jordan and Peter Von Der Ahe.
There's been a tremendous downward pressure on values, and investors are demanding higher yields to compensate for risk, management, and illiquidity, Edward says. Owners and investors who couldn't see past the short-term now have some clarity and people can start making fact-based decisions. Expect more transactions as they come back to the market, he continues; the new market players will be in a strong cash position, so we should see more generational opportunities and new wealth created. Underwriting is no longer grounded in fiction.
Peter adds that he’s seen more foreign investors in the past six months than in the past two years. One listing, the mixed-use, pre-War 200 Park Avenue South, attracted both international and domestic bidders looking for quality, appreciation, location, cash, and a five-to-ten year horizon, he adds. Edward tells us deals over $15M are still rare, and $50M is about the limit for financing ease. Meanwhile, the firm continues to engage in special asset work, assisting lenders with valuation and disposition of bank-owned assets.

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Related Topics: Peter Von Der Ahe , Sesame Street
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