Te Lee & Associates Investment Services Group invited thousands o itsclients to complete a short online survey consisting o eight key questionsacing private real estate investors. Te respondents included high-net- worth individuals, partnerships and other groups specializing in commer-cial real estate deals valued in the range o $2 million to $20 million. Hereare the results.
1. Buying Commercial Property:
As the economic environment contin-ues to plod along, the number o investors that have not purchased acommercial property in over one year increased to 76%, which is a 4%increase over the number last quarter. However, investors that closedon transactions within the last our months INCREASED by over14%. ruly a good sign. Te remaining responses were pretty even as you can see in the graph.
2. Show Me the Money:
Almost one-hal o all transactions that closed were $5 Million Dollars and below. 72% o the deals were under $10Million Dollars. Tis represents the demand by Private Investors totake advantage o the marketplace and lack o activity by institutionalinvestors in their “lower range” in acquisitions o well located assets.Tere was a huge decrease, 57%, in properties valued above $10 MillionDollars that sold this last quarter.
Tere was a 20% drop in Lender nanced property romthe last quarter, although a little over one-hal o all transactions, 52%, were lender nanced. All cash sales increased by 45%, with 37.9% o the reported transactions being all cash. Tere were some assumableloans that accounted or closing 5.7% o all the sales last quarter.
4. Safe Harbor:
Te condence in the stock market has rebounded some- what but the overwhelming place or private investors to place undsis still in commercial real estate (38.9%) and short term cash (28.9%).Tis is a drop o approximately 7% rom last quarter, but still shows thecondence that investors have in commercial real estate, which stayedat the same 39% rate. Tis nding is still signicant because privateinvestors typically rely on leverage to a greater degree than institutionalinvestors and are not as adverse to risk.
5. How Long Will Tis Last:
Finally! Some optimism in the commer-cial real estate market. Last quarter, 82% o the respondents did notthink the market had started to strengthen yet. Tis past quarter, thatnumber went down to 63%, a reduction o 30%! For the rst time intwo years, over one-hal o the respondents believe the market will bestrengthening in less than 18 months. About one ourth were still pes-simistic that we still have over 24 months beore the market shows signso getting stronger.
Tis document has been prepared or general inormational purposes only and is not intended as specic advice or recommendations. Te inormation presented is a summary o the personal opinions o a select groupo participants and these can be no assurance that these participants reect a representative sample o the overall market. Any reliance upon the inormation provided herein is solely and exclusively at your own risk.
J. Mark Larson
Investment Services Group
515 S. Figueroa Street, Suite 1600Los Angeles, California 90071
For additional information please contact:
StocksBondsCommercial Real EstateMutual FundsShort term cashOther
4. What type o investments would you mostavor today?
SECOND QUARTER 2010
1-4 Months 1-4 Months4-6 Months 4-6 Months7-9 Months 7-9 Months8-12Months 8-12MonthsOver 1 Year Over 1 Year
1. How long has it been since you last
a commercial property?
Below $5 Million$5 Million - $10 Million$10 Million - $20 MillionOver $25 Million
2. What was the value o the transaction?
All Cash Assumable FinancingLender FinancingSeller Financing
3. Te property was purchased on which basis?