Statistics tell us NOW is the time to buy stabilized assets.
Pinnacle Real Estate Advisors 2 - Our Mission: Maximize our Clients’ wealth by utilizing our innovative process – the Pinnacle Experience. Pinnacle Investment Group: Our main focus is to advise each client during the sale or acquisition of their real estate investment. We draw from our diverse backgrounds and many successes to offer the best of our experiences to each client. We understand it is imperative to provide exceptional value.
Pinnacle Real Estate Advisors 2010 Mid Year National Economic Trends
Pinnacle Real Estate Advisors 4 - National Economy: Where will Job Growth Occur (‘11 – ’14)? Rising incomes and profitable businesses will drive spending. Retail occupancy and NOI should follow! Energy and Technology driven economies
Pinnacle Real Estate Advisors 5 - National Economy: A Move to Deleverage When consumers feel confident about the future, they are willing to purchase on credit. Today’s uncertain times has the consumer saving more and buying less on credit. We are deleveraging. However, if debt is forgiven by lenders, this could have a healthy outcome for consumer spending long term.
Pinnacle Real Estate Advisors 6 - National Housing: New Starts We remain at an all time low for new housing starts. Until the national home builders return, this will remain soft. New home sales drive many other retail economies - contractors, home furnishings, movers, etc.
Pinnacle Real Estate Advisors 7 - National Leasing: Market to Market Positive absorption has returned to much of the U.S. Despite Denver being demographically smaller than most of the markets listed, we are still toward the top of the absorption list. Is South Florida making its come back?
Pinnacle Real Estate Advisors 8 - National Leasing: Absorption by Market Size This shows absorption as a function of inventory. Again, highlighting Denver’s strength compared to other markets.
Pinnacle Real Estate Advisors 9 - National Leasing: Service Providers are Soaking Up Space Only new leases shown, not renewals Who are tomorrow’s retail tenants? Landlords should be looking to service industries to fill vacant space. Cellular stores (red arrows) could also be considered a service and are aggressively expanding.
Pinnacle Real Estate Advisors 10 - National Leasing: New Product The 0.2% is made up mostly of strong credit big box tenants taking advantage of recession pricing.
Pinnacle Real Estate Advisors 11 - National Leasing: Supply and Demand Oversupply is leading to competition for tenants in Denver. This is one of the factors causing lease rate compression. Barriers to entry keep supply down.
Pinnacle Real Estate Advisors 12 - Capital Markets: CMBS Will Return We have seen a 99% drop in CMBS lending. Expect CMBS to return to commercial real estate but not at past levels. REITs and “opportunityequity” will control the market for the next couple of years.
Pinnacle Real Estate Advisors 13 - National Sales Market: Sales Volume This compares the first half of 2009 to the first half of 2010. YoY demand is showing signs of improvement. Florida’s towards the top of the list once again.
Pinnacle Real Estate Advisors 14 - National Sales Market: Distressed Sales 1 and 5 retail properties traded today are considered distressed. Who is tomorrow’s seller?
Pinnacle Real Estate Advisors 15 - National Sales Market: Cap Rate Deviation Cap rate spreads are trending above the national average within one standard deviation. This would suggest NOW is a good time to buy stable assets.
Pinnacle Real Estate Advisors 16 - National Sales Market: Retail Repeat Sales 2.75x From the base in 1998 to 2007 retail property values have increased 2.75x. According to the Case Shiller index (housing) we saw a 2.3x from 2000 to 2007. This graph is calculated by analyzing retail properties that have sold more than once.
Pinnacle Real Estate Advisors 17 - National Sales Market: Today’s Buyer Who is buying in today’s market? $260MM was the Galleria purchase in Houston.
Pinnacle Real Estate Advisors Mid Year 2010 Denver Retail Leasing Activity and Trends Market Summary:
Market absorption was positive for Q2, vacancy fell from 8.4% to 8.2%
10 new retail buildings were delivered in Q2 totaling 335,711 sqft
Rental rates decreased 5.2% from the previous quarter: $15.86 to $15.03
Pinnacle Real Estate Advisors 19 - Denver Leasing: Total Retail Market Statistics – Ending Q2 - 2010 Most of Denver’s retail markets continue to have slow growth and rental rate compression. However, some individual markets are starting to see below market vacancy, which should create new demand.
Pinnacle Real Estate Advisors 20 - Denver Leasing: Some Positive Rental Demand The recession has created strong demand for local Outlet Centers, driving rental rates well above trending averages. Specialty Centers are defined as combining Airport Retail, Outlet Centers and Theme/Festival Centers.
Pinnacle Real Estate Advisors 21 - Denver Leasing: Top Under Construction Properties
Pinnacle Real Estate Advisors 22 - Denver Leasing: Top 20 Mid Year Lease Deals
Pinnacle Real Estate Advisors Q2 - 2010 Colorado Retail Investment Sales Activity and Trends Data Set Parameters:
Product: Retail Cap Rate Sales
Comps Analyzed: 213 Cap Rate Deals from 07.01.07 to 06.30.10; 500k to 10M
Pinnacle Real Estate Advisors 24 - Colorado Sales: Transactions to Trailing Average - ($500k – 10M) While total sale volume is down, transaction volume has returned to historic averages. Have we found our new base line? 17 17 17.75 avg. 9
Pinnacle Real Estate Advisors - Colorado Sales: Q2 Cap Rate Sales - ($500k to 10M) 25 How are Colorado cap rates to the national averages? 11 of the 17 investment transaction were traded with above average cap rates.
Pinnacle Real Estate Advisors - Colorado Sales: 17 Investment Sale Locations - ($500k to 10M) 26
Pinnacle Real Estate Advisors 27 - A Testimonial to Retail Investments "After meeting Tom in person, I was extremely impressed with his professionalism and market knowledge and decided to list the property [Macaroni Grill - Denver, CO] for sale with him. The fact that I have decided to list other properties with Tom is a clear endorsement of how he operates his business and works with his clients, and I would not hesitate to recommend him to anyone looking to buy or sell a commercial property.” Kurt Steves, Vice President Cardinal Capital
Thanks for Reviewing the Q2 - ‘10 Retail Leasing & Investment UpdateQuestions about the information? In need of your current property’s value? Looking for a different market segment?Call Tom Ethington @ (303) 962-9538