WHY NOW IS NOT A GOOD TIME TO BUY COMMERCIAL REAL ESTATE

Now is probably not a good time to buy commercial real estate (“CRE”).  And I don’t say this lightly because I own a commercial real estate company and I don’t make sales commissions if I don’t sell CRE.  But, in my opinion, it’s the truth and it’s rarely spoken by brokers/agents to their clients.

Doubtful? Check out this article regarding the matter.  If there are 254 billion dollars with experienced CRE investors looking to buy CRE but they can’t find anything to buy and aren’t accepting any more money from investors, this confirms it’s probably not the time to buy CRE.

In my primary CRE market in southern California, it is particularly difficult to find any CRE purchase that makes sense.  Demand way exceeds supply here, inventory is very low, and prices are hitting new records.  There are better options out of state than in California, but many of my buyers don’t want to buy out of state because they want to manage what they own and want it as close to them geographically as possible.

However, it is a great time to sell CRE even if it means having to pay the capital gains tax.  Many of my sellers want to do a 1031 exchange, but it simply doesn’t make sense to buy another CRE property. Prices are so high for new CRE properties and a buyer will probably lose all of the gains made on the sale of their CRE property, especially when the CRE prices drop like they always do.

And here is another article regarding restaurant owners with multiple locations taking advantage of the high sale prices and selling the CRE that they own: HERE.

How you sell and market your property in this hot market will really make a difference on the sales price you receive. So, keeping that in mind, hire a broker that knows what buyers are hungry to buy in your market and who will overpay for your property. Find one that won’t just post your CRE property online and put up a sign on it.  The right broker is one that knows how to negotiate and has a proven track record of doing so with many years of experience.  The key is to find a broker that doesn’t put his desire for a quick commission above your interests, especially since selling a property for top dollar takes a lot of effort and time when done correctly.

One thought on “WHY NOW IS NOT A GOOD TIME TO BUY COMMERCIAL REAL ESTATE

  1. dan maughan

    I could not agree more David. And you are also correct about the 1031 problem. That is where we can help you help your clients by offering the deferred sales trust. No property replacement required, income stream to seller, DEFER CAP GAINS and potentially reinvest in RE down the road.

    Please feel free to contact me direct @323.203.6687 (mobile)

    best,

    dan-

    Reply

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