Atlanta Office Market: Hot or Not?

By Stan Sonenshine in Real Estate Investing

5 years ago

5 years ago 0 0 1595

Think back to the office market in 1985. People were saying, “Nothing can go wrong. People are still coming.” Those same people were soon singing the blues because surprise, surprise, something went wrong. Is Atlanta’s office market as hot as it seems? BizNow’s recent article The Fastest-Growing Office Rents in the U.S. Are in Atlanta touts Atlanta’s office market success, but, in my opinion, fails to give a full picture. I see it more as a tale of two cities—the institutional office market and the local office market. Midtown + Buckhead: Hot Atlanta Office Markets Media likes to focus on the hot markets, like Midtown and Buckhead, and rightfully so, according to these stats: “Rents at premier office spaces in Midtown and Buckhead have risen 14.2% since last year, breaking the $50/SF ceiling for the first time.” Plus, 2.2M SF of new prime office space is underway with “Selig Enterprises

Crowdfunding Becomes More Popular, But Skeptics Remain

Crowdfunding: A Viable Option?

By Stan Sonenshine in Real Estate Investing

5 years ago

5 years ago 0 0 2122

National Real Estate Investor recently published an article titled Real Estate Crowdfunding Firms Push Further into the Mainstream, in which the writer argues that although first questioned, crowdfunding continues to gain a base of active sponsors and investors. One sponsor, using the CrowdStreet platform, says “it serves as a consistent, recurring source of equity, as well as a capital source that is accessible for smaller dollar amounts, under $3 million.” Crowdfunding: Who’s in the Crowd? Here’s what I think about crowdfunding: I like to enter a deal with the fewest, financially-qualified partners as possible. Either directly and indirectly having a large number of unknown partners pretty much scares me. I assume this approach works well when the market is good and properties are performing well. But I am always thinking ahead. What happens in a market slowdown, and a property funded by crowdfunding gets into trouble? The results could be very

Getting Started in Real Estate Investing: It Ain’t Easy

By Stan Sonenshine in Real Estate Investing

5 years ago

5 years ago 0 0 1865

Knowledge, Network + Money A recent article in The Washington Post offered advice on launching into the world of real estate investing; the author says, “In general…there are three things that every real estate investor needs no matter what: education and knowledge, a good network, and money. But not necessarily your own money.” Stan’s Viewpoint Everything the author says is true except it isn’t that easy. Learning markets, finding good deals, and hooking up with the right professionals and investors takes a lot of time, persistence and patience. Like any startup, the first few deals will likely be less successful due to lack of experience and inability to foresee problems. In addition, these deals will likely require one’s own money or that of close friends and family. New investors are also likely to underestimate the cost of ownership and the amount of time and effort to manage. Very small deals don’t

Investment Strategies for Real Estate Cycle Phases

By Stan Sonenshine in Real Estate Investing

6 years ago

6 years ago 0 1 1943

Recently, I’ve taken an in-depth look at the real estate cycle and its phases. The first blog in this series defined the real estate cycle phases. The second blog described the unique aspects of the recent recession and recovery. And the latest blog described crosscurrents impacting the current recovery. In this blog, I offer investment strategies for the different phases of the real estate cycle. While I’ve said this before, it is worth repeating. Before making investment decisions, you must always consider: Your personal situation Your objectives Your risk tolerance Post Market Peak/Recession Strategy Stay out of the market. Fundamentals are declining, and although prices are starting to look cheap, you don’t know how bad it will get. Better to be a little too late than too early. Risk You miss out on some good buying opportunities. Early Recovery Strategy This is the best time to be a value-add buyer.

Smart Real Estate Investing in 2018

By Stan Sonenshine in Real Estate Investing

6 years ago

6 years ago 0 0 2019

It’s a new year, and we’re moving full steam ahead. It’s a great time to check in with current real estate trends and events shaping this year’s market and then decide how you will respond to them to meet your 2018 investment objectives. Current Real Estate Market Trends Money Chasing Deals: It will come as no surprise that demand for real estate still far exceeds supply. This results in peak prices, which equals lower yields, and makes it increasingly more difficult to “win” deals. Risk/Potential: With the market peaking, there is more downside risk and less upside potential. Hesitation: Current owners are hesitant to sell because opportunities to reinvest their money at acceptable returns just do not exist. Low Prices: Prices per square foot on existing properties seem low compared to replacement costs. Core Investment: Institutional investors now consider real estate a core investment, thus eliminating the need for a

CRE Market: Looking Back to Look Ahead

By Stan Sonenshine in Real Estate Investing

6 years ago

6 years ago 0 0 2032

In last year’s first blog of the year, “2017: A Mature Market,” I made some predictions about the commercial real estate market and investing for 2017. Here’s a look at what I predicted and what actually happened. It’s apparent I had some good predictions and some that did not come to fruition. INVESTING What I predicted: A good, but not great year for investing. What happened: Transactions and overall volume were down, but price per transaction continued to rise to new highs. INTEREST RATES What I predicted: Interest rates will increase, but will still be cheap by historic standards—with only a marginal effect on investment. What happened: Ten-year Treasuries were flat. Two- and five-year Treasuries rose, but not enough to impact the market. CASH FLOW What I predicted: A combination of more solid incomes and continued low interest rates will result in good cash flows. What happened: This prediction was

Cap Rates: They Have Their Place

By Stan Sonenshine in Real Estate Investing

7 years ago

7 years ago 0 0 2192

Here’s the scenario. You have money you want to invest, and you do not want to manage real estate, but you want an income stream. When considering your options, you find the following: U.S. Treasury bond—2.3 percent return with virtually no risk; Municipal bond—4.5 percent return (with some tax benefits), still with minimal risk; and McDonald’s ground lease—5 to 5.5 percent return, with a slightly higher risk and illiquidity. These examples demonstrate very low risk situations, but make a comparison between similar investment options. So, where do Cap Rates (short for capitalization rates) come in? Cap rates are the benchmark that enable investors to compare various investments. Here’s a straight forward definition: “A cap rate measures a property’s natural rate of return for a single year without taking into account debt on the asset, making it easy to compare the relative value of one property to another.” In most basic

The Importance of Timing on Real Estate Investment

By Stan Sonenshine in Real Estate Investing

7 years ago

7 years ago 0 0 2039

A dollar today is worth more than a dollar tomorrow. So, the farther into the future one expects income or a sale to occur, the less it is worth in today’s dollars. In my opinion, investors don’t contemplate this factor enough when considering a real estate investment. Factors that are commonly considered for real estate investments include location, market, available financing and current cash flow. But when you invest and how long you plan to hold can strongly impact how well you do. The Effect of Timing + Buying Let’s look at some examples: Those who bought properties at the market peak in 2006-2008 with 3- and 5-year loans know the pain of debt maturing in a down market. While it is always prudent to buy in a down market, it is possible to buy too early. This could result in debt maturing before the market recovers or in anticipated

Top Takeaways from GSU’s Views From the Top 2017

By Stan Sonenshine in Real Estate Development, Real Estate Investing

7 years ago

7 years ago 0 0 3899

Each year, I start the new year with an economic conference hosted by Georgia State University’s Department of Real Estate, and it rarely disappoints. This year was no different. Views From the Top 2017: “Connectivity & Atlanta’s Urban Transformation” delivered insightful viewpoints on a variety of economic topics. First up was Sun Trust Economist KC Conway. Here were his top comments: Real estate sector predictions: Housing and Industrial are real estate’s strongest sectors, with commercial storage and manufactured housing yielding the best returns. Retail is regressing, and Hotel is overbuilt with declining values. Cost for new or renovated Office space is extremely high. Atlanta + Southeast predictions: The Southeast region, including Atlanta, will outperform the nation in 2017. Atlanta will continue to be plagued by traffic This is a “Must Solve” problem. Millennials will move elsewhere if not resolved, resulting in stymied growth. General insights: Capital for commercial real estate

2017: A Mature Market

By Stan Sonenshine in Real Estate Development, Real Estate Investing

7 years ago

7 years ago 0 0 2874

Entering 2017, the investment community finds itself in a Mature Market. Gone are the days of distressed sellers, foreclosures and properties which could be purchased at steep discounts. Today, properties are cash-flowing, occupancies are high and rents have recovered to peak levels. Combined with cheap debt and investors flush with yield-driven capital, the result is fewer opportunities coupled with property values at pre-recession levels (or, in some instances, even higher). So, what happens when investment opportunities diminish and the market tightens? Development becomes an increasingly attractive option for value-added investing. Historically, seven years into a recovery, speculative development has already begun, but that has not been the case. This cycle is unique for several reasons: The depth of the recession The impact of new regulations on financial institutions The headwinds to demand created by online retailing and office-sharing concepts To be sure, infill, mixed-use urban retail concepts; mega, mixed-use projects

Previous page Next page

Atlanta Office Market: Hot or Not?

Crowdfunding: A Viable Option?

Getting Started in Real Estate Investing: It Ain’t Easy

Investment Strategies for Real Estate Cycle Phases

Smart Real Estate Investing in 2018

CRE Market: Looking Back to Look Ahead

Cap Rates: They Have Their Place

The Importance of Timing on Real Estate Investment

Top Takeaways from GSU’s Views From the Top 2017

2017: A Mature Market

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