Commercial Real Estate Vacancies Rise Modestly...

Comments: 17

Ray Lanfear Mar 31, 2007, 1:19pm EDT

Without any doubt, real estate, whether commercial or residential, will
continue to be an important part of anyone's assets.

Ray
haveittodayray

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Ms. Meacham: Money Maven Mar 31, 2007, 8:07pm EDT

I agree with you Ray L.. The richest throughout history have own both types of real estate, and there's no trending to show that won't still be the case. If this release is any indication, older commercial properties with vacancies will soon be an even better buy for those looking to add this type of asset to their portfolios.

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J.T. O'Sullivan Apr 2, 2007, 12:02am EDT

Jenn,

You are hot! Call me...

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Ms. Meacham: Money Maven Apr 2, 2007, 12:13am EDT

You're hotter J.T. You call me...

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Ms. Meacham: Money Maven Apr 2, 2007, 12:14am EDT

And while you're out, try to stay on topic. Now, back to commercial real estate vacancies....

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Daniel A. Apr 2, 2007, 12:33am EDT

Is now a good time to invest in REIT's? If so, are there any REIT's you would suggest?

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Pat D. Apr 2, 2007, 10:03pm EDT

Daniel,
If you believe the economy is cooling or slowing, this is not a good time to get into REITs, commercial or otherwise.

I personally own CBG. This is not REIT, but it is a commercial real estate property manager and broker. I chose it because it has international exposure. This helps to cushion it from a slow down in the U.S economy, and provides some benefit from the falling dollar.
The stock has not been behaving well, but I think there is minor support here at the $34 price level. If it breaks below $33, I'm out, cutting my loss. I have a short term target of $37. At that point (if it gets there) I will reevaluate.

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Ms. Meacham: Money Maven Apr 2, 2007, 11:45pm EDT

Thank you Pat D. I'll also mention to Daniel that REITs tend to have fairly high management costs. However, if the real estate market is trending up (as it appears commercial real estate may be) and you're not into purchasing and managing commercial properties on your own, than REITs can be a good way to dip your toes in the real estate market. Make sure you explore what types of real estate your REIT invests in, as these investments can range from hotels and office complexes to high-rise apartments and land projects.

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Daniel A. Apr 3, 2007, 2:47am EDT

Well, considering I'm 17, I'm not purchasing or managing commercial real estate for the foreseeable future, I'll stick with the REITS if I want to get into commercial real estate. I'll certainly keep that in mind, though.

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Pat D. Apr 3, 2007, 7:03am EDT

To add to what Jennifer said:
Because REITs have been popular lately, a lot of very specialized REITs have been created. For example, there is BMR which deals with real estate used for medical purposes. EDR specializes in apartments in college towns. PSA owns storage units.

I am not particularly recommending any of these stocks, just giving some examples.

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Ms. Meacham: Money Maven Apr 3, 2007, 2:28pm EDT

Excellent examples Pat D.. These certainly show the breathe of commercial REITs that someone can get into, and illustrate that it takes a little due diligence on the part of the investor to assertain whether that particular area of commercial real estate is in growth mode or not. For a while storage units where THE hot commodity, for instance. And Daniel, 17 isn't too young to start thinking about commercial property as a direct investment. I know another 17 year old whose father helped him buy an Oil Can Henry establishment. I also know another investor who owns a small plot of vacant land that he now rents out to a cell phone company for its cell phone tower (and he rakes in $10,000 a month on rent for that space!!). Just a few ideas to get you thinking....

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Pat D. Apr 3, 2007, 4:27pm EDT

The cell phone tower thing is a nice little sideline for the farmers around my area.

I am not a big fan of direct ownership of real estate as an investment, but I understand it can be lucrative. The trouble is that if it goes bad, it seems to go very bad.

My neighborhood is littered with the mistakes of people that were going to make their fortune in real estate. All it did was leave a bunch of empty rentals and foreclosures.

The idea of buying out of favor commercial real estate sound risky. To make it desirable, money will need to be invested to update and renovate. Attrracting tenants when the absorption rate is falling may be difficult, even if the property is improved.

I like my assets liquid. I'll stick to stocks.

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J.T. O'Sullivan Apr 6, 2007, 4:51am EDT

O.K.

I shall. Number please?

What's the best approach to buying in a devalued neighborhood?

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Ms. Meacham: Money Maven Apr 6, 2007, 2:39pm EDT

Lol J.T.. As to your second question, I would say that the best approach to buying in a devalued neighborhood (given that it sounds like you've already found that neighborhood and know that it's devalued compared to other property sales in the area) is to take the leap and make an offer. If an agent isn't already involved, then make the offer directly to the property owner. If either you or the owner has previous for-sale-by-owner experience, you may be able to have the owner pass along their agent-savings to you.

Is there more you'd like to know about this process?

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