TUESDAY, JUNE 16, 2009
by Paula WidholmChicago |
| From left: Cibula, Saturno, Podolsky |
Although rents have spiraled downward and good credit tenants are scarce, many panelists at the Chicago Industrial Properties Summit June 11 agreed that now is a great time to buy.
For those that can raise 35-40% equity, there are many bargains to be had in this market, according to Steven Podolsky, SIOR, principal,
Podolsky Northstar CORFAC International. "I've seen sellers that are sick of dealing with real estate and want to get out," he said. "The smart ones weather this and stay in for the long haul."
Some buildings are selling for $38 per sq ft, and were recently built for $60 per sq ft. Podolsky predicted that these buildings would be selling again at the cost to build by 2012.
He added that real estate values would go down even more with the bottom hitting at the end of this year or the beginning of 2010.
George Cibula, president,
Darwin Realty & Development, said he believes "we're at the bottom now."
Mark Saturno, senior vice president,
AMB Property Corp., summarized that rental rates are down 20-30% and real estate values are down by that or more.
Once the recovery does come, Podolsky said it'll be more cautious and not as "gangbuster as the run from 1997-2007. The Dow will come back slower and real estate values will come back slower."
The difference, according to Saturno is that "In the past upturn, anyone could get capital. Anyone buying today is going to feel good about their buy three to five years from now."
Tenant strategies"Existing tenants are a gold mine," Saturno said. "We're doing blend and extends and getting leases pushed out two to five years."
Podolsky said lower rent, concessions and paying full commissions is the industry standard nowadays.
Cibula warned that there's a difference between a tenant that can't pay and one that doesn't want to pay. "If they can't pay, get them out, start the eviction process."
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