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It’s a Buyer’s Market for South Florida Commercial Real Estate

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Welcome to the Berger Commercial blog, where our team of real estate professionals share observations and insights on Florida’s commercial real estate market. We don’t claim to have a crystal ball, but we do claim to be among the best informed, experienced and most successful commercial brokers and property managers in the region.  Here’s a glimpse of what we’re seeing.

Overall, it’s an attractive buyer’s market.  While Florida real estate clearly is not out of the woods yet, the good news is that transactions are happening and brokers are closing deals. Several years of market collapse has pushed prices down. Interest rates are low. Banks hold large portfolios of non-performing loans and foreclosed properties.  Cash is king.

Confidence is a potent market force. Owners of small- and mid-sized businesses who have determined that the worst of the recession is behind them are revisiting decisions about their space. If they have determined that the sky probably is not going to fall, they are more likely to sign a new 5-year lease.

Speaking of confidence, even a glimmer of optimism encourages borrowers to hold on to their properties and nudges lenders to work with them and find acceptable solutions for problem loans.

Some people know a good deal when they see it. Buyers in today’s commercial real estate market range from savvy individual investors with cash to hedge funds that buy loans at discounted prices and then sell them for more than the purchase price of the loan.  All are motivated by optimism about an asset’s future value.

Class-A properties are selling at a premium. High net worth and institutional investors are looking for quality commercial, industrial and multifamily properties.

Is the current market just postponing the inevitable collapse which some have predicted?  It might take up to five more years to know for sure, but at the moment the market is functioning. Sustained growth and stability will depend upon job growth in Florida. The state is struggling to attract new businesses.  Residential growth fuels commercial development, so as long as people come to Florida to live and work, there is a future for the commercial real estate market.

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