Commercial Real Estate Bits & Pieces Insights

I was at a recent broker event with specialists from different commercial real estate segments. Here are some interesting insights from this…the housing market has slowed down; less folks are buying homes and that may have dramatically impacted a number of other industries. Our industrial folks say the construction companies are downsizing, giving up warehouse and smaller industrial space as the construction business has declined. Furniture stores and home goods may also be impacted. Industrial vacancy rates in the East Bay which until recently were in the 4-5% range are now headed towards 5-6%. The commercial mortgage experts believe that long-term rates will stay around the 6% mark, and even if short-term rates went down there is a fear of tariffs and increased deficits causing more government borrowing that will keep long-term rates up. In the apartment house investment market, there were 140 East Bay apartment sales this year for a Billion dollars, but far lower than in the past. Overall,  the average per-door price is $300,000, and institutional buyers are standing on the sidelines. Cap rates which were 4-5% make it hard to finance when mortgage rates are 6%.