Mark Heschmeyer at CoStar News discusses exactly what I’m running into out there in the recovering commercial real estate market and that is rapidly dwindling supply of something good to sell. Most of my buyers are located in the Los Angeles area and cap rates in Southern California have always been a couple points lower than you can find by going outside the state. Now, if you’re going outside the state, far from home, most buyers want a product with little in the way of management headaches, which leads to newer single tenant, single parcel, NNN absolute retail. Even a retail center with multiple NNN tenants is still pretty management intensive. After all, someone has to play mediator.
The single tenant, single parcel is also my preferred market segment. Problem is that with the banking crisis that started almost three years ago, construction financing came to a complete halt so almost nothing new was getting built. So now, there’s very little available, and what comes on the market that is the right type of product in the right market is gone in a few days. Nothing will change until the construction pipeline fills up again, which could be a couple of years.
I’ll let Mark Heschmeyer take it from here – at the link