Commercial Land - Market Activity and Analysis

As luck would have it, I have several Commercial Land listings again.  Recently I have shared some analysis of the Commercial Land - market activity with some of my land clients.  So I thought I would share it here as well.  

 

In general, there was sort of a bump of activity last year (2012) and there were signs of interest  with a number of calls in the first quarter 2013 on land but it seems that things have quieted down a little as we enter into the summer.  

Looking back at Commercial Land sales, I found that KCREA (Kentucky Commercial Real Estate Association – our Commercial Information Exchange) reported 23 sales of commercial land larger than 5 acres for the 12 month period beginning 4/1/2012.    So about 2 sales per month.   Interestingly, 8 of those 23 were foreclosure sales, auctions or bank sales.   In April of 2013, there were 253 commercial land properties larger than 5 acres which were listed for sale on KCREA.  So there is presently about an 11 year supply of land on the market.

It is no longer news that commercial land in general depreciated about 40% since 2008.  What this tells us is that with roughly a third of the commercial land sales being distressed sales, and an 11 year supply of land at current consumption rate, we can see this downward pressure on prices is still with us.  

On the positive side, the metro market area’s Industrial occupancy is very high and we are beginning to see a shortage of Industrial space.   This has led to some Industrial spec projects for the first time in quite a while.  If this demand continues and if financial institutions begin to loosen their credit somewhat and allow more of these projects, we should expect to see the demand for commercial land to increase in tandem with this activity.  

Of course, land is not a homogenous product.   Location, size, zoning, traffic, roads, visibility, availability of utilities are all factors in addition to price as projects come available.   Each of these will ultimately be a factor in the demand for a particular parcel when new projects are being considered.  

Let me know if you have any questions. 

 

I hope you have a great day!

 

Side note - I am a licensed real estate broker in Kentucky and Indiana and I specialize in Commercial Real Estate.  I handle Office, Industrial, Retail, Commercial Land, Investment and International Properties.   I work with Sellers, Buyers, Landlords, Tenants, and Investors.   Heck I can even set you up with a Residential specialist if you need help.   If you need any help with real estate, give me a call or send me an e-mail.  I would love to help.   

 

David

 

David W. McCoy

Associate Broker

Commonwealth Commercial Real Estate

10444 Bluegrass Parkway

Louisville, KY  40299

 

office: (502) 379-6005

Cell: (502) 905-5274

e-mail: DMcCoy@ccre.biz

 

 

KCREA goes International

If you are looking for Commercial Real Estate in Louisville and you are asking a residential realtor and looking at the MLS, I'm afraid that you are searching about 7 or 8 years too late.    Please don't misunderstand, I am not knocking residential realtors at all.  It is just that the MLS eliminated commercial properties from their data base about 7 years ago.   

There are several on-line listing services which provide information on Commercial Real Estate.  I use several and I think that most of the commercial real estate specialists do as well.   Locally, KCREA, the Kentucky Commercial Real Estate Association, has most of those listings.   

KCREA is constantly evolving.  It is not perfect but it does seem to be actively trying to improve.   So I was pleased when I recently discovered that KCREA now has an option to translate the listing into several different languages.   If you do a search for a property and click on one, on the right side of the page, down several lines is an option to translate the page.  If you click on that option, several icons of flags appear.   If you are not familiar with the flags, when you roll over the flags, a label appears displaying the language.  (Languages include: Spanish, Chinese, French, German, Italian, Japanese, Korean, Russian and Hebrew)  Click on the flag and the page will translate.

Pretty cool.   Now, as Paul Harvey would say, the rest of the story.   I speak a little Spanish and truth be told, the translation is not perfect.   Still, while the translation could be a little better, it certainly would be largely understandable to a Spanish speaker.  They might be somewhat amused at the translation but I suspect that they would be able to get the basic information and a decent understanding of what it being offered.  

I for one, think that this is a big step forward.   In our market, this is not yet a major issue although, in our office, we have worked with Cuban immigrants, who spoke almost no English, Russian business owners, who fortunately were bilingual, and Chinese business owners, who brought their kids to translate for them.   In some of our high schools, the students are speaking 30 or 40 different languages as their native language.  

Check it out.   You can go to www.KCREA.com and do some searching.   Then click on the Translate option and select a language.   If you find that you need some help, let me know. 

Thanks for reading and have a great day!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Parkway
Louisville, KY  40299

ofc: (502) 379-6005
cel: (502) 905-5274
e-mail: DMcCoy@ccre.biz

Let me know if you need help with Commercial Real Estate.  I am a licensed Real Estate Broker in Kentucky and Indiana and I specialize in Commercial Property.  I handle Office, Industrial, Commercial Land, Investment, and Retail properties.   I work with Landlords, Tenants, Sellers, Buyers, and Investors.     Heck, I can even set you up with some help from a residential realtor if you need it.  Give me a call.  I would love to help.

New Office / Special Purpose Listing

2013 is off to a great start!  Earlier this week, I listed a 32,000 square foot Office / Special Purpose property in Eastern Jefferson County for sale.   This building, located on a 7 acre suburban campus, has abundant parking and has terrific access to I-71 and I-64 via the Gene Snyder freeway.  The asking price is $3.1 Million.    

I plan to tour the property later this week, when I hope to be able to take some pictures that I can post later.  In the mean time, if you would like more information, you can e-mail me for more information OR you can check it out on one of the following sites:

• Our company website - www.ccre.biz
• www.KCREA.com
• www.LoopNet.com

It should be available on www.CoStar.com shortly as well.  

This is a really nice property.  If you know someone who might have an interest, please pass the word!  

Have a great day and thanks for reading!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

ofc: (502) 379-6005
cel: (502) 905-5274
e-mail: DMcCoy@ccre.biz

BTW - I am a licensed real estate broker in Kentucky and Indiana.  I specialize in Commercial Properties, handling Office, Industrial, Commercial land, Investment and Retail properties.   I work with Landlords, Tenants, Sellers and Buyers.    Give me a call if you need some help buying, selling or leasing commercial real estate.  I would love to help.    

Louisville 2011 Retail Real Estate Review

If you are reading this and thinking that this looks very familiar, you may have already read one of my entries on 2011 Land, Office or Industrial activity.   I admit that I use almost the exact same format and even wording in order to make them a little faster to get out.   That said, I promise that you are not reading the same thing under a different title.   In that these reports are some of the most labor intensive reports I produce, I am simply trying to be as efficient as possible.   That said, let's get down to business.

I'm continuing my review of Louisville Commercial Real Estate for 2011. Today, I am looking at the Retail Market. Here is what I found -

The Numbers -

According to KCREA (Kentucky Commercial Real Estate Alliance), the Louisville metro area had 128 Leases for approximately 459,803 SF of Retail space. The median lease space was 1935 SF while the average lease was for 3,592 SF. Retail leases in 2011 ranged for spaces from 500 SF to 38,068 SF. 

Regarding Retail Property Sales, KCREA reported 53 Retail Buildings sold in 2011 consisting of 291,022 SF selling for $14,289,750. The median building size was 4,200 SF while the median transaction size was $200,000. The average selling price per square foot was $50.70 and the average building size was 5,491 SF.    The average sale was for $269,618.  (note: if you are checking my math, to get this figure, I had to make some adjustments because some transactions did not disclose the square footage of the property or had invalid numbers entered.)

The largest Retail sales transaction was a 30,000 SF Building in Louisville which sold for $1,069,000. The smallest unit sold was a 718 SF unit which sold for $109,000.  The smallest transaction in terms of price was a 1,756 SF unit in the CBD which sold for $14,000.

What this says to me -

At 128 leases and 53 sales for the year, we are seeing about 2.4 leases and 1.0 sales per week. Half of the leases are for less than 1,935 SF. It is interesting to note that the Retail market is far more uniform than the Office or Industrial market.  This tells me that in 2011, there were few larger leases to dominate the statistics.   While information on the term of the leases is not provided in the KCREA stats, conversations with other brokers leads me to believe that we are continuing to have shorter term leases.   

For Retail Property Sales, more has been selling although again, mainly smaller properties at lower prices.   It is worth noting that although there were more Retail Property sales, that the total dollar amount of the Retail Sales was much less than that for either Office or Industrial properties.

Recommendations -

The figures for Retail indicate that Retail Property is continuing to struggle.   There was very little big box activity in Louisville in 2011 which you would expect when Retail Sales are down nationally.   The improvement in Retail sales in late 2011 should bode well for 2012.  If the economy continues to improve and especially locally if unemployment continues to improve, we can expect Retailers to begin to test the waters for expansion again.  

That said, it may be a while for this to happen and so my recommendations remain the same.  I would say that things are looking better.   My retail colleagues in the office tell me that December was a very good month.   Still, we continue to have a lot of inventory and downward pressure on pricing.  

Successful Landlords and Sellers will keep their properties in top condition and price them competitively. 

Notes, Disclaimers and Such -

BTW - If you would like me to evaluate your particular property, give me a call. Also if you need any help on any real estate needs, I would love to help. I am licensed in Kentucky and Indiana and specialize in Commercial Real Estate. I work with Buyers, Sellers, Landlords, Tenants and Investors. I handle Office, Industrial, Land, Retail and Investment properties. Heck, I can even set you up if you need help with residential property.

ALSO - I am sure that my broker would appreciate me clarifying that the views here are my own and do not necessarily represent those of Commonwealth Commercial Real Estate, its brokers, agents or employees (other than me, of course) If you would like to make a comment or offer another opinion, you may feel free to do so in the comments sections. What you should not feel free to do though is make comments which are inappropriate or offensive. Should I see any such comments, I will delete them.

Finally - The information gathered for this analysis comes from KCREA (Kentucky Commercial Real Estate Alliance). This information reflects the activity of the members and participants of KCREA and therefore should not be considered a complete census of commercial activity. It is also dependent on the individual brokers to enter and maintain their information. As such it is subject to some error. Never-the-less, it presents a picture of the commercial real estate activity and I believe it is useful for review and analysis.

Let me know if you have any questions or if I can be of some help. Thanks for reading. Hope you have a good day.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY 40299

ofc: (502) 379-6005
cel: (502) 905-5274
e-mail: DMcCoy@ccre.biz

Louisville 2011 Industrial Review

I'm continuing my review of Louisville Commercial Real Estate for 2011. Today, I am looking at the Industrial Market. Here is what I found -

The Numbers -

According to KCREA (Kentucky Commercial Real Estate Alliance), the Louisville metro area had 127 Leases for approximately 1,127,191 SF of Industrial space. The median lease space was 3924 SF while the average lease was for 41,748 SF. The largest Industrial Lease reported for 2011 was 162,000 SF while the smallest lease reported was 475 SF.

Regarding Industrial Sales, KCREA reported 38 Industrial Buildings sold in 2011 consisting of 1,635,993 SF selling for $37,115,500. The median building size was 24,960 SF while the median transaction size was $487,000. The average selling price per square foot was $22.96 and the average building size was 42,535. (note: if you are checking my math, to get this figure, I had to make some adjustments because some transactions did not disclose the square footage of the property or had invalid numbers entered.)

The largest Industrial sales transaction was a 248,400 SF Building in Louisville which sold for $7,760,000.   The smallest unit sold was a 2,400 SF unit which sold for $130,000.

What this says to me -

At 127 leases and 38 sales for the year, we are seeing about 2.4 leases and 0.73 sales per week.    Half of the leases are for less than 3,924 SF.  When the average space leased exceeds the median by such a large margin, this screams that there are very few large transactions in the market place.  The vast majority of the transactions are very small spaces.   While information on the term of the leases is not provided in the KCREA stats, conversation with other brokers leads me to believe that we are continuing to have shorter term leases. 

For Industrial Sales, the activity remains somewhat light. Things being sold are tending to be smaller properties at lower price points. Like the leasing, it is interesting to note that the top 5 sales transactions amounted to more than half of the total dollar volume of the reported sales.  

Recommendations -

Louisville has had a fair amount of good economic news in 2011, with expansions planned at Ford and GE, among others. As these lines begin to come on-line and as suppliers and other companies also begin to expand, it looks as though things in Louisville will continue to improve.

My recommendations remain the same. Like the Office, I would say that things are looking better - number of calls and showing are up and unemployment is improving.  Also, while I cannot quantify this, I am beginning to see a willingness of companies to consider longer terms in their leasing.  

We continue to have a lot of inventory and downward pressure on pricing. Successful Landlords and Sellers will keep their properties in top condition and price them competitively.

Notes, Disclaimers and Such -

BTW - If you would like me to evaluate your particular property, give me a call. Also if you need any help on any real estate needs, I would love to help. I am licensed in Kentucky and Indiana and specialize in Commercial Real Estate. I work with Buyers, Sellers, Landlords, Tenants and Investors. I handle Office, Industrial, Land, Retail and Investment properties. Heck, I can even set you up if you need help with residential property.

ALSO - I am sure that my broker would appreciate me clarifying that the views here are my own and do not necessarily represent those of Commonwealth Commercial Real Estate, its brokers, agents or employees (other than me, of course) If you would like to make a comment or offer another opinion, you may feel free to do so in the comments sections. What you should not feel free to do though is make comments which are inappropriate or offensive. Should I see any such comments, I will delete them.

Finally - The information gathered for this analysis comes from KCREA (Kentucky Commercial Real Estate Alliance). This information reflects the activity of the members and participants of KCREA and therefore should not be considered a complete census of commercial activity. It is also dependent on the individual brokers to enter and maintain their information. As such it is subject to some error. Never-the-less, it presents a picture of the commercial real estate activity and I believe it is useful for review and analysis.

Let me know if you have any questions or if I can be of some help. Thanks for reading. Hope you have a good day.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY 40299

ofc: (502) 379-6005
cel: (502) 905-5274
e-mail: DMcCoy@ccre.biz

2011 Louisville Office Review

I'm continuing my review of Louisville Commercial Real Estate for 2011.   Today, I am looking at the Office Market.   Here is what I found -

The Numbers -

According to KCREA (Kentucky Commercial Real Estate Alliance), the Louisville metro area had 141 Leases for approximately 504,846 SF of Office space.   The median lease space was 1746 SF.   The largest Office Lease reported for 2011 was 101,000 SF at the call center on Lakefront Place.  The smallest lease reported was 150 SF.   

Regarding Office Sales, KCREA reported 46 Office Buildings / Condos sold in 2011 consisting of 352,687 SF selling for $18,092,309.   The median building size was 2782 SF while the median transaction size was $195,000.     The average selling price per square foot was $49.47.  (note: if you are checking my math, to get this figure, I had to make some adjustments because some transactions did not disclose the square footage of the property.)

The largest transaction in both size of building and dollar value was a 140,826 SF office building in the Louisville CBD.   The smallest unit sold was a 1000 SF Office Condo.   The smallest transaction was a 2942 SF Office building in Henry Co which sold for $31,000.  

What this says to me -

At 141 leases and 46 sales for the year, we are seeing about 2.7 leases and 0.9 sales per week.    It is interesting to note that 50% of the leases are for space less than 1800 SF.  Also, one single lease (the call center mentioned above) comprised 20% of the leased space reported for the year.  

Given the number of showings I had for companies looking for 30,000 SF and up last year, it is telling that of all of the leases reported on KCREA, there were only 2 recorded for more than 20,000 SF.    That seems to validate the feeling that many of my colleagues and I shared that there was a lot of activity looking at space but not nearly as much actually going to lease.    Most of the space being leased, continues to be smaller space.

For Office Sales, the activity remains somewhat light.   Things being sold are tending to be smaller properties at lower price points.   Like the leasing, it is interesting to note that the one 140,826 SF building sold comprised approximately 40% of the Square Footage of Office property sold.  

Recommendations -

My recommendations remain the same.   While I would say that things are looking better - number of calls and showing are up and unemployment is improving, I would also have to say that we continue to have a lot of inventory and downward pressure on pricing.   Successful Landlords and Sellers will keep their properties in top condition and price them competitively.

Notes, Disclaimers and Such -

BTW - If you would like me to evaluate your particular property, give me a call.   Also if you need any help on any real estate needs, I would love to help.  I am licensed in Kentucky and Indiana and specialize in Commercial Real Estate.  I work with Buyers, Sellers, Landlords, Tenants and Investors.   I handle Office, Industrial, Land, Retail and Investment properties.  Heck, I can even set you up if you need help with residential property.  

ALSO - I am sure that my broker would appreciate me clarifying that the views here are my own and do not necessarily represent those of Commonwealth Commercial Real Estate, its brokers, agents or employees (other than me, of course)  If you would like to make a comment or offer another opinion, you may feel free to do so in the comments sections.  What you should not feel free to do though is make comments which are inappropriate or offensive.  Should I see any such comments, I will delete them. 

Finally - The information gathered for this analysis comes from KCREA (Kentucky Commercial Real Estate Alliance).  This information reflects the activity of the members and participants of KCREA and therefore should not be considered a complete census of commercial activity.   It is also dependent on the individual brokers to enter and maintain their information.   As such it is subject to some error.   Never-the-less, it presents a picture of the commercial real estate activity and I believe it is useful for review and analysis.

Let me know if you have any questions or if I can be of some help.   Thanks for reading.  Hope you have a good day.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

ofc: (502) 379-6005
cel: (502) 905-5274
e-mail: DMcCoy@ccre.biz

2011 Review of Louisville Commercial Land Sales

As I begin my planning for 2012, I am taking a final look at 2011.    Today, I analyzed Commercial Land Sales for last year.   Here is what I found:

The Numbers

For all of 2011, KCREA recorded 30 land sales for a total of 1020.25 Acres selling at $9,811,546.    The average parcel size was 34 acres and average sales price per acre was $9,683.   The average transaction size was $338,329.    Median parcel size was 4.86 acres and median dollar value of a transaction was $226,250.

The largest transaction in terms of dollar value and also tract size was a 410 acre parcel in New Washington, Indiana which sold for $1,300,000.   The smallest transaction in terms of dollar value and tract size was a 0.06 acre tract in downtown Louisville which sold for $10,000.

This amounts to 8 transactions totaling $1,990,000 in 4th Quarter 2011 for an average transaction of $248,750.

What this means

If you are looking at the numbers alone, 2011 was another draught for Commercial Land and Development, in general.    With only 30 total transactions recorded for the year, one would expect only 2.5 land sales in any given month.    Looking at the average price of property sold, you would also conclude that the vast majority of the land sold was unimproved land which was not ready for development.  

Development is a highly leveraged business so that when it goes well, the payoff is great but if it doesn't go well, the possibility of loss is also magnified.   It is well known that many Developers went out of business in this recession and that many remain under water.   The Developers remaining are far more cautious, both because of their risk aversion as well as that of their lenders.   In this environment, we should expect the recovery for Land to progress slowly.

Still, as I mention in November, there are beginning to be some encouraging signs.   The number of calls on land is up.   And although these transactions did not go through, I had respectable offers on three separate parcels of land I have listed in the last quarter of 2011.   I am also aware of some new plans for some decent sized developments that are in the works for 2012.

The things that I expect to move in 2012 are parcels that are competitively priced, already zoned properly and have infrastructure in place.  

Anyway, I am looking forward to a good year in 2012.  Have a great day, everyone.  Thanks for reading.

Notes and Disclaimers and such -

If you know of anyone who would like help with real estate, give me a call. I am licensed in Kentucky and Indiana. I specialize in Commercial Real Estate and handle Office, Industrial, Land, Investment and Retail properties. I work with Buyers, Sellers, Landlords, Tenants and Investors. Heck, I can even set you up with some help for residential property if you need it.

The Information presented here comes from KCREA (Kentucky Commercial Real Estate Alliance) data base.   This information is dependent on the individual members keeping it current and accurate.   It is not a census of all commercial transactions.  It contains only the information of the members of KCREA and other who contribute.   As such, I cannot guarantee its accuracy.   Still I believe that it is a good indicator of activity and is useful to examine.Also, I am sure that my broker would appreciate me clarifying that the views represented here are my own and do not necessarily represent the views of Commonwealth Commercial Real Estate, its brokers, agents, or employees (other than me of course).   Should you wish to comment on this post or to offer another opinion, you may feel free to do so in the comments section.   What you should not feel free to do however, is to make any inappropriate or offensive comments.   Should I encounter any such comments, I will exercise my right to delete them. 


Have a great day!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

ofc: (502) 379-6005
cel: (502) 905-5274
e-mail: DMcCoy@ccre.biz
www.ccre.biz

Louisville Commercial Real Estate 3rd Qtr 2011 Review of Leasing

In my previous post, I examined YTD Commercial Real Estate Sales through 3rd Quarter 2011.   In this post, I will examine YTD Commercial Real Estate Leasing.

The Numbers

According to KCREA (Kentucky Commercial Real Estate Association), 299 total leases were reported from January 1, 2011 through September 30.    Because of privacy concerns, the dollar amount of these leases is normally not available.     This equated to an average of 7.7 leases signed per week.

Leasing Data breaks down as follows: (note: figures are 2011 YTD figures through 3rd Qtr)

• Industrial Leases:  98 transactions totaling 779,929 SF; Avg leased area 7958 SF; Median leased area 3,862 SF; Avg asking rate for Industrial Space $3.44 per SF
• Office Leases:  104 transactions totaling 266,374 SF; Avg leased area 2,561 SF; Median leased area 1,640 SF; Avg asking rate for Office Space $16.12 per SF
• Retail Leases: 96 transactions totalign 324,533 SF; Avg leased area 3,381 SF; Median leased area 1,950 SF; Avg asking rate for Retail Space $9.82 per SF

(A note about KCREA figures - Information on KCREA is provided by and maintained by the individual brokers.   The accuracy of the information is dependent on the individual brokers keepign their information current.    Also transactions outside of the members of the KCREA community will not appear.   Accordingly, while this information is useful, it cannot be considered to be a complete and accurate census of Lousiville Commercial Real Estate activity.   Never-the-less, it is probably the best information available and I believe that it is still very useful in examing the Louisville Commercial Real Estate market.)

(side note on dollar value of leases:  From existing data, it is difficult to estimate the dollar amout of leasing activity.    If we were to use the average asking price and the square feet leased, we could come up with an estimate of approximately $4.3 Million for Office, $2.7 Million for Industrial, and $3.2 Million for Retail.   However being based on asking prices, you would have to assume these figures would be high.   Also, this estimate would assume basically 1 year leases.  In today's market, several leases may be one year but historically, they tend to be longer and information on KCREA is not complete enough to give us this insight.) 

What this means

The thing that sticks out to me is the size of the leased area.  In every category, there is a big discrepancy between the average size leased and the median amount of space leased.    This indicates that each category has a few large transactions that comprise the lion's share of the activity.  Looking at the median numbers, we see that more than half of all of the Industrial transactions were for less than 4,000 SF; more than half of the Office transactions were for less than 1,700 SF and finally more than half of the Retail transactions were for less than 2,000 SF.  These are very small transactions especially when we consider that the transactions involving smaller spaces also typically involve shorter lease terms.  

As with Sales, the other important thing to consider here is the amount of inventory.   Presently on KCREA, there are approximately 11,000 listings.  (this includes both lease and sales listings.)  Inventory has increased significantly over the last couple of years.    As with sales, with only 299 leases recorded YTD, it would take years to clear out all of the existing inventory.   The successful Landlords will recognize that they MUST do everything possible to be in the top 5% to 10% of listed properties, in condition and price.

Crystal Ball

If we were to base our predictions for the future on the figures we have seen to date, one would expect another difficult year in Commercial Real Estate leasing.   My experience and word on the street however may indicate that we will have some positive news in the works.

• Office - For the first time in many years, many of the larger Tenants have been looking around for Office space.   These larger leases can take quite a while to finalize but several deals are already rumored to be in their final stages.   These should begin to show up in the figures in the next 6 months or so.  
• Industrial - Industrial Leasing has been fluctuating somewhat but if manufacturing continues to recover, we can expect this to improve as well.   The Industrial sector should benefit tremendously as Ford and GE add several thousand new manufacturing jobs they have announced. 
• Retail - With retail, I have been seeing some of the retailers beginning to look around again and while some leasing seems to be occurring, activity in this sector seems to be trailing Office and Industrial.   Most of the activity seems to be smaller retailers with very few big box deals being done.

Apparently with that, I have overheated my crystal ball as it is getting cloudy.   Time will tell.

If you would like some help divining the future of your commercial real estate or if you need help finding some property to lease or buy, I would love to help.   Give me a call or shoot me an e-mail.

By the way, I am sure that my managing broker would appreciate me clarifying that the opinions expressed here are my own and do not necessarily reflect those of Commonwealth Commercial Real Estate, its staff, employees, agents, or brokers (other than me, of course).  If you have another opinion and would like to express it or ask a question, please feel free to post a comment.   I welcome other points of view, although I do not welcome inappropriate comments or language.  In those cases, I reserve the right to delete them.

Hope you have a great day.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Louisville Commercial Real Estate 3rd Quarter Review of Sales

With the 3rd Quarter of 2011 behind us, I decided to do some market analysis of the Commercial Real Estate market here in Louisville.  Here is what I found.

The Numbers

According to KCREA (Kentucky Commercial Real Estate Association), 161 total sales were reported from January 1, 2011 through September 30, 2011.   These sales had a dollar amount of approximately $75,923,496.   Average transaction size was about $471,575. This translates into approximately 4.1 sales transactions per week. (note about numbers:  Obviously duplicate transactions, transactions with incomplete data and transactions with obvious errors were omitted when calculating these figures.) 

Sales Data breaks down as follows:  (note: figures are 2011 YTD figures through 3rd Qtr)

• Industrial Sales  31 transactions totaling $34,488,500;  Avg building size 48,749 SF; Avg Sale Amount $1,112,532; Avg Sales Price / SF $22.82 / SF; Avg asking price $22.18 / SF
• Multifamily Sales - 22 transactions totaling $5,723,600; Avg building size 14,004 SF; Avg Sale Amount $260,164; Avg Sales Price / SF $18.58; Avg asking price $40.66 / SF
• Office Sales - 33 transactions totaling $13,482,000; Avg building size 8,937 SF; Avg Sale Amount $408,545; Avg Sales Price / SF $45.71; Avg asking price $78.34 / SF
• Retail / Shopping Ctr Sales - 42 transactions totaling $12,162,750; Avg building size 5,370 SF; Avg Sale Amount $289,589; Avg Sales Price / SF $53.93; Avg askign price $70.40 / SF
• Special Purpose Sales - 11 transactions totaling $2,245,100; Avg Sale Amount $204,100
• Vacant Land Sales - 22 transactions totaling $7,821,546; Avg tract size 34.96 acres; Avg Sale Amount $355,525; Avg price paid per acre $10,169 / acre; Avg asking price $42,689 / acre.

What this means

The striking thing to note is the prices.  Without a frame of reference, this may not mean much but the prices are down in almost every category.   Comparing the sales prices to the asking prices gives a better picture of the market at large.   Industrial prices while low seem to have stabilized with asking prices essentially equal to the sales prices being paid on average.     Sales prices on Office and Retail however are off considerably from asking prices.   More than likely this indicates that most of the properties being sold are distressed properties.   Land is a slightly more complicated beast but with an average sales price of around $10,000 per acre, this indicates that there is still very little development going on.   Land which sells in this price range typically is more rural or agricultural and more than likely does not have commercial zoning, utilities to site or other infrastructure necessary for development.

The other part to consider here is the amount of unsold inventory.   Presently on KCREA there are nearly 11,000 listings.  (this includes both lease and sale listings).   This inventory has increased tremendously over the last couple of years.   With only 161 sales this year, you can see that it would take years to eliminate all of the existing inventory.    The best advice continues to be that if you are selling property, you HAVE to do everything possible to have it in the top 5% of listed properties, in condition and in price. 

Let me know if you have any questions about this article or about commercial real estate. 

Have a great day!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

KCREA Facts for the Day

Louisville Commercial Real Estate Market Facts for the day.

KCREA (Kentucky Commercial Real Estate Alliance) which has our Commercial Information Exchange (somewhat equivalent to the MLS of residential real estate) reports a total of 3158 listed properties today.   1496 are sale listings and 1662 are lease listings.   In the last 7 days, KCREA reported 8 sale transactions and 11 lease transactions.

For comparison, total KCREA listings very consistantly averaged 3000 for most of 2009 and 2010.  Hence total listings are up by a little more than 5%.    (Sales listing are up nearly 7% while Lease listing are up around 4%)    

The total number of transactions is very healthy relative to the last couple of years.  At the rates of last week, you would expect current inventory levels to last 166 weeks (about 3.2 years).   (Sales levels would indicate a turn over of 187 weeks (or 3.6 years) while Lease levels would indicate a turn over of 151 weeks (or 2.9 years)).  

All in all an interesting week.   We can hope this trend continues.  

If you need help with commercial real estate, please give me a call.  I would love to help.

Thanks, all.  Have a great day!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Louisville Commercial Real Estate Market Notes

With the Holiday season in full swing, most people and businesses are preoccupied with things other than Commercial Real Estate.   This has left me with a quiet morning with time to do some research on KCREA.   KCREA, in case you are unfamiliar, is the Kentucky Commercial Real Estate Alliance which provides our commercial real estate information exchange.   This CIE is similar to an MLS.  

Commercial Real Estate Inventory Up

This morning there are 3132 commercial real estate listings on KCREA, with 1647 of those being for lease and 1485 being for sale.    Inventory levels are trending up with normal total listing staying around 3000 listings, generally breaking down to about 1400 sale listings and 1600 lease listings.    Doing the math for you, that would equate to sale listings being up about 6% while lease listings are up 3%.   

Commercial Real Estate Transactions Down

The number of commercial real estate transactions for the last 7 days were down with 5 leases reported and 1 sale reported.    This compared to the average number of transactions YTD (approximately 49 week period) of 7.5 leases and 3.7 sales.    Because of the holidays, I would not consider this to be abnormal or of any concern, in and of itself. 

Inventory Turn Over Rates

At the YTD levels of activity and these inventory levels, we would expect it to take approximately 4.2 years to lease all of the present lease listings and approximately 7.7 years to sell all of the present sales listings.     If we took the prior week levels of activity, we have a much more sobering picture with a projected 6.3 year horizon to lease all current listings and a projected 28.6 year horizon to sell all current sale listings.  

Final Word

The obvious first conclusion is that the recession is still with us and it is still a buyer's market in commercial real estate.   But in spite of the recession, there are transactions being completed.  On average for the year, there is about 1 lease every day and about 1 sale every other day.   Although these are not huge numbers, there is definitely activity in the market.    The important thing for a seller / landlord to consider is how long they are willing / able to wait to sell or lease their property.    In this market, sellers and landlords need to be aggressive to get their property moved.   Considering the market information above, those pricing their property at average market rates, can expect a long wait.

KCREA Notes

This information is provided by the individual brokers and is dependent on them to keep it accurate and current.     This is not a census of commercial real estate activity.  It only contains that information provided by members of KCREA.   While this information is not independently verified, I believe that it is a good tool and indicator of the market activity.

Thanks, all.  Have a good day and stay warm!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

PS Please call me with your real estate needs.  I am licensed in KY and IN and work with all types of commercial real estate.