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- 🐶 Today's top dogs in office real estate
🐶 Today's top dogs in office real estate
Plus: We detail the art of winning a bidding war, and the Best Ever Book Club announces its September pick.
Best Ever CRE Team
September 07, 2023
Hey there, Best Ever Community!
In this week’s newsletter, a handful of office hot spots emerge, Joe Fairless schools us on how to win a bidding war, and the Best Ever Book Club announces its September pick.
Plus, the Best Ever Conference is hosting a free virtual Economic Summit on September 20 featuring Neal Bawa, Bob Fraser, Kristin Matthews, and Ben Lapidus. Sign up here to save your seat!
First time here? Make sure to subscribe to stay up to date on all the latest CRE news!
Let’s real estate!
🎙 ICYMI
ON THE BEST EVER SHOW
🏈 Yannik Cudjoe-Virgil — From NFL to Multifamily: Scoring Big in Commercial Real Estate: From leveraging relationships to capital raising tactics, Yannik reveals the game-changing strategies that propelled him to success in the commercial real estate arena. Listen here.
💸 Reid Bennett — Navigating the Multifamily Brokerage Lending Landscape: Explore multifamily strategies, lender insights, and market dynamics that can reshape your investment approach and maximize your gains. Listen here.
🤝 Bryant Dawson — The Playbook on How to Close a $50 Million, 450-Unit Deal: Bryant shares his playbook on successful capital raising, property evaluation, and forming strategic partnerships. Listen here.
🗞 NO-FLUFF NEWS
OFFICE REAL ESTATE HOT SPOTS
From rising interest rates to a national vacancy rate that surged to a record 17.1% in July, to the WeWork fiasco and beyond, it’s been a tough run for office real estate. Office sales in 2023 totaled just $17.5 billion through July, 66% lower than during the same period last year, according to Commercial Edge.
However, according to a recent Green Street institutional marketplace update (via GlobeSt), while some major metro areas saw sales drop as much as 55% in the first half of 2023 compared to the first half of 2022, a handful have emerged as outliers experiencing growth.
Top Dogs: The Tampa-St. Petersburg, FL, market — despite a modest $129.2M transaction volume — experienced the largest growth at a staggering 138.3%. Meanwhile, Los Angeles, CA, took the top spot in volume at $551.3M, a 21% increase over the first half of 2022.
The Rest of the Pack: Oakland-East Bay, CA, ranked second in overall growth behind Tampa-St. Petersburg at 36.8% ($148.3M total volume). The aforementioned Los Angeles came in third in growth (21%) with Atlanta, GA, (12.2%; $131.7M), Central New Jersey (8.5%; $102M), and Washington, D.C. (3.9%; $188.1M) rounding out the list.
The Bottom: Orange County, CA, saw a 45.2% drop in transaction volume compared to the first half of 2022 despite a $165.5M transaction volume, while Miami, FL, ($124.8M) saw a 48.2% drop, and San Diego, CA, even with a transaction volume of $124.8M, ranked last in growth at -55%.
What It Means and What’s Next: As in any economic climate, investors must choose their markets wisely. While it’s unlikely that office space demand will swing back to pre-pandemic levels, the stabilization of the office market, according to Bloomberg’s Jonathan Levin, appears to hinge upon borrowing costs (when they come down, and how soon) and property owners proving that they can refinance their expiring mortgages. All this — along with the scale and impact of WeWork’s impending demise — remains to be seen.
📰 Other CRE News
For Sale: $33B in CRE Loans: The FDIC has begun seeking buyers for $33 billion in CRE loans from Signature Bank, largely comprised of multifamily properties in NYC.
It’s Goin’ Down: Both monthly and annual rent growth turned negative in August, according to the September report from Apartment List.
Retail on the Rise: More retail space was occupied in Q2 than was vacated for a tenth consecutive three-month period, according to CoStar.
STRs v. NYC: New short-term rental regulations implemented this week in NYC threaten to drastically change the STR landscape. Hotels and New Jersey are likely to benefit the most.
Dry Powder: Data analytics firm Preqin estimates there is more than $205 billion currently earmarked for investment in CRE in the U.S.
🌎 BEST EVER CONFERENCE
FREE VIRTUAL EVENT
These last months (or years!) have been a crazy rollercoaster ride for commercial real estate. So what’s ahead? How can you navigate the micro-economic climate, mitigate losses, and find new opportunities to grow wealth?
Join us on September 20 for a free, virtual Economic Summit 📊 featuring Neal Bawa, Bob Fraser, Kristin Matthews, and Ben Lapidus. In a rapid-fire format, they’ll discuss today’s most pressing economic issues and how they will impact investing in the months to come, including:
🔸 Inflation
🔸 Interest rates
🔸 Investor psychology
🔸 Labor & wages
🔸 Construction & development
🔸 Housing
🔸 And more!
👉 Secure your free seat before they're gone!
✍️ BEST EVER BLOG
BY JOE FAIRLESS
🧐 Are you tired of losing out in bidding wars for lucrative apartment deals? If you find yourself repeatedly coming up short, it's time to rethink your strategy.
🏆 Winning a bidding war involves more than just offering a higher price; it requires crafting an attractive offer that stands out to sellers. In this blog post, Joe Fairless delves into five proven tactics to enhance your bidding power and increase your chances of securing those coveted apartment deals:
💵 Submit a nonrefundable earnest money deposit to demonstrate seriousness and commitment to the seller.
✂️ Shorten the due diligence period to expedite the closing process and reassure the seller of your commitment.
✍️ Sign an access agreement within three days of being awarded the deal to show your seriousness and begin due diligence early.
📝 Offer to mark up the seller's contract with minimal revisions to reduce negotiation conflicts and increase the likelihood of deal success.
📅 Provide a guaranteed closing date, especially during uncertain economic times or significant events, to offer assurance and potentially shorten contingencies, such as the due diligence period.
💬 “The most common solution investors implement after losing multiple bidding wars is to increase their offer price. Yet, oftentimes, they still end up on the losing side. This is because the offer price is just one of the many terms in the contract that make or break a deal. Therefore, the secret to winning more bidding wars is knowing how to create a more attractive offer by focusing on the other purchase terms that are the most important to the seller.” —Joe Fairless
✏️ More From the Best Ever Blog
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We invite you to join the cause with us and give to the Assistance League of Charlotte today!
🎓 EXPERT RESOURCES
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📚 BEST EVER BOOK CLUB
WHAT WE’RE READING
Join Joe Fairless, founder of Best Ever CRE and co-founder of Ashcroft Capital, for the Best Ever Book Club, a non-fiction book club (led by Joe) in which we read and discuss books that can have a positive impact on our lives as real estate investors.
This month, we're reading The Catalyst: How to Change Anyone’s Mind by Jonah Berger.
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Wishing you a Best Ever day!
—Joe Fairless