Today’s Competitive Investment Sales Market – Unlocking the Value

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Commercial Real Estate Investment Bank Pacific Security Capital defines how to unlock the value in todayÂ?s competitive investment sales market.

http://www.pacificsecuritycapital.com - Pacific Security Capital, a leading commercial real estate investment bank, focuses on creating value in today’s competitive investment sales market and identifies valuable strategies to follow to achieve success in investments.

Mike Myatt, executive managing director, Pacific Security Capital shares “there is little doubt that we are currently experiencing one of the most heated sellers markets in recent history.” Myatt continues, “today’s investment sales market has been reduced to an e-bay like environment where retail brokerage houses simply put an asset up for auction and wait for the buyers to circle like hungry sharks.”

Many will point to the increased flow of funds in the commercial capital markets creating a demand-side frenzy that is causing a compression in cap rates and escalating prices to all time highs as justifying current market tactics. Myatt adds that, “while there is an element of truth surrounding the logic contained in the previous sentence, I believe it is simply easier for many buyers to blame the market and follow the herd rather than adapt their acquisitions plan.”

The follow the herd mentality is evidenced by the fact that many institutional buyers like REIT’s, TIC syndicators or foreign investors seem content to participate in the madness rather than seek alternate investment sales strategies. The need to place funds seems to be taking precedence over making good investment decisions for many in today’s market.

The real opportunities in today’s investment sales market are not found by following the herd mentality but can be found in the application of any of the following strategies:

1. “Off-market” transactions: Seek out assets that are not listed by retail brokerage firms. Hire an investment bank to approach principal owners on a direct basis negotiating with them on assets that are not publicly for sale.

2. Change Market Focus: Focus your acquisition strategies on secondary and tertiary markets where there will be less competition for assets. Additionally stay out of the hot markets and look toward markets recovering from downturns.

3. Change Asset Class Focus: Rather than chasing multifamily and retail properties look for opportunities in office, hospitality and industrial asset classes.

4. Stay Away from Traditional Trophy Assets: If you must buy big look for opportunistic plays that have higher vacancies, lease roll-over risks, of financing issues. An asset doesn’t need to be located in New York, Chicago or Los Angeles or be fully leased to constitute a trophy designation.

5. Look for Joint Venture or Recapitalization Opportunities: Many of the best investment opportunities in today’s market are not found in out-right acquisitions. Explore joint ventures that will allow you to co-invest with existing owners of assets in a fashion that will allow them to free up trapped equity or fund new developments.

6. Change Your Acquisition Process: Traditional acquisition time frames that were competitive 12 months ago will leave you on the outside looking in with today’s frothy market conditions. Be willing to make unsolicited offers, put up meaningful earnest money deposits and close quickly.

About Pacific Security Capital (PSC)

Pacific Security Capital (“PSC”) is a leading commercial real estate investment bank and real estate capital markets expert. Pacific Security Capital provides commercial real estate loans, structured finance, investment sales and advisory services for commercial real estate projects requiring more than $3MM in financing. Pacific Security Capital is headquartered in Portland, Oregon with other locations across the United States. More information about the company can be found at http://www.PacificSecurityCapital.com.

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Karen Sams
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