Yonkers, NY (PRWEB) July 12, 2010
Executives with NAI Friedland Realty’s Industrial Division recently participated in a roundtable discussion on the state of the industrial real estate market in Westchester and Bronx counties in 2010 and identified some of the key issues the markets will face going forward.
The veteran brokers of NAI Friedland Realty, a full service commercial real estate firm covering the entire New York metropolitan area, maintained that while there has been some improvement of late, the industrial real estate market in this region has not reached its bottom as yet. Roundtable participants were: Ross Schneiderman, Senior Executive Vice President, and Executive Vice Presidents Peter Cokin and Steven Kornspun, SIOR.
Q: What are some of the prevailing trends in the industrial market in this region?
Schneiderman: "We are seeing the baseline for the industrial markets being lowered. Where space was leasing for $12.00 per square foot, now it is going for $10.00 or even less in some cases. Space selling at $100 per square foot two years ago, is currently on the market at $75 to $90 a square foot. There are clear examples of this deterioration in value in Southern Westchester County, for example. Particularly, we have seen evidence of this in property sales that have closed recently in Yonkers and Mount Vernon."
Cokin: "Another thing we're seeing is that owners who are keeping yesterday’s prices hoping that the market will come back are the ones that are having difficulties selling their properties. Once they adjust building prices to today’s values, they can sell, and users are able to get loans if they put down enough of a deposit. The reality is that today a large percentage of owners are still not willing to sell at today’s reduced values."
"The people that I’m working with say that it has to be an extraordinary deal for them to buy something, especially if they think the property is going to be empty for a year or two."
Kornspun: "The banks are really looking for stronger customers. The appraisals are coming in at lower values than anticipated, which requires a higher down payment from the purchaser. This, in turn, tends to deplete cash reserves and operating capital and makes it more difficult to own. We’re currently in a bit more of a rental market and it is predominantly a smaller user who is looking."
Q: Is the market on the road to recovery or do we have a ways to go yet before the industrial sector returns to “normal” in terms of leasing and property values?
Schneiderman: "I think we have gotten back to the point where the growth (in a property’s value) is going to be so minimal that you won’t even see it because we’re so used to the jumps (prior to the downturn) of 10%, 15% each year. I think we are going to see real low single-digit appreciation."
Kornspun: "It’s very difficult to tell at this point in time whether or not we still have some more deterioration in value before we start going back up or whether we’re already at the bottom. It’s a cycle and we are somewhere at the bottom of that cycle. I agree with the people who are starting to take advantage of the market. We have interest rates at 40-year lows, and that is going to change eventually as prices go up. We have a corrected market. If people don’t take advantage of that now, they are going to miss their chance. The opportunity will be gone. Now is the time. You can’t get any closer to the right time to buy with the combination of lower prices, lower rents, and low rates."
Cokin: "The situation of a property owner underwater is very common in the residential market. But now, a lot of Friedland's customer’s businesses and factories are underwater, and they’re realizing that although they might want to get $2 million for a building, in today’s market they will likely only sell it for $1 million. Many owners are going to try to hold onto the building, because they can’t afford to sell it."
Schneiderman: "In terms of leasing, price is going to dictate everything. The landlords who don’t bite the bullet and lower their prices will not lease their space. They are in denial. They were getting $14 a square foot a few years ago and now they’re lucky they can lease it for $8 a square foot. That’s a big hit. And some say, 'You know what… I’ll wait another month. Maybe I’ll get lucky.' So they wait another month, and another month, and another month."
NAI Friedland Realty Inc. is located at 656 Central Park Avenue in Yonkers, NY and can be reached at 914-968-8500 or by visiting http://www.friedlandrealty.com.
About NAI Friedland Realty Inc.
NAI Friedland Realty Inc., founded in 1970, is a full service commercial real estate firm covering the entire metropolitan New York area, with a majority of its business in Westchester County and the Bronx, but additionally in Putnam and Rockland Counties, New York City, Connecticut, and New Jersey. Headquartered in Yonkers, New York, Friedland also maintains a satellite office in Manhattan. Friedland sales staff members strive to provide guidance and information that enables clients to make the best lease or purchase decisions. Brokers in Friedland’s four divisions -- Retail, Industrial, Office, and Residential/Development – understand their markets and are supported by a sophisticated computer database of available properties and potential tenants. Friedland is a member of NAI, the only managed network of commercial real estate firms in the world.