Three years after the collapse of the financial markets and by extension the real estate market, companies are actively shopping for deals despite continued uncertainty about the economy.
In May, two thirds of real estate investors polled by Marcus & Millichap indicated they planned to increase the size of their portfolios through next spring ”“ by 23 percent on average, according to a report in National Real Estate Investor. That could bode well for commercial real estate owners that held out through the recession long enough to see the return of what is shaping up as a seller”™s market, despite the threat of higher interest rates that could make debt-based deals more expensive to pull off.
Robert Weinberg, a major Westchester County, N.Y., developer who is now focusing on Port Chester abutting Greenwich, said capital is not a problem for developers these days.
“We”™re ready to do things,” Weinberg said, during a September round table with the Fairfield County Business Journal. “There”™s no problem with (borrowing), money”™s available. There”™s no shortage of equity capital.”
In the past few weeks, Greenwich-based Gladstone Development Corp. announced a deal to spend $15.3 million for a shopping center in Winsted. GHP Office Realty sold off 95 E. Putnam Ave. to a small syndicate of local investors.
Still, caution abounds. Following its second-quarter results, SL Green Realty Corp. CEO Marc Holliday highlighted a dozen deals his company has done in the New York City area, while adding he does not expect to keep up that pace over the next few years.
“We think we played that market exactly as we wanted to over the recovery period,” Holliday said. “I think we”™ve now moved into the middle innings, and while we still have a pipeline of real estate opportunities, I don”™t expect that you”™ll see us transact anywhere near the $4.5 billion of volume over the next two years as (we) did over the prior two years.”
And while Building & Land Technology continues to build up its Harbor Point development in Stamford”™s South End, several other proposed developments in Fairfield County have yet to get out of the gate, including 95/7 in Norwalk, Fairfield Metro Center and Georgetown Land Development Co.”™s mixed-use village planned for Redding.
“In general, good deals get done,” said Michael Weinstock, a Ridgefield resident who is group vice president of commercial real estate lending for New York-based M&T Bank. “You”™ve got to look at these projects on an individual basis. You”™re going to build some housing in Georgetown, is this the right time to do it? Would it sell out? You do market studies. Is that the same thing you saw 10 years ago when it started getting talked about? So you got to talk about where you are in the cycle with these projects.
“If you were lending through the cycle, you”™re fairly strong and lucky to have done that because your structures were much stronger,” Weinstock added. “You”™ve had sponsorship that”™s way stronger. The weaker players have filtered through, they weren”™t able to accomplish some things but the stronger ones have.”
