The Nasty World of CRE Grunge

There is a lot to be said for quality. There is a lot to be gained by a commitment to quality property management.

In the world where being grunge is often applauded and rewarded, I remain convinced that being tacky is a cultural statement about one’s point of reference.

Is it just me or have you also noticed some of the creeping influences of grunge within the world of CRE?

Of late, I’m becoming more acutely aware of the relationship between cracked stucco, peeling paint, potholed parking lots, leaking roofs and the level of an owner’s commitment to creating and maintain property value through capital improvements and dedication to property management.

I See Ugly Properties

My recent observations of properties in the metro Phoenix, Arizona commercial real estate market have led me to the conclusion that something grungy is happening. Once pristine properties are now left to the elements. The same grunge is becoming more and more apparent in the Prescott, Flagstaff and Sedona, Arizona commercial real estate markets.

There appears to be a deliberate draw-down on capital commitments and property management. It’s obvious, it’s annoying and it most certainly can impact a commercial property’s actual and perceived value. Capital is tight and owners are hesitant to spend.
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2010 – The Disaster Verses Recovery Conflict

comm bldgs sunrise - cwpLike many who find themselves connected to the lifeblood of the commercial real estate market, I have been listening, researching and studying the myriad voices and have come to the conclusion that we are entering 2010 in a state of conflict.

Two camps have emerged. The first is what I will refer to as the “Disaster Camp” and the second is the “Recovery Camp.”

The Disaster Camp (DC) is the illusive analysts whose cryptic research clearly indicates we are entering an era of melt-down. The DC guys and gals come at us armed with their complex charts and narratives that prove conclusively that we are headed into doomsday.

The Recovery Camp (RC) is equally persuasive with their slick, bullet-pointed PowerPoint presentations. The RC camp trumpets phrases like “sidelined investor capital waiting to be spent” and “Bond money waiting to pounce on market opportunities.”

After all is said and done, more will have been said than done! I’m conflicted as a result of the plethora of combative voices that leave me feeling as if I have just stepped off a wild roller-coaster and cannot gain my bearings.

As we enter 2010, I’m a lot like many of my clients, nauseated and bewildered and I am vowing here and now to never ride that roller coaster again.

For at least the opening stages of 2010, I am going to go back to trusting the basic fundamentals of investment and my instincts. In the early part of 2010 I’m resolving to delete all of the emails that are in the DC and RC camp. Away with the charts and the PDFs that tell many tales.

Here is what I am going to do in 2010…return to trusting me, myself and I. Oh, I will be forced to gaze at many more PowerPoint prophets and read many more detailed documents designed to either scare me into sleeplessness or fill me with the phony messages of hope beyond reason.

My thought is that 2010 is going to be a year of disaster AND recovery. We will eat at both sides of that aweful table made up of vinegar and sugar. That is why I am going to return to trusting myself and to a healthy avoidance of investment extremism. I’m inviting you to do the same.

Donald Teel is Senior Associate with Arizona Commercial, an Arizona commercial brokerage and property management firm. Need more information? Please call 1-877-777-9100 or, if you prefer, you may email Donald Teel

Prescott, Arizona…Per Square Foot

per-sqaure-footOne square foot = 0.09290304 m2.

Okay, now what about Prescott, Arizona’s commerical market on a per square foot basis? What does it mean to owners and buyers. Is it time to buy? Is it time to sell? If so, how?

My recent suggestion to my Broker didn’t go over too well. “What we should be doing is pricing property for sellers on a ‘per square yard’ basis and for buyers on a ‘per square foot’ basis,” I said. He grimaced…I walked away.

High Value Market

We are a high value marketplace. Commericial real estate values in Central and Northern Arizona generally and in Prescott, Arizona in particular are declining creating an interesting investor market. Indeed, we appear to be nearing the bottom of the trough and it is and has been for some time…a buyer’s market.

We won’t be changing the marketing analysis to a per square yard formula but the principle behind the notion spells out the reality.

Resisting the Market Realties

Some owner’s are resisting the truth inherent in the current makret realities and in so doing they are actually capitalizing the reduction of their property value.
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