What an interesting question.
If leasing rates are climbing, is that a good thing or a bad thing?
Well, it depends upon whether you are a Landlord with space to rent, or a tenant who is actively seeking to secure new space. Of course, we as a society, have been conditioned to believe rising rental rates are a “bullish” sign as it points towards improved (lower) vacancy rates and an economy that is improving. Remaining consistent with that point of view, clearly we at Premier Commercial Real Estate are very bullish at this point in time. We see continuing signs of economic improvement and positive absorption of previously vacant rental units. And we expect that trend to continue!
So, if you anticipate a need for new or additional space OR if you are nearing the expiration of your current lease, you might want to chat with a real estate professional to jump start the process before prices rise further. Even if your lease has a fair amount of remaining term, there may be considerable benefits in opening discussions with your current landlord “sooner rather than later”.
Alternatively, you may be a buyer who has been waiting for an opportune time to buy? Or an owner who has been thinking about selling but you have been reluctant to do so, in poor market conditions. Hmmm. Interesting….so let’s take a look at these two positions.
Increasingly, property values had bottomed out in the past few years, known as the “post 2008 era”. Of course, 2011 saw signs of improvement which has continued into 2012, 2013 and now, 2014. As confidence levels improved, buyers began to realize that the bottom of the market was reached and prices are on the rise. The combination of historically low Interest rates, which have remained at attractive and inviting levels AND limited inventory (buildings on the market being offered for sale), has created a “dynamic” which has placed upward pressure on pricing. We expect that trend to continue. So, if you are considering purchasing a building, we encourage you NOT to wait much longer as you may miss the boat. Either you may experience rising interest rates or higher prices. Either way, not a good idea to put off your plans much longer, in our view.
As a property owner who had been wanting to sell, but was unhappy with general market conditions, I suggest you consider the following rule of advice that was professed by a very experienced and successful owner/developer that I respect wholeheartedly…..…”sell when you can, not when you have to”. Today, demand for purchasing buildings exceeds supply. That, of course, is a terrific situation for sellers. Some brokers refer to that as a “Sellers Market”. Not necessarily so, in our view, but certainly a good situation and opportune time to “go to market”. Think about doing so….this is the time.
The Pendulum has swung………..do you really want to wait until it swings back?