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JP Morgan sees an array of sectors in the US that are benefiting from high user demand and will perform well in 2022, according to its 4th annual Global Alternatives Outlook.

The report is based on the opinions of CEOs, CIOs and strategists from JP Morgan’s $200 billion-plus alternatives platform. It provides a 12- to 18-month perspective on the trends influencing their respective markets, as well as their most promising investment ideas and their thoughts on the underappreciated risks investors may face.

Logistics, Multifamily, Outdoor Industrial Storage Top the List

Logistics properties (particularly infill logistics assets in the so-called last mile between urban storage facilities and consumers); suburban multi-family and single-family housing in Sunbelt states; campus-like clusters (or nodes) of amenity-rich offices for the technology sector; and industrial outdoor storage facilities (including truck terminals, parking and equipment storage) in key urban locations, are set to flourish.

Deeper into 2022, JP Morgan believes that “contrarian investment opportunities in stressed corporate and retail subsectors may start to emerge,” according to the report. “Leasing markets for offices are likely to recover slowly, potentially creating refinancing challenges for asset owners. If declines in asset values overshoot the intrinsic development costs associated with these properties, opportunistic investments in offices may become highly attractive.”

Although contrarian plays are already apparent in retail, this sector is very different, JP Morgan’s report stated.

Core US Real Estate in ‘Sweet Spot’

Economic growth and inflation create a “sweet spot” for core real estate in the US, the report said.

Cash flow-generating assets are likely to become increasingly expensive in 2022 as the real estate market becomes more crowded, according to the report.

At the same time, long-term megatrends, such as the surging popularity of e-commerce transactions and, in the US, population migration to Sunbelt states, continue to drive demand for niche real estate assets, according to the report.

 

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For the last 2 to 3 years, people have been asking, “When is the next downturn?” “How much longer can this Seller’s Market last?”

Traditionally, the real estate market experiences a downturn every 10 to 12 years, however, at this time, due to the increase in migrations from cities and states with high income and sales taxes, (NY, PA, CA, Washington, D.C) this cycle has been delayed.  Both companies and investors are relocating to South Florida.   No one can say when this will change, but this is the time to take advantage of the market. We usually don’t realize historic change is happening until it’s already has taken place, and by then it’s too late.

Fortunately, real estate shifts rarely happen overnight. We believe that there is still time to take advantage of the seller’s market.  I share with you my thoughts for 2022:

Six to twelve months from now, we will all look back and identify Q2 2021 and the Q3 of 2022 as the point where the market peaked and stabilized.

To be clear, I’m not saying values will crash. But I am certain they will have stabilized and will correct, in late 2022 or 2023 and beyond.

Now, I don’t really think this is a bold prediction, I think we all intuitively know it. We have seen this happen during the Jimmy Carter years with 18%+ interest rates and high inflation, the Days of the RTC and, of course, 2007/2008 when the market crashed, which we saw end in 2010, We are now 12 years since the last recovery.

I think it is important that we ask ourselves, out loud, “What actions are we taking in light of this new reality?”

In my world of real estate sales brokerage, I can think of three big answers to that question:

1) Review your portfolio to identify any properties you may want to sell in the next one to two years. Then call me to explore your options to sell now or refinance and hold. Both are proactive decisions if you make them. Everyone has different circumstances that must be considered. We may miss the peak of values, but we are still at or near the top of the market crest and avoid Meaningful decrease.

2) Review your portfolio and identify any properties that may need to be refinanced, as the rates are still at the lowest they have been and, with the current inflation rate, mortgage rates will only increase.  I can help you with this through Sperry Capital.

3) Consider rent adjustment in your leases. Start putting in annual CPI or floor & ceiling of 3 to 7% increases into your leases. Most landlords are adjusting their new leases and have moved away from fixed rent increases.

Today, my friend, the future is staring us right in the face, telegraphing what is coming next. What will you do with that information?

Let’s schedule an appointment and review your properties to help you determine the right course of actions for your situation.  SperryCGA has offices though out the US and can advise you in multiple markets.  I have been helping real estate investor and owner/users since 1978.

Let us help you maximize the value of your investment.

 

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Ron Osborne, Managing Director/Broker of Sperry CGA-RJ Realty, negotiated the sale of an auto repair facility located at 770 N State Road 7 in Plantation, Florida.

Osborne represented both sides of the transaction, including seller, DOXATO LLC, and Buyer, GCDC 2 LLC, in the transaction. Osborne sourced the buyer from Argentina, an entity he had previously worked with.

The property consists of a 17,000-square-foot site with a 4,408 square foot fully functional auto repair facility with 3 overhead doors with room for 7- 8 lifts. The property was formally used as a transmission shop.

The deal closed December 29, 2021.

The total transaction has a value of $1,509,000, or $342 per square foot, which includes the real estate and chattel mortgage on the equipment.

“The Seller approached a neighboring property owner and offered him the property, who is a current client,” explained Osborne. “Knowing that I am the Automotive Property specialist in the area, he referred the owner to me. Our biggest challenge in the sale was tenant’s right of first refusal on the lease, however it was written that the tenant had to match the offer exactly.  Since our Buyer presented an all-cash offer with proof of funds for the purchase price and a very large deposit, that stipulation became a non-issue.”

The deal represented Osborne’s sixth automotive transaction in Broward County in 2021, with all of the sales or leases transactions closing at the top of the market.

Sperry CGA-RJ Realty will be leasing and managing the property.

“The current tenant will be vacating sometime late January and we should be able to deliver the space first of March,” Osborne said.

Offering rent will be $28.00 NNN.

680 NE 42 St, Deerfield

Ron Osborne, Managing Director/Broker of SperryCGA/RJ Realty, negotiated the sale of an industrial property located at 680 NE 42 Street in Deerfield, Florida.

Osborne represented both sides of the transaction, including the Seller, DAMANI INVESTMENTS, LLC and Buyer, ACHIM INVESTMENT GROUP LLC.

The sale includes an 8,342-square-foot building situated on a 17,437-square-foot lot. The 1970-built building features nine 935-square-foot bays was 100% occupied at the time of the sale.

“We received multiple full-price offers from investors and owner/users and ultimately selected a pre-qualified owner/user and closed the deal in under 45 days from Contract,” commented Osborne. “There are multiple owner/users as well as investors looking for 5,000 to 75,000-square-foot facilities.”

Osborne helped obtain an SBA Loan with full approvals within one week of contract, marking the fourth SBA Loan closing in 2021 that he has assisted with. Osborne also helped the Seller complete his 1031 exchange in NC though the local SperryCGA Affiliate office.

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During the 2nd quarter, Ron Osborne, Broker/President of Sperry Commercial/RJ Realty, closed on 3 transactions valued at a total of $4,725,000.

Osborne represented the sellers in each of the deals, which include:

  • The Boat Center, a 12,500-square-foot, single-story retail building situated on 1.06 acres at 1771 S State Road 7 in Fort Lauderdale within the State Road 7 corridor. The property sold for $2,650,000. The buyer accepted the property in “AS IS” condition knowing it needed to have the roof replaced.
  • A car dealership located at 3297 W Oakland Park Blvd in Lauderdale Lakes, which sold for $1,200,000.$37.74 per square foot of land value or $814 per sq.ft. of building area. The sale includes a single-story, 1,473-square-foot retail building situated on 0.73 acres.
  • 510 Building, a 1,250-square-foot office building situated on 33,817 square feet of land, located at 510 S State Road 7 in Plantation, Florida, sold for $875,000. The buyer is buying as long term investment, and plans to redevelop the property in the future.

“The multiple offers we received exemplifies how tight our market is,” commented Osborne.  “There are plenty of buyers out there fighting for quality assets.”

 

Limousines of South Florida is extending its reach in Broward County by purchasing a car dealership in Lauderdale Lakes for $7 million.

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720 N State Road 7

Ron Osborne of RJ Realty completed another auto dealership transaction in the State Road 7 corridor in Plantation.

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RJ Realty is pleased to announce that it has been selected to market for sale Haims Motors Lauderdale Lakes dealership.  The property is located at 2000 N. State Road 7.

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Ron Osborne, Broker/President of RJ Realty, has negotiated the sale of a used car dealership located at 3000 W. Oakland Park Blvd. in Oakland Park.

Osborne represented the Seller, WHD Holdings LLC, an entity managed by David Rivera, in the transaction.

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Ron Osborne, Broker of RJ Realty, is pleased to announce the second closing for 2018.  His client, 4770 MG Holdings LLC, purchased a single tenant building in Ft. Myers, FL.

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