by Dan Rafter
Few would argue that the country’s economic downturn, though officially long over, isn’t still making life challenging for commercial real estate professionals. Though deals are happening more frequently now, with spec projects popping up across the Midwest, it’s still far from easy to close deals today.
Just ask a key official with Cassidy Turley.
“Before the downturn, I could tell you what a property would sell for and how long it would take to sell. That certainly wasn’t the case during the downturn,” said David Stokes, vice president in the Minneapolis office of Cassidy Turley. “Now it is starting to get better, but I still can’t tell you how long it will take to sell your property. It’s a very unpredictable world.”
The good news is that deal activity is steadily improving. Stokes says that the commercial real estate industry is “very much on the mend.”
At the same time, most of Stokes’ buyers and sellers are typical, meaning that they’re not financial institutions and they’re not involved in workouts.
“The glacier is just starting to melt,” Stokes said. “There was for a time zero activity. Then the unpredictability came. Usually you know how long it will take to sell a building. Everyone makes money. Everyone is happy. That wasn’t the case during the downturn, but I think we are slowly getting back to the point, or at least closer to it.”
Stokes points to a deal he made about a year ago. A national lender and a pair of community banks — all of which he was representing — called Stokes within a two-week period. They each wanted properties sold and off their books by the end of the year. Stokes said that it would take two to three years to get solid prices for the properties.
The lender and banks didn’t care. They told Stokes to sell them for what he could get.
“They just said to do it,” Stokes said. “Properties sold for 10 cents on the dollar, beautiful land and sites.”
That doesn’t sound positive, but Stokes said that deal was the sign of better things to come.
“It was the dam breaking,” he said. “People were finally buying. Banks were finally in a position to unload some of their properties. That was the sign that it was going to get better. Now we are seeing more typical deals. Banks are back to financing. It’s a good sign.”