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Insulated from the Great Recession - Fall 2013
During the Great Recession most commercial real estate lost 25%-90% of value. As is almost always the case there is some light in every storm. The light in the commercial real estate storm was leased investments with quality tenants. This product rarely came to the market and when it did was purchased quickly - saving the few properties with significant location challenges. Why? People are always looking for secure investments and even in the depth of the downturn many investors believe that Sarasota real estate is a very sound investment. How did the values increase? Due to decreasing interest rates, the capitalization rates for quality investments dipped below 6% (meaning higher sales prices) compared to 7%-8.5% cap rates prior to the Great Recession.