New York City Tri-State Area: Continued Challenges in the Capital Markets

With 2009 well underway, we see continued challenges in the capital markets. Though general sales volume across the country is considerably lower than the same period one year and two years ago, properties that offer solid real estate fundamentals are still attracting significant interest from real estate investors. We are

With 2009 well underway, we see continued challenges in the capital markets. Though general sales volume across the country is considerably lower than the same period one year and two years ago, properties that offer solid real estate fundamentals are still attracting significant interest from real estate investors. We are finding that properties with central locations, low lease roll, and a history of good cash flow have the best chance at transacting. Additionally, properties with assumable debt have particular interest because the debt can be accretive, providing higher leverage and better terms than possible in today’s market.

Despite the perception of doom and gloom, deals are happening and we have recently seen heightened interest from private investment groups who have been watching from the sidelines in recent years. With their powder still dry, these groups recognize that the current cycle provides a unique opportunity to expand their portfolios and achieve higher yields than possible in recent years. Based on a deal in CT that recently went hard, as well as strong interest to a recent investment opportunity in Fairfield County, we find that that even in difficult economic times, good real estate is still an attractive investment alternative.