Estero How Hot Is Hot
June 13th, 2005
Estero, Florida - Hot is not good enough! Try SIZZLING!!
Estero Florida is the hottest area of Lee County when it comes to land speculation. With two new malls, Gulf Coast Mall opening phase 1 in Oct 2005 and Coconut Point Mall opening phase one in March 2006, and the continual growth of Florida Gulf Coast University (7000+ enrollment) commercial users cannot get there fast enough. Prices are through the roof with no let up in site. The surounding areas of I-75 at the Daniels Rd, Alico Rd, Corkscrew Rd as well as the US 41 South corridor have all been picked over while speculators have gotten 100% returns at worst and 1000% returns or more at best. The grand opening of the new midfield terminal at Southwest Florida International Airport has also contributed to the frenzy.
Krise Commercial Group has available parcels in those areas for investors and users. If you are interested in locating your business into the newest and fastest growing area of hot Lee County please call us ASAP to save money today.
The Real Estate Paradigm:
We Can All Sleep or Change
I was trying to sleep the other night and my mind was racing. I was thinking about the financial turn of events that have changed our country forever. I thought about the big Wall Street businesses, I thought about the national and regional property owners and developers. As I continued to try to fall asleep, I thought about the local guys who had accumulated a nice portfolio of property after a life time of investing. Then I thought about the local business person that either owns or leases a place to do the business that they have created out of a dream. Then finally, I remembered that I am a commercial real estate broker who depends on the trading of properties to make a living. It all was circling in my mind as I could plainly see that all these people are connected and play a vital role in all our financial well being.
The only reason it is hard to feel sorry for the Wall Street crowd is because of the perception that they play with other people’s money (OPM). People also believe that the Wall Street financiers have made hundreds of millions of dollars running their businesses over the years. That is true, but only for the senior executives and directors who are flush with cash because of their success. Still, that does leave room for sympathy for the thousands of worker bees who are suffering and losing employment because of the conditions we now face. When the bankers go under, as in Merrill Lynch, Colonial Bank, Riverside Bank, Commerce Bank, Orion Bank and others, it does affect us locally. The stockholders are generally local people who lose their total investment. Many jobs are lost and the circulation of money dips a little on every single job loss. As the numbers of job losses mount, (14 million nationally) the drop in money circulation (The Multiplier Effect) begins to be felt by everyone.
It is a fact that government policy in the housing market loan process and the financing of commercial properties led to the decline in the value of real estate globally. All of the professionals in the real estate business in
The national and regional property owners and developers are hanging on by their fingernails. When the second largest mall owner in the country, General Growth Properties, files for bankruptcy, we have problems. Is their bankruptcy due to mismanagement? I don’t think so. When you are tied to the thousands of big box retailers that have just left the face of the earth, i.e. Linens and Things, Ann Taylor, Levitz Furniture and Steve and Barry’s to name a few, it cannot be all your fault. There were 4,603 retail store closings in 2007, 5,770 retail stores closed in 2008 and thousands more in 2009 as the final figures are not yet available. When a company liquidates, the landlord’s usually get nothing more than a legal bill from their attorney for trying to protect themselves in the bankruptcy proceedings
How does a local person who bought properties over the years hold on? Let’s look at a hypothetical case study of a local person with a portfolio of real estate worth $20 million dollars in 2005. The properties are a couple of retail centers, several small office buildings plus a couple of good lots for future development. Business is good in 2005, then occupancy rates of the entire community decreases by 38% with no end in sight, There is very little traffic from people looking to lease, and the majority of those people are looking to cut their lease rate and upgrade their facilities. The tenants that you have demand rent decreases because all are aware of the drastic drop in rental rates. Competition from other building owners is fierce. What do you do? If the owner had an enviable 60% loan to value (LTV) of his entire portfolio when all this started, and a cash balance of $3 million dollars in the bank at the end of 2005, most would have admired this savvy business person. Now fast forward to 2009. The property owner owes the bank more than the properties are worth. He is bleeding money to support the properties, how long can a person hold on? The investor is out of money and the properties are in trouble with the bank. The banker is giving a lot of pressure because of the banking regulator’s pressure on him. The only
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