How to Find a Deal in CRE

Find A Deal in Todays CRE Market

It is hard but not impossible. You must hold your nose and roll up your sleeves.

I just finished reading The Midlife Cyclist, which was depressing, but I recommend it to any athlete over the age of 40. The book includes nearly 350 pages of research explaining how—as you age—your body turns into fertilizer. But the silver lining is that if you work hard, you can be healthy and active well into your 80s. Tough, but not joyless.

Like remaining competitive, the reality of deals in today’s commercial real estate markets is tough but not joyless for those willing to be smart about it.

Successful investors find deals where their unique profiles give them the slight edge. Also, they are going into markets that they have never considered in the past.

Shrewd tenants are seeking landlords ready to meet them halfway with win-win terms. Also, to reconsider how they are using space and add efficiency to their footprint, they are leveraging tech.

Here’s why these markets are so tough. I will focus on industrial in the Carolinas because its growth is the most unexpected of all the asset classes.

  • Increased demand. Manufacturing-employment growth in the Carolinas is nearly double that in the rest of the US. (1)

  • Increased complexity. When I was at Trammell-Crow in 2005, the bread-and-butter deals were 25,000 SF. The average warehouse in 2008 was 37,347 SF. Today it is 330,000 SF – a 10X increase in 15 years. (2)

  • Increased competition. Warehouses are cropping up everywhere. Developers are parachuting in from all corners the US, resulting in 30% more activity than the rest of the US. (2)
    Increased prices. Back in the day, paying $60,000/ac for signature land at the corner of I-77 and I-85 was expected. Now prime industrial land sells for $200,000/ac/hour truck-drive from the same intersection. (3)

So What is A Tenant or Investor to Do?

Turn to the STP Scorecard™. At Cardinal, we use The STP Scorecard™ to uncover value in any real estate transaction.

S – Seller/Landlord Circumstances. The STP Scorecard™ has 10 questions to help a client understand the seller or landlord or circumstances.

T – Transaction Structure. The leverage that sellers and landlords have these days is at an all-time high, so The STP Scorecard™ turns a buyer’s or tenant’s attention to crafting the transaction structure with prompts for creative deal-making.

P – Property Characteristics. If you are a buyer, consider class B buildings in tier-two markets. If you are a tenant, challenge your assumptions about what you think you need to find value in today’s markets.

Reach out to Cardinal if you want a real estate expert on your side.

Email me if you would like to receive a free copy of the Prepared to Win-Win Negotiation Worksheet™.

Do you want to learn more about the STP Scorecard™? We love this tool and are happy to discuss it with our firm friends.
Real estate transactions can be fraught with frustration and pitfalls.

Sometimes the hardest part turns out to be working with your broker, the person who is supposed to help you through the complexities. Veteran commercial real estate broker and client advisor John Culbertson discovered that brokers’ interests aren’t always aligned with those of their clients. He realized there was a better way to advocate for clients and get the deal done.


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