At our Colliers National Conference in Chicago last week, I was struck by the difference in various commercial real estate markets across the country. One-third of my partner investment sales brokers are making their living solely on bank sales of foreclosed properties, including those that are controlled by receivers. In these markets (primarily the southeast), the only motivated sellers are banks that have been wrestling with loans for the past three years. In these areas, average property owners are not able to move their properties while bank sales at “market-clearing prices” are continuing.
The other one-third of our brokers is working hard at selling properties with highly-rated credit tenants. The trend seems to be that investors big and small, are gravitating to less risky properties. With the equities market in turmoil, prices are being driven up and rates of return are going down for the best in class properties.
In the Honolulu commercial real estate market, we have a balanced market with no over-supply of any particular product. This means that Honolulu has some of the lowest vacancy rates anywhere in the United States. Investment property sales are at a steady pace with very few distressed or foreclosure sales. Many customers come to look for distressed properties but only a handful of these transactions actually transpired in the past year. We are blessed to have a healthy commercial real estate market that is balanced by various types of sellers and products. As I landed on the runway at the Honolulu International Airport, I thought, “it’s great to be home.”