Pulse on Current market situation for investing in CRE?
What are your thoughts on current market situation! Is it a good time to invest in commercial real estate retail considering higher interest on loans and possibly a recession?
How do you think Texas / Austin/ DFW market will be for commercial in coming years ? Any thoughts on investing in mature markets vs growing market ?
[{"id": "icni024", "text": "It's a bad time to invest. Rates hikes are making deals more cash heavy, and over the next year you'll see market valuations start to drop significantly. Retail is still the riskiest of the core asset classes, and tenant solvency is going to be a problem for some landlords as we enter a recessionary period.\n\nIf you're sitting with cash on the sidelines, you'll probably make more money by waiting a year or so to buy and just passively managing the asset until the market recovers than you would have with the best market deal you could find today.\n\nAs for markets specifically - core urban markets with strong population growth and household incomes will be safer than secondary or tertiary markets over the next few years.", "replies": [{"id": "icocfzx", "text": "Do you think if  SFH prices drop significantly, commercial RE would drop concurrently or a few months later?", "replies": [{"id": "icpkbxy", "text": "CRE will be a few months slower to adjust as there's less sales volume so establishing new price levels takes longer.\n\nWhat generally happens in declining markets is buyers start bidding lower, vendors pull listings and there's a pause (up to a year usually) as vendors look to ride it out and hold on to their concept of value. Sales volume and new listings drop to very low levels until eventually the number of 'have to sell' vendors are sufficient to create enough lower comparables that vendors are forced to internalize the new lower valuation for their asset.", "replies": [{"id": "icppldg", "text": "Thank you for the insight!", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "icobg15", "text": "It doesn\u2019t feel like a good time to get into CRE. On top of all the other issues (riding rates, dropping valuations, failing tenants), construction and materials costs are insane. If you have to do any rehab or repairs it\u2019ll hurt financially.", "replies": [], "depth": 1}, {"id": "icoendx", "text": "Thanks ! \nThis helpful.", "replies": [], "depth": 1}]