RealStake

With tenant-in-common investments becoming a hot commodity in the commercial and multifamily real estate markets, homework is key. Many 1031 investors rush to purchase within the IRS guidelines, while other investors not involved in a 1031 purchase TICs for the promised management. The problem? High fees and low returns can wipe out any tax savings. For non-1031 investors the extra costs associated with the tax deferral isn't offset by tax savings so there may be more profitable alternatives (such as REITs).

Fees aren't cheap. In a typical deal, sponsors charge a property-acquisition fee of 2% to 6% of the equity they put into the deal. Sales commissions are 5% to 8% of equity collected, and there can be a 2% to 3% fee for organization and marketing expenses, not to mention the ordinary annual property management fees, which run from 2% to 6% of net rental income.

Getting A Slice Of The Commercial Market

The 2006 Grubb & Ellis commercial real estate forecast is out and they see growth in many North American markets. The Kansas City office market is expected to see positive net absorption, while right up I-70 the St. Louis market is expected to see lots of new space leased with old space vacated - lots of activity but low net absorption. The Wichita market is expected to see growth in medical office space. In Miami and Orlando job growth is expected to fuel the office market through 2006 and into 2007.

The picture varies from market to market and between office, industrial, retail, investment and multifamily properties, but the overall picture is positive. They expect asking rental rates to increase 5 percent for Central Business District office properties and 6 percent for suburban office space. Visit Grubb & Ellis for a clickable map to see the markets you're interested in.

commercial real estate,investment real estate

Commercial mortgage requirements could get tougher as federal banking regulators issued guidance to banks on commercial loans and recommended that banks with high concentrations of certain loans keep a higher capital cushion than required.

The caution focuses on loans where repayment depends mostly on rental income or on the sale, refinancing or permanent financing of the property. That includes loans to real estate investment trusts and unsecured loans to developers. Regulators said lenders with high concentrations should hold more of a capital cushion than the minimum required and enough to match the level of risk.

Buffalo News - Regulators issue warning to banks on commercial real estate loans

Grubb & Ellis expect a healthy year in Chicago's commercial and industrial markets. Positive absorption is expected in the suburban office market, though the city will see office construction in an environment of negative absorption. The industrial market is expected to see absorption over 20 million square feet, compared to 15.8 million in 2005 with the fastest growth in the south suburbs.

«Like 2005,» he said, «this year's going to be a Goldilocks year, not too hot, not too cold. There will be a cooling in the housing market and perhaps a slowdown in economic growth toward the second half of the year, but not enough to upset what will be a good year for real estate. Interest rates will remain surprisingly low, and payroll jobs will be created. In most places, absorption will be up and rents firm.»

Chicago Primed for a Healthy 2006, Grubb & Ellis Contends

A strong economy combined with heavy residential development taking up the available vacant land translates to declining vacancy rates for commercial and industrial properties in the Boca Raton, Florida market according to CB Richard Ellis. Industrial space leasing at an average rate of $7.96 per square feet has only a 4.1 percent vacancy rate. Office space vacancy rate is 8.8 percent with lease rates of $16.90 per square foot. 47,500 square feet of office space is under construction with more planned, but little if any industrial development is occurring, so expect industrial vacancy rates to remain tight.

«Because the economy is coming back pretty strong, any future developments being planned will be leased rather quickly due to the demand we face here and the remainder of Palm Beach,» Kelly said. «Vacancy rates are destined to stay tight for some time.»

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