After a lapse, there is almost always a rebound, which is the current state of the commercial real estate market. The rebound even includes 
areas of cities which were once abandoned many years ago, and are now going through a city revitalization project.
During the lapse many investors created a buying market for many new investors of commercial real estate. The lapse being caused by lenders either not refinancing properties, which became deals with lending already in place for an investor who has access to cash to pay off a note which balloon has come due. Or from an investor who entered the commercial real estate market trying to wear multiple hats, like managing the property, doing the maintenance and up keep for the property, and acting as the handyman as well; the proverbial jack of all trades, but master of none.
A formula for an unsuccessful leap into the commercial real estate market, driving an investor into a frenzy of disappointments, ending in a loss of the investment and resentment of land lording.
Real estate investing is mostly the K-I-S-S method, simplicity in all things.
So with the current rebound, history will repeat itself with the new commercial investors, as the commercial real estate market is now poising itself for another relapse.
The rebound is being driven by higher purchase prices which are substantially impacting the capitalization rate of properties which are the “bread and butter” types of commercial real estate. So what may have been a multifamily property which sold with a cap rate of 8.5%, goes up for sale in this rebound market, and after a bidding war, sells with a current cap rate of 4.5%, a recipe for higher rents to try and bring the cap rate back towards 8.5%.
But, the shadow market of house rentals may prove to cause another relapse in the commercial multifamily sector. With renters having a choice of either renting a house for the same price as renting an apartment in a 100 plus unit complex, the house with a front yard and backyard may become a better option for many.
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Related articles
- Commercial Real Estate Lapse, Rebound, Relapse: Sunday Morning Thoughts 02 June 2013 (backedbyrealestate.com)
- Common Real Estate Investment Mistakes Win Comment from Industry Professional Yoram Eliyahu (prweb.com)
- 10 issues facing commercial real estate in 2013 (bizjournals.com)
- Metro Denver’s commercial real estate starting 2013 strong (bizjournals.com)
- Riggs: “Risk Off’ for Commercial Real Estate (Low Rates, Higher Commercial RE Returns) (confoundedinterest.wordpress.com)
Backed by Real Estate 
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