California Realtors Optimistic About the Commercial Market

First of a two-part series

If you think the residential real estate market is tough, you should see what commercial Realtors are up against.

Ray Lindsey, Century 21 M&M Commercial Realtor Modesto
Ray Lindsey, Commercial Realtor Modesto 209-758-4941 email-rlindsey

“The leasing market is starting to pick up a little bit,” said Ray Lindsey, a Realtor at Century 21 M&M and Associates in Modesto.  “But the sales market is lagging.”

Lindsey, a 25-year realty veteran, works a territory that covers a 150-mile radius from his Modesto base.  His assessment of the local market also matches the national scene.

Nationally, new construction is nearly nonexistent and increases in the vacancies of industrial, retail, office, apartment and warehouse has made it a tenants’ market.

Jerry Nickelsburg, senior economist for the University of California, believes recovery for the commercial market won’t take place until 2011.

“To be sure, the commercial real estate market has not turned but optimism about the future, a precursor to a turn in the market, certainly has,” wrote Nichelsburg in the 2010 “California Commercial Real Estate Survey.”

Lindsey also believes better times are ahead.

Courtesy of the California Commercial Real Estate Survey

“I think it’s going to get better, but we’ll have some more tough times before it gets better,” he said.

The better times will follow, said Lindsey, when California’s 12.4 percent unemployment rate declines and banks start making more loans to small businesses.

“It’s pretty tough to find money,” said Lindsey.  “You can put deals together if you can find financing.”

While residential loans are at record lows — less than 5 percent for a fixed, 30-year mortgage — it’s much higher for commercial financing.

“Residential rates don’t apply to commercial at all,” said Lindsey.  “It’s 7 percent for commercial and 30 percent down, using the bank’s appraisal.”

The best commercial transactions occur with owner financing, when the seller, not a lending institution, finances the sale.

“There’s a lot of that going on.  Probably 30 to 40 percent of the market,” Lindsey said about owner financing.  “That’s when you can get the deals together the easiest and quickest.”

While leasing has been stronger for Lindsey, he is working on two sales, an office in Modesto and an industrial space in Stockton.  It’s a buyers’ market, he said, as the first offer on the Stockton property was about half of the $1.4 million listing price.

“We’re in the counter-offer stage right now and I think it’ll sell for $1 million,” he said.

On the leasing side, Lindsey said newly constructed retail space is priced at $3 a square foot and previously used spaces are $1.20 a square foot.

“That’s not too far from where we were before,” said Lindsey.

DeeDee Thomas, Century 21 M&M Commercial Realtor in Turlock, CA
DeeDee Thomas, Commercial Realtor in Turlock (209)668-5002 email-dthomas

Dee Dee Thomas, a Realtor at the Turlock Century 21 M&M office, specializes in commercials properties in Turlock.

“I do a lot of it,” she said.  “I do a lot of downtown Turlock including retail offices and sales of small buildings in Turlock.”

Thomas, a Realtor since 1976, rates the commercial market in Turlock as “very slow and depressed.”

A member of the board of directors of the Turlock Downtown Association, Thomas is optimistic the Turlock Downtown Property Owners Association business Incubator is helping the local rebound.

The Incubator, which helps start-up businesses with reduced rents and business guidance, had only five vacancies among the 15 available office spaces in July.

“We’re beginning to see more activity there,” said Thomas.

Turlock’s commercial market parallels other valley communities and recovery is still years away, she said.

“I don’t see it any time in the near future,’ said Thomas.  “Commercial tends to lag behind the residential market.”

NEXT FRIDAY:  The agricultural realty market

Look for this real estate blog every Friday on the website. If you are looking for property in Northern California, or for more information on buying or selling a home, visit –  Please send any comments, questions or suggestions, to me at or just leave a comment below.


7 thoughts on “California Realtors Optimistic About the Commercial Market

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