Century 21 M&M Realtors are seeing an increase in commercial real estate activity in Northern California. Ernie Ochoa, Realtor for Century 21 M&M in Merced says this is because rents are low. He is seeing an increase of Mom and Pop type businesses looking for commercial real estate space to lease.
David Lal, Realtor for Century 21 M&M in Berkeley and Hercules says that he is seeing ‘first time investors’ looking for entry level commercial properties. According to David the “C” rated properties are actually showing some appreciation.
“Strip malls are still taking a beating, but office space and warehouses are ramping up, in part due to the fact that affordability is at its greatest,” says David. “Square footage for both commercial real estate sales and commercial real estate leasing has stabilized and in some cases, the cost per square foot is creeping up – especially in San Jose where internet technology companies are thriving.”
Sarah Shipman, Realtor for Century 21 M&M in Oakdale agrees with Ernie Ochoa, “Locally we are anywhere from 24 – 48 months behind the Bay Area in commercial real estate recovery. I have definitely seen an increase in phone calls from small business owners looking for properties to lease, but not much movement on the sales side.”
A new report from the Mortgage Bankers Association (MBA) shows that nation-wide commercial mortgages performed better than other types of loans last year. At the end of 2010, the 30+ day delinquency rate for commercial mortgages reached 5.33%, compared to 6.48% rate for all loans.
In fact, last year marked a turn around for commercial real estate in the United States. The national transaction volume totaled $120 billion in 2010, as opposed to the $54.6 transaction volume experienced in 2009. It appears that corporate tenants, particularly in large population areas, took advantage of the lower rents, especially during the last three quarters of 2010.
Century 21 M&M Commercial Realtors agree that the market environment over the next 24 months presents a favorable time to acquire commercial properties at discounted prices. During the recovery phase of this recession investors, purchasing commercial properties at significantly lower prices, should see a return on investment that exceeds historic averages.