May 28, 2011
Lenders' adversity to single tenant deals is creating a big advantage for those owners who can do portfolio financings. Newmark Realty Capital has been able to get major discounts in interest rates for large industrial portfolios, say a single loan against 10 properties. With cheaper financing these larger players can bid higher for property to buy and bid lower rent to attract tenants to fill their buildings.
Why, with 40+ million square feet of vacant office and R&D space in Silicon Valley, do we see major users designing campuses and leasing new buildings at twice the rent they would pay for a 1980's vintage R&D building? Partly tenants want safer more resilient buildings. To meet this resiliency demand from users the structural engineering profession is working on standards that will estimate a building's downtime after a major quake. ATC58 is in draft and should be issued in 2011. Just as important, tenants want spaces that can layout for the "office of the future", see my April posting.
Other Product Types
Newmark remains active in the outlying product types; self-storage, mobile home parks, data centers, hotels. If it generates income we can find a financing source, working with a wide range of lenders with a broad spectrunm of interests. We have a long list of life insurance correspondent lenders, are active in CMBS 2.0 and are also working with those banks that are back in the market.
Posted by Eric Von Berg