Commercial real estate transactions in North East Ohio were up by almost 73 per cent to $702 million in 2012. Last year’s figures were so impressive that it was the most successful showing since 2007. These numbers were the result of a sales survey conducted by Alec Pacella, a vice president of the NAI Daus real estate brokerage.
In 2012, the dollar volume of office, industrial and shopping center properties that sold for over $1 million was over the $405 million level recorded the previous year.
The pace of sales also surpassed the one set in 2008, when the dollar volume reached the $696 million mark. The financial crisis hit the market in October that year which meant that lending for commercial properties stopped virtually overnight.
Mr. Pacella recently remarked that the encouraging sales figures were “the new normal” in the market. He also stated he didn’t know whether the market would ever reach its 2007 heights again, saying that “It was so frothy it bordered on an unhealthy situation.”
The dollar volume of sales is definitely improving in the market, but the composition is not considered normal at present. A lot of distressed properties are included in the sales volume.
One example is the deal that saw the 1 million sq ft Parmatown Mall and Shopping Center sell for $14 million after the property went into receivership.
David Browning, the managing director of the Cleveland office of CBRE Group Inc., stated that many sales in 2012 were “funny” because they involved lenders trying to work out problem loans as opposed to arms-length deals.
More capital is coming into the real estate market again. Pacella described it as being “skittish and fragile” but the outlook in the industry is much more positive than in 2009-2010.
