Commercial Real Estate(CRE) markets have always depended upon supply and demand. The short term imbalance between suppy and demand today appears to be affecting the market more than ever before. This phenomenon has created a CRE market in which buildings are being purchased at a significantly higher price than they ought to be.
The supply of buildings on the market has remained at a fairly low rate as distressed owners have not yet been compelled to deal with the majority of their problematic assets.
On top of the assualt of the CRE market, the current administration will have capitalization rates increase to at least 20% from 15% as soon as the Bush tax cuts sunset beginning January of 2011 and the national healthcare plan will add not less than 3.8% to the capital gains tax burden as well. For these reasons, a majority of building owners opted to sell now at the lower capital gains rate.
Director of Sales – Upper West Side
Goldenwood Property Advisors, Inc.
Commercial/Investment Real Estate