Friday, January 22, 2010

Calkain Featured in Shopping Center Business

Jonathan Hipp, President and CEO of Calkain Companies, was recently interviewed by Shopping Center Business for their January issue. Among the topics discussed were the 1031 exchange and single tenet net lease markets. You can read the document in more detail here, but a summary of these topics is listed below.

1031 exchanges have suffered from the drop in market activity and though there may be signs that this trend is abetting, volume has not shown sustained positive increases. Furthermore, the bulk of properties traded are between $1-20 million, with larger deals somewhat scarce. New regulations are also being considered to strengthen 1031 standards, as the collapse of LandAmerica convinced many that more rules are needed in the market.

The demand for single tenant net lease properties remains high compared to most areas of real estate, though sales volume has certainly fallen from its previous highs. Today the market is somewhat segmented by geography, with Washington DC, seeing more net lease transactions than most other areas. Like 1031’s, most deals concern properties under $20 million, with many in the $5 million range. There is still disconnect between buyers and sellers, many are not willing to alter their expectations. Financing is also a large issue and is in-part behind the reduction of large scale deals because it is very hard to obtain large amounts of financing.

Overall, the market continues to experience corrective pains as it adjusts itself to new realities. However, there is a feeling that the worst is over, though recovery may not be right around the corner. In the end people are still buying and selling properties, they are just much more selective about when and where they do it.

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