How Business?

"How's Business?" I probably get asked this question at least once a day. Only thing is, these days, the inquirer really wants to know and is not just making a polite greeting. I'm always torn between the deep truth and a glossy version of it. The glossy version is that business is slower than I want it to be, in both my commercial segment (Market America) and residential (Engel and Völkers). Residential is picking up velocity and we are seeing Europeans buyers come in and buy and we are seeing end users come in to feed on our wonderful bottom priced inventory.

Here's the deep truth. Let's start with Commercial. Market America handles retail and office leasing and many properties for investors. We are really a boutique commercial agency and take great pride is selling most of our own listings. I have always been a "deal' guy and an immersion investor and broker. But most of the investors are on the sidelines right now. They have either have been over leveraged and are not able to put the funds together for a deal or are patiently waiting for cap rates to come up.

Lease rates for office and retail are declining. For a recent swumary of lease rates in office in our area, GO HERE. Notable exceptions are the Pine Island Road Corridor for retail. This is because this has been an underserved part of our county. Our Shoppes at Diplomat leasing is going well. To see our other listings lick here and Also Here (Two Groups of listings). Bridge Plaza, an existing shopping mall in front of the Landings on McGregor is for sale. We are also handing the few vacancies that come up. Activity in commercial has slowed perceptibly the last three to four weeks as walk-in traffic has slowed. We are seeing quite a bit of requests for smaller space as companies downsize in this market.

Many restaurants are closing and some businesses are shuttering for the summer. The mid to low range restaurants are faring better that the high end establishments. Belt tightening is happening all over the economic spectrum and diners either stay home or go to lower priced eateries.

The hospitality segment (Hotels) are seeing lower cap rates and money is hard to come by for this segment. Hotels suffer when car travel goes downs.

Developable land is not moving well - and when it is, it is at distressed prices. This is a good time to land-bank multifamily, single family lots and commercial parcels. We are selling a few parcels for immediate development, but not many - and the prices are low.

We are doing a great deal of work on foreclosed and bank owned properties. Our commercial division is working with the banks and the funds. We are doing acquisition consulting, due diligence, and planning their exit strategies. This is where we are uniquely qualified since we also operate the Engel and Völkers franchise. We examine the portfolios.; make buy recommendations, and then put the inventory onto Engel and Völkers sales team. The commercial team is very busy - just not very profitable right now.

In the Residential Segment, business is also very busy but not as profitable. As I need it to be. This is because the segment of the market that is moving is the lower end. Also - when we do get deals , it seems that often the lending side of the transaction is often falling apart. Our title company, Valid Title, tells me that they are seeing many deals being pulled by the banks at the closing table. This because the underwriting requirements seem to change often. Money is not expensive, but the lending institutions are very strict on underwriting.

Our European marketing is paying off as we have buyers flying in and buying - mostly single family homes. Engel and Völkers now has 14 agents and at least half of them are working with buyers. The buyers are patient and not making quick decisions. We have, however, had a number of instances that the homes that the customers are about to tour or make offers on are gone - sometimes the day they call on them. I do like to see this because it emphasizes some urgency. The great deals do not stay on the market long.

Traffic at sales centers like Parkside and Dock of Bay is down, but the quality of the traffic is high - there are not many lookers, but those that are, seem to be buyers. The unfortunate thing is that these buyers are still not pulling the trigger. Many of the sales offices report that they the buyers left town this year without buying, thinking that there would still be inventory here when they come back. Some will be disappointed.

Waterfront property prices have held up well and we are starting to pick at the inventory as it slowly goes down. Right now we have a number of waterfront offerings; you can search our E and V site HERE. I am pretty excited about our newest listings - an estate next to Henry Ford's home on McGregor. To see the listing click here on CASA RIO. Be sure to look at the virtual tour: Virtual Tour. The owner has been rebuilding this home for four years and it is now ready for resale. Two and ½ acres river front on McGregor is certainly a rare find.

Foreclosures in Lee County continue to be a major concern and as I mentioned above, we are very involved with both the funds acquiring blocks of these properties and the banks to help them dispose of these properties. You will be hearing more about this from me in the future.

You can search the MLS at any time bny registering by clikcing the side bar box in the email.

Best to you and yours,

Gregg
Gregg.Fous@engelvoelkers.com