Real Estate Newsletter Summer 2018
My new web site is live!
After many months of back and forth with a couple of different web developers, my new web site, https://mikelincre.com is finally up and running! It is a place where I will showcase my current listings, highlight past deals, and share my thoughts about the real estate market. I will continue to send out paper newsletters like this one, but will be publishing digital content, as well.
You can also connect with me on LinkedIn (http://www.linkedin.com/in/mikelincre) or on Twitter at @mikelinCRE.
Have we peaked in the current market cycle?
It is my observation from reviewing transactions and discussing with other industry professionals that we are starting to see cap rates level off and creep upward (thus resulting in dropping prices). This can be the result of several factors:
- The unemployment rate, at 3.9%, is at its lowest point in 50 years. This could motivate the Federal Reserve to spur inflation, which is currently at its targeted level of 2%.
- The Federal Reserve has already increased interest rates twice in 2018 with at least one more increase likely this year.
- Rising interest rates mean that loans are more expensive to obtain. This may lead to reductions in property prices.
What would be the result of just small cap rate changes? Here’s a chart to illustrate the impact on a property with a net operating income (NOI) of $150,000.
|Net Oper. Income||Cap Rate||Value|
You can see that a cap rate increase of just one percent results in a loss of half a million dollars in value! The drop in property value is even greater for properties with a higher NOI.
Is now the right time for you to sell? Or is it better to wait it out until the next cycle? I can help you answer these questions. If you’d like to get a complimentary, no-obligation Broker Opinion of Value for your property, please contact me. I would be glad to help you determine your future commercial real estate strategy.
Ontario Airport Experiencing Unprecedented Growth and adds nonstop service to NYC
As of May 2018, ONT has totaled its passengers at 438,974, an incredible 12.4% increase from May 2017. Cargo tonnage is increasing as well, increasing 22.1% from a year ago. On top of these numbers, ONT has also just approved a new 30-year lease with FedEx and has confirmed that JetBlue will adding nonstop service to JFK airport on September 5th of 2018. All of this action has turned ONT into the fastest growing airport in Southern California!
The Inland Empire is the Center of California Job Growth:
The IE is the leading region in California for job growth, and it’s tied for first place in national job growth, too. California employment peaked in January of 2018, with slightly more than 16 million jobs. That’s 20.2% higher than the lowest point of the last recession, and 9.9% higher than the state’s pre-recession peak. The biggest contributor to these numbers is Inland Empire, the state’s largest job creator. In December, the Inland Empire posted a year-over-year job growth of 3.4%, compared to just 2.2% growth posted by Silicon Valley in the same period, according to the Bureau of Labor Statistics. The nation’s job growth was just 1.5%, indicating that the Inland Empire is doing quite well.
171 East Holt Avenue, Pomona, CA
This property features newly renewed 5-year corporate leases with Little Caesars and Fred Loya Insurance, showing their commitment to the location. Culichi Roll also recently renewed its lease for 5 years. The property is located along Holt Ave, one of the main east-west corridors in Pomona.
Price: $2,570,000 – 6.25% Cap Rate
4414 University Parkway, San Bernardino, CA
This is a three-tenant property located in a neighborhood center anchored by Ralphs and LA Fitness. The tenants are Subway, Little Caesars, and Liquid Tea Bar. There was a tremendous amount of interest in this property with several cash offers at or near asking price.
Sold Price: $1,980,000 – 5.48% Cap Rate
I specialize in representing buyers and sellers of retail investment properties, focusing primarily on the Western Inland Empire, encompassing the cities of Corona, Norco, Eastvale, Ontario, Chino, Chino Hills, Montclair, and Pomona. Prior to commercial real estate brokerage, I worked as a residential real estate investor, flipping houses in Orange County.
I grew up in New Jersey, and have worked for corporations such as Nestle PowerBar, Prudential, and Computer Sciences Corporation. I have a degree in Biomedical Engineering from Johns Hopkins University and an MBA from Duke University.
« Previous Next »