A commercial real estate investment advisor in Orlando calls Standard & Poor's downgrade of the United States sovereign credit rating "good news for commercial real estate" both nationally and locally.
Sean Glickman, vice president of the Investment Advisory Group for Coldwell Banker Commercial NRT, said even after the downgrade, investors still flocked to U.S. government backed debt.
The 10-year Treasury benchmark fell as low as 2.23% after the downgrade and resultant stock market turmoil and has fallen further since. “If the market instability continues and Treasuries remain so low, cash flow from long-term leases on quality retail assets will become more attractive and investment activity will only increase. This will only multiply with foreign investors taking advantage of the weakness of the U.S. dollar,” Glickman said.
In the Orlando area, multi-tenant properties are recovering. “More deals were executed over the past 12 months than in any year-long period since the recession started,” he said. Best-in-class grocery-anchored shopping centers trade at cap rates in the mid-7% range. Cap rates start at 8.5% for lesser-quality properties.
Interest in local retail properties "remains keen," he continued, and should increase as investors set their sights on secondary markets.
“Good news is out there; but sometimes it's hard to hear it," Glickman said.
