Potential investors outnumber available properties
2/9/2003The phone has been ringing off the hook in the Perrysburg offices of InvesTek Real Estate LLC as anxious investors try to bail from the sinking stock market into what is perceived as the safer haven of real estate.
Unfortunately, the president of the firm that specializes in investment real estate sales doesn't have a lot for them.
“For the same reason that people are jumping into real estate, the current owners don't want to sell,” said John Aubry. “They know it's a safe form of investment. Where else would they put their money?”
Investment sales volume in metro Toledo last year totaled $119 million, down 15 percent from the previous year, according to InvesTek. Of the total, $43 million was spent on retail properties, $36 million on offices, and $35 million on apartments with four or more units.
New investors with $25,000 to $500,000 have asked Mr. Aubry for help in buying real estate. The investors, who have taken heavy hits to their stock portfolios, are attracted by an 8 to 10 percent cash yield on investment properties, he said.
“People are looking for income-producing properties. If we had the product, it would be sold instantly at high prices,” Mr. Aubry said, lamenting that few property owners are willing to sell at good prices and perhaps buy even bigger properties with the proceeds.
Michael Realty Co. and CB Richard Ellis, Reichle Klein, local commercial real estate firms, say in recent reports that the level of activity for office property sales has been remarkable, with deals on at least six major properties closing in 2002 or early this year.
Still, the total such property investment last year is down from $143 million in 2001 and is much less than the $149 million in 1999. Included in the figures are only commercial income-producing properties, Mr. Aubry said.
But a longtime local property investor cautioned new buyers to be careful.
Real estate investing is not for everyone, said John Barone, who recently purchased three buildings in Arrowhead Park in Maumee and another on Executive Parkway in west Toledo.
“It's kind of a dangerous thing, because a lot of people are starting to make unwise investments in real estate,” he said. “A property needs to be bought at the right price because rents are staying the same; there's no growth in [the market].”
He added: “A lot of owners are trying to sell at prices that are too high.”