Investment real-estate sales on fast track

8/10/2004

With interest rates climbing, many investors have decided now is the time to sell their commercial real estate properties, spurring so many transactions that this year's sales could be the most in more than a decade, say local real estate agents.

John Aubry, president of the investment real estate brokerage firm InvesTek Real Estate in Perrysburg, said, "This is one of the hottest investment real estate markets we've ever seen."

Mr. Aubry's firm tracked investment deals in the Toledo area through July totaling nearly $118 million, or only $43 million off the $161 million in transactions completed for all of last year. That number was the highest recorded in at least a decade.

This year's figure is already more than the $80 million in transactions completed in all of 2000.

The deals involved apartments, hotels, shopping centers, office buildings, and factories.

"We have owners who believe the time is now right to sell their properties to achieve maximum value," said Mr. Aubry.

The activity is driven by interest rates.

"Investors have seen that the interest rates have bottomed out and they'll be moving up, so property values will stabilize or come down," said Mr. Aubry.

Nearly $40 million in apartment buildings changed hands in the first seven months of this year, but almost equally active was the retail seg-

ment.

In that was the $16.8 million sale of Starlite Plaza on Monroe Street last month, as well as separate transactions involving California investors who spent $7 million for the Food Basics store on Cherry Street and slightly more than $4 million for a drugstore on South Avenue.

Harlan Reichle, managing director of CB Richard Ellis, Reichle Klein in Maumee, said higher interest rates are not likely to deter avid buyers, who have been eager to find more property for sale.

"The investment property transactions in the area in recent months could have been twice as high if there [was] more product to sell," said Mr. Reichle, who specializes in investment transactions.

Burned by the stock market in recent years, many baby boomers have decided real estate is the safest investment they can make, even though rental rates have been stagnant for years and vacancies have been climbing, especially in multifamily apartments, said Mr. Reichle.

"People willing to buy today are willing to overlook the soft fundamentals right now because they figure the properties will start performing down the road," he said.

Pete Shawaker, the partner in charge of the investment division at Michael Realty Co. in Toledo, agreed. He predicted rental rates will rise as the economy gets stronger.

"I do not think anyone's going to be in trouble," Mr. Shawaker said.

Stephen Welly, president of Rudolph/Libbe Properties in Sylvania Township, said: "I don't see the market slowing down."

An offer has been submitted for a strip shopping center in Findlay that his company just started constructing, he said.

"Any time we have a good investment to put on the market, there's substantial amount of activity, provided the location is good, the tenants are solid, and the [rate of return] is reasonable for the type of investment," Mr. Welly said.

Contact Mary-Beth McLaughlin at:

mmclaughlin@theblade.com

or 419-724-6199.