Dearth of Opportunities for Investors in Area Real Estate Market

In a released statement from NAIOP, seminar moderator James F. McCaffrey, a principal at Trammell Crow Company, notes that there are three primary areas of opportunity in this area. He points to locations in the city's central business district but points out that the competition is tight there. Corporate lease-backs are another way to invest because most corporations here have some extra space. He also identified a number of projects that have solid yields but adds that there aren't many and they are well known. McCaffrey acknowledges that investors are holding about $17 billion in capital but are waiting on the sidelines for signs of stability or great bargains.

But while investors are looking for something to invest in here, NAIOP president David Begelfer insists that it does not mean the real estate market here is in bad shape. ""We are far from the days where real estate companies are going out of business," he tells GlobeSt.com. "We are having a bit of a downturn but that can be helpful." He notes that a lot of the sublet space is occupied or at least being paid for and he believes there will be investment opportunities in the near future.

The problem is, says Begelfer, investors have money to invest but not all sellers have dropped their prices. "There is a lot of money out there that very much wants to invest in Boston and the suburbs but owners don't feel that they're in any shape to sell. They are willing to wait it out," he says. Begelfer thinks that some properties will fall in value and high vacancies may make them "ripe for purchase" but the drop hasn't happened yet. "It's dismal in the sense of opportunity and uncertainty with subleasing but many owners were able to achieve high rents and they can weather this," he says.

While most at the seminar concluded that it will take at least a year for the economy to recover, Begelfer notes that the real estate market will lag for an additional six months. "There will be opportunities for investors," he says. But meanwhile, he says, others are looking to other geographic locations. "Some can't sit and wait. They have funds raised and they need to go out there and buy so they will look at the broader market."