Lenders No Longer in Panic to Sell

MIAMI—Multifamily is still the darling of commercial real estate, even as buyer and seller attitudes are improving. But could that change?

We caught up with Dennis Bernard, a partner of Strategic Alliance Mortgage, LLC and the founder and president of Bernard Financial Group, to ask him about how attitudes are shifting. If you missed part one of this exclusive interview, click here to check it out.

GlobeSt.com: What particular sectors are more or less active and why?

Bernard: Since it's commercial real estate, it depends on where. Overall, multifamily continues to be a leader in value creation and growth. In many of the markets we are in, we are seeing tremendous activity in certain submarkets for industrial. Office continues to be soft due to the high vacancies and costs associated in lease-up.

Retail is really all about the old adage of location, location, location. Retail is strong in the right locations. The big boxes may continue to see some stress this year to due to several of the large boxes closing underperforming stores nationally.

GlobeSt.com: How have buyers' attitudes or strategies changed over the past 18 months? And how are they likely to change throughout the course of the year?

Bernard: The attitude of buyers continues to improve. This is being helped by the slow improvement in the economy, cheap and available capital, an abundance of lender disposed real estate and boredom.

By nature, real estate developers and owners are entrepreneurial and aggressive. They have been sitting on their hands for several years, and now that some regularity to the commercial real estate markets is returning, they are once again looking to create value and that means buying.

GlobeSt.com: How have sellers' attitudes or strategies changed over the past 18 months? And how are they likely to change throughout the course of the year?  

Bernard: The biggest change has been with the lenders. There is no rush or panic to sell. They are working more on stabilizing their assets and then marketing them. Volume on the action sites are dropping. Also, sellers are looking for significantly higher value and return then just six to 12 months ago. They know that if they have strong commercial real estate, coupled with the cheap money—both debt and equity—they can push cap rates down.

GlobeSt.com: In what areas is your firm focusing its energies and why?  

Bernard: We are very focused on all forms of debt and equity placement. Our volume this year will be twice what it was last year, which was twice what it was the year before. We will continue to focus on value opportunities from our sizable servicing portfolio for our better borrowers.