When athletes rush they lose their technique. Great coaches get their players to learn to do the right things and learn how to do them quickly. So, what approaches do sellers need to learn to move quickly?
Projected increasing interest rates have caused buyers to become more cautious in their purchasing choices, and, in many cases, sale cycles are taking more than in previous decades. For that reason, it's important to be tactical in correctly pricing assets for sale to appropriately engage prospective client interest.
The single-tenant net rental category continues to possess the largest transaction velocity and the maximum number of possible buyers looking for a trip to quality. These buyers especially want properties with new building, long-term corporate ensured leases, and internet-resistant tenants in great locations. They're also showing more willingness to get new investments nationally rather than in their local market.
STNL pricing $5 million and under stays the most consistent with the smallest separation between asking and final sales price due to this group having the most significant buyer pool and being less reliant on financing. However, the depth of formal supplies submitted from this buyer pool has begun to shrink. Typical listings are creating an average of five offers or less in contrast to about five to ten offers 18 to 24 weeks ago.
STNL assets priced $5 million and greater have observed similar results but are undergoing longer marketing periods to secure a purchaser as a result of vendors' rearview mirror pricing expectations, rising interest rates, and the simple fact that most buyers need financing to innovate. Institutional buyers are approximately 30 basis points to 50-plus basis points higher on pricing compared to private investors. The gap between requesting and final sales cost has widened in this category.
Demand stays through the roof for grocery-anchored investments, that have traditionally been considered a safe harbor for both private and institutional investors. Watch for institutional buyers to take a look at markets outside their typical criteria due to the lack of quality opportunities. Well-located properties with daily wants and internet-resistant tenants with renewable market rents are still key acquisition criteria characteristics. Prospective buyers are carefully assessing these types of assets in which a grocer is not the top performing store on the sector or a grocer has transitioned into a second-tier alternative from the marketplace area.
Break Up Revenue Plan
As demand and pricing for non-core grocery-anchored shopping centers continue to slowly decrease, a break-up sale will help provide an owner with better overall proceeds. By purchasing a shopping center in bits, a seller can realize a better value in contrast to selling the whole center as a whole. Furthermore, the pricing of different, smaller offerings, generally appeals to a far larger buyer pool. For instance, over the previous year, Hanley Investment Group sold six pad buildings inside a Walmart-anchored shopping center that resulted in roughly 100 basis points more in total value when compared with the centre being marketed as a single property.
Success is where preparation and opportunity meet, so looking ahead to 2019, think about being quick, but don’t rush!