In commercial real estate we talk about linkages rather than location. This used to mean proximity to airports, other transportation hubs, population centers and highways. Now the importance of linkages goes beyond the location and extends to the global community. An auto plant is more connected to the parts suppliers and raw materials producers and the dealerships that sell the cars, than to the community of its location.
Globalization has lead to greater productivity and lowered employment. While this seems to be a sudden phenomenon, it is not. The current economic crisis has merely accelerated the process. The jobs that are lost will not come back. The labor type of jobs that have been outsourced will continue moving for cheaper production. The new plants used to just move and take advantage of cheaper labor. Now they move and take advantage of new technologies as well.
This means that the 4000 jobs that moved to Mexico, were probably replaced with 3500 jobs when they went to China and 3000 jobs when they go to Viet Nam. Each time the factory moves, productivity and production increase. Employment decreases. A new strategy will be needed to keep the world working.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
Showing posts with label location. Show all posts
Showing posts with label location. Show all posts
Wednesday, September 29, 2010
Wednesday, July 8, 2009
Location, Location, Location
New Rules for Successful Investing
1. Location, Location, Location
This is part of a series that is being posted to my website because blogs read backwards and this item needs to read forward. You may read everything published to-date at http://www.segrestrealty.com Hit the “Investment Guidelines” link.
This sounds like an old rule; but it has a whole new meaning. For retail properties is means a high traffic, good visibility, easy access location. Industrial Properties need linkages to rail and other transportation and affordable utilities and access to suitable employees. Residential, especially 2nd homes, need really easy international access. Some type of attraction must be available, such as beaches, mountains, golf courses, etc.
The location must also be considered from an environmental aspect. Beach properties need to take in consideration the possible rise of sea level and the availability of insurance. Agricultural properties need to factor possible changes in temperature and moisture. Any property that requires irrigation, should anticipate huge spikes in the cost of water. A 1 degree increase in the average annual temperature can change the suitabilility of land for a type of crop.
Political risk is also becoming more and more a consideration. How likely is a huge political swing to occur? What will be the implications of such a swing? How satisfied is the general population with the status quo? What are the rules for ownership and how likely are they to change? These are all important questions for the new investor. No one is immune to the consequences of fanatical forces.
There will, for quite a while, be a lot of properties chasing not too many currency units. Only the “necessary” properties will have good markets.
David Segrest is a REALTOR® in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com He is also a contributor on Argentina to: http://realestatebloginternational.com/
1. Location, Location, Location
This is part of a series that is being posted to my website because blogs read backwards and this item needs to read forward. You may read everything published to-date at http://www.segrestrealty.com Hit the “Investment Guidelines” link.
This sounds like an old rule; but it has a whole new meaning. For retail properties is means a high traffic, good visibility, easy access location. Industrial Properties need linkages to rail and other transportation and affordable utilities and access to suitable employees. Residential, especially 2nd homes, need really easy international access. Some type of attraction must be available, such as beaches, mountains, golf courses, etc.
The location must also be considered from an environmental aspect. Beach properties need to take in consideration the possible rise of sea level and the availability of insurance. Agricultural properties need to factor possible changes in temperature and moisture. Any property that requires irrigation, should anticipate huge spikes in the cost of water. A 1 degree increase in the average annual temperature can change the suitabilility of land for a type of crop.
Political risk is also becoming more and more a consideration. How likely is a huge political swing to occur? What will be the implications of such a swing? How satisfied is the general population with the status quo? What are the rules for ownership and how likely are they to change? These are all important questions for the new investor. No one is immune to the consequences of fanatical forces.
There will, for quite a while, be a lot of properties chasing not too many currency units. Only the “necessary” properties will have good markets.
David Segrest is a REALTOR® in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com He is also a contributor on Argentina to: http://realestatebloginternational.com/
Monday, December 15, 2008
Market Bottoms
Market Bottoms
How does one know when the market has hit bottom? Maybe there will be a small surge. Take care. This could be the “dead cat bounce”. I think most of the markets are at or near their bottom. Some activity is taking place. Neither buyers nor sellers are negotiating the way they were even a month ago. People are counting the days until January 21st.
Market “fundamentals” are important. Faith is more important. Most of us believe that when the new administration comes in things will change for the better. Our beliefs, more that the actions of the new administration is what will change the market direction. For investors who have a definite strategy, based on property performance there has never been a better time to meet goals. Commercial real estate prices are finally in line with yields. Competing investments are yielding less. Vacancies reduce NOI (net operating income). This reduces the value of the property. It increases upside potential however.
Buying properties with high vacancy rates may seem scary right now. People with courage will probably make a lot of money. Concentrate on location. Physical conditions and leasing strategies can be fixed. Location will be critical as the economy bounces back. Cautious users know they cannot afford a bad location.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
How does one know when the market has hit bottom? Maybe there will be a small surge. Take care. This could be the “dead cat bounce”. I think most of the markets are at or near their bottom. Some activity is taking place. Neither buyers nor sellers are negotiating the way they were even a month ago. People are counting the days until January 21st.
Market “fundamentals” are important. Faith is more important. Most of us believe that when the new administration comes in things will change for the better. Our beliefs, more that the actions of the new administration is what will change the market direction. For investors who have a definite strategy, based on property performance there has never been a better time to meet goals. Commercial real estate prices are finally in line with yields. Competing investments are yielding less. Vacancies reduce NOI (net operating income). This reduces the value of the property. It increases upside potential however.
Buying properties with high vacancy rates may seem scary right now. People with courage will probably make a lot of money. Concentrate on location. Physical conditions and leasing strategies can be fixed. Location will be critical as the economy bounces back. Cautious users know they cannot afford a bad location.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Subscribe to:
Posts (Atom)
