Commercial Real Estate News, Denver, Colorado

[00:00:00] This week's Listener of the Week is Jen, loves CRE. Jen, DM us your home address. And for all of you listening, if you leave us a five star review below, you might be next week's Listener of the Week. Now, this is a fair question. What in the world is actually going on with commercial real estate right now?

Maybe you've seen, uh, online or on TV that the market's crashing, but then you'll hear my podcast and I, you hear me saying the exact opposite. I'm going to dig in today on what it looks like here in Denver, Colorado, transacting commercial real estate. State, state, state. So, here's the deal. Different product types are thriving while others are suffering.

So, industrial is doing really well. Outdoor storage is doing really well. Labs are doing well. [00:01:00] Small retail, second generation restaurants are doing really well. Multi families doing really well. Now on the other side of that coin, there are some product types that are hurting, for certain. Office space, not a pretty picture right now.

Uh, big box retail, sure doesn't tickle right now either. Uh, but... It's really important to understand that these changes do not mean we have a multi quadrillion dollar industry about to topple. It's the reality of essentially fluctuations in the economy, which is normal, and the industry as our needs as a society changes.

Now, that's one pillar of the big picture of what's going on in commercial real estate. in 2023. The other side of that coin is the banking industry. [00:02:00] So right now it's July 2023 and banks are really afraid. I'm going to be very honest with you. Banks are being extremely conservative about their lending, if you can even get a loan from a bank.

Um, That is not to say you can't get deals done, but it's something to keep in mind that if you're an investor and you're planning on buying a commercial property with 20% down, it's not going to be like it was a year ago or two years ago. Banks are looking for way more strict, uh, Better lease terms. It's extremely difficult, if not impossible, to get a lease on a building that's vacant.

Banks need a compelling reason in this economy to loan on a property, because [00:03:00] ultimately when the bank lends on a property, they own the property. And they want to make sure that they're doing rule number one that I always talk about. The banks don't want to do a dumb deal. So... Everybody thinks that commercial real estate is on the verge of collapse, and I completely understand it.

There's a lot of for lease signs, there's fear mongering in the media, there's uncertainty in the economy, right? There is the perfect storm for an adjustment, and it's happening, but it's not crashing. And save your condolences for your local commercial landlord. They're probably going to be okay. So I want you to think about this.

First and foremost, negativity shines way brighter than positivity. So, and I've noticed this personally, like on my social media, I'll post something [00:04:00] and I'll get 10 posts and it'll be nine nice posts and one. I telling me, you know, the industry is crashing and to eat Ss and die. Oh my gosh. I'm not used to censoring myself.

Anyway, those negative comments, thoughts, that is propelling this, the industry is crashing narrative, which is just, um, not, not real. It's not the, the true narrative. So, Instead of looking at commercial real estate in a negative light, right? The media says it's crashing. It's really important to understand that the other side of that coin is it is the most opportunistic time right now to buy commercial real estate and there are ways to do it if you operate creatively.

Who would have thought? You know, when I went into commercial [00:05:00] real estate, I thought it was going to be very black and white and what I learned was that it's a very creative sport. You need to exercise elements of creativity to get a deal done and you better embrace it because no deal is the same. Every deal is different.

You wouldn't believe the creativity I've seen to get deals through a finish line. I was at happy hour with a client a couple... Weeks ago and the client's father had passed and we were talking about properties the father had bought well. And he said, man, my, my dad bought these properties super well in 1986.

And I was with my father at the time who was buying real estate in the 80s. And my father, Izzy, what's up dad? Said. Oh, well, that's because the [00:06:00] oil and gas industry crashed in Colorado in the 80s, property was going for very inexpensive and your father saw that opportunity, swooped in, bought it and crushed it.

So it's really important to understand that when you see these fluctuations in the market, it's. Nothing but opportunity for a savvy investor, right? Because the masses are going to go along with the fear mongering. The masses are going to read the comment that says, Commercial real estate's crashing. But the reality is that commercial real estate is extremely cyclical.

Historically, it performs... Very well. And look at what happened after the last real estate crash we had in our country. Not that long ago, 15 years ago. [00:07:00] Pricing on real estate since the last real estate crash has literally gone through the roof. So, if the real estate market does crash, if it's anything, you know, history repeats itself, if it's anything like last time, it's the best opportunity to buy.

And it's going to accelerate in value again, right? Look at, you have to look at history to see what's coming next. So, what can you do to prepare? First and foremost, get creative. Put your colorful pants on because it's time to party. How can you get creative? I'm seeing... This is probably the best and biggest opportunity in your life to get seller financing done.

What does that mean? That means, instead of the bank, the seller plays the bank. And this can benefit them and you. Why? Say I, I'm [00:08:00] a, I own a million dollar warehouse and I sell it to you. Well, I'm going to pay 35% in taxes to Uncle Sam on my capital gains. But if we decide to sell or finance it and you put down 20% and pay me over 10 years, all of a sudden I'm not paying 35% of my capital gains this year.

I'm paying far less. Over a longer period of time, so seller financing can actually be very favorable to both the buyer and the seller. And I am seeing seller financing deals going out the gate like I've never seen before. People are getting creative. People are getting inquisitive. And I'm going to be honest.

I have seen the craziest, most outlandish offers in the last nine months that will make... [00:09:00] Your head spin, and that's okay because deals are still out there. Deals are still going to get done. There are people who are going to need to have an emergency sell or need to buy, right? Like I said, don't pull out your tissues yet for your local landlord.

The industry is not crashing. It's just adjusting. And the way you get ahead is by first off recognizing that Getting creative, staying liquid, and committing. Committing to doing it. Committing to push yourself forward. It's scary, right? It's the biggest transaction of your life. But, to me, what's scarier is not doing it.

What's scarier to me is regret. Looking back and thinking, oh, I should have done that. Right? And if you're [00:10:00] here at this point, episode 19, we're almost 11 minutes in to Commercial Real Estate Secrets. You feel the same way, right? We're all in the same boat. We all want freedom to travel. We want to leave legacy, generational wealth for our family.

So, stay curious, stay liquid, keep educating yourself. And, uh, strike when you feel it. Listen to your intuition. Listen to your gut. I talk to investors who tell me, I'll pull up to a property and know it's the one. Listen to that voice. Because generally that voice is correct. And don't let anybody tell you it's not.

So, what questions can I answer for you? DM me at Aviva Real Estate. If you want to get started in commercial real estate, I have a free guide in the show notes below. [00:11:00] Click it, download it, let me know how you like it. And next week, we're wrapping up season two of Commercial Real Estate Secrets with the best commercial real estate investment to own, lease, manage, and maintain is, we'll see you next week.[00:12:00] [00:13:00] [00:14:00]