The Commercial Real Estate Landscape Part 2

Two Major CRE Decision Makers

There are two major CRE decision makers which are:

Users - Need assistance to operate business.

Investors - want to own the asset to produce cash flow.

Real Estate Market Cycle

The real estate market cycle has 4 distinct phases which are:

Phase 1: Recovery - Market is in the troth of the cycle. State of over supply and lack of demand.

Phase 2: Expansion - Need of additional space.

Phase 3: Hyper  - Over built, supply begins to outstrip demand. Vacancy rates begin to rise and rental growth slows down.

Phase 4: Recession - Falls below the average point. Vacancy increases and rent decreases further till  the market bottoms out and the cycle starts all over again.

Capital Markets

There are a variety of differ capital markets and they are split into different categories:

Private - Equity – Individuals - Personal Investments, Pension funds, Insurance companies and Hedge Funds

Private - Debt – Commercial banks, Insurance companies and Pension funds

Public – Equity- Equity REITS

Public - Debt- CMBS ( Commercial Mortgage Bank Security) and Mortgage REITS

Daniela Peeva, B.A.(hons), LLB

Commercial Mortgage Specialist

2005 Sheppard Avenue East, Suite #200

Toronto, ON M2J 5B4

Tel: (416) 499-5454 ext. 101 | Toll free: (866) 705-4447 ext. 101 | Cell: (416) 879-7404

[email protected] | [email protected] | www.macommercial.ca