Sam Kartalis

The year in commercial real estate started off well, with a huge increase in the volume of both leases and sales. Based upon our business and in talking with my peers, I would say at least an increase of 20 percent, but probably more.

Certainly the multifamily market remains heated, with cap rates remaining low, keeping values very high.  Fortunately or unfortunately, depending upon whether you’re a buyer or seller, prices are high. Still, most prices work because the cost to borrow money is very low—an all time low.

Now, if you’re a buyer at these very high prices (low cap rates), what happens when cap rates go up? Notice, I didn’t say “if” they go up—they will go up! When? When interest rates start increasing. As always, the key is when to buy and when to sell. Make certain you have a seat when the music stops.

As usual in Texas, the “Solstice Recession” (temporary) hits us every summer when commercial real estate takes a vacation and heads out of town to beat the heat. When calling or emailing a client, all you get are messages reminding you that the party is out of town. Friday afternoons at the office are for only a few dedicated souls and those who have to make payrolls.

In the meantime, a lot of retail space is being absorbed (there’s a lot out there), and I hear retail developers talking new developments with major retailers finally considering expansion again.

The best news is that the banks are lending aggressively for good deals, and a lot of money for equity is available on the sidelines. Take advantage of it while the rates are at historic lows.

Sam Kartalis is president and chief operating officer of Henry S. Miller Realty Services LLC. Contact him at sam@henrysmiller.com.