Real estate shifts to a cash flow phase

 By Jim Fried

My past columns have profiled specific guests on my show, but this month, I wanted to write about the latest phase of the region’s real estate market. It’s based on ideas that many of my guests have expressed during the last few weeks, but sometimes only shared privately.

I have been in the real estate business for over 30 years and have been involved with more than $2 billion worth of real estate transactions. My expertise is creating real estate business deals, not just managing the marketing process.

During the current real estate cycle, I have helped many real estate investment groups capitalize development transactions and sell their urban land. Now, the market is shifting from a construction phase to one focused on cash flow. Investors and lenders are seeking high-quality, predictable cash flow that’s generated from multi-tenant and single-tenant properties.

More recently, the trend is moving toward identifying cash flowing properties for my clients to buy and then helping them to finance the deals.

Well-located, well-anchored retail space with a tenant mix that minimizes exposure to sales on the Internet will continue to be the darling of real estate investors in 2016 and 2017.

Other than retail, investors and institutions continue to chase the cash flow generated by apartment projects. This product type is considered a stable investment that is not subject to the swings of the economy. Capitalization (cap) rates continue to be driven down in this asset class even though people believe interest rates may rise later this year.

A number of the family offices and institutional investors with whom I work are seeking to expand their holdings of individual apartment projects and portfolios of apartment buildings. However, they’re finding it extremely difficult to identify assets in this genre that they can acquire at prices they believe are appropriate. One family has decided to sit on its cash until the market pricing becomes more attractive.

I regularly get calls from families located in cities such as Dallas, Houston, Chicago, Boston, New York and Atlanta looking to buy in Florida, and Florida families looking to buy outside of the state. More often than not, we end up putting two families together and they blend their portfolios, market concentrations and risk profiles. This is becoming an increasingly common solution as investors continue to chase yield.

The most important part of any of these combinations is who will operate the property. The high net worth investors and families with whom we work put the potential operating partner through very rigorous due diligence prior to investing. ¿

I’ve discussed this topic in the past on my show and I expect to have numerous episodes on this in the future. To hear the opinions my guests, you can go to the archives on our website, friedonbusiness.com. You can always hear news and information on our show, every Thursday from 6 to 7 p.m. on 880 AM in Miami.

You May Also Like

Pride Week Festival Begins With Tribute to Pulse Nightclub Survivor

Miami Beach Pride’s week-long festivities will commence with a special tribute to the LGBTQ+ community honoring the victims of the tragic shooting at Pulse Nightclub in Orlando. A ceremonial “flip the switch” lighting event will illuminate the iconic 1111 Lincoln Road parking garage in pride colors as a sign of solidarity. It is the second

Surfside luxury condo sees notable sales

Arte at Surfside is making waves. There’s, of course, the news that Ivanka Trump and Jared Kushner are renting at the 16-resident luxury condominium. And there’s the December penthouse sale for $33 million. But other sales are heating up the oceanfront property at 8955 Collins Ave. developed by Alex Sapir and Giovanni Fasciano (both pictured

Up in the Air: A Discussion

In a dynamic region where residents are typically on the move, everyone is wondering about the health of the airline industry and the safety of airports and airplanes. Everyone is eagerly looking for signs about when air travel will begin to normalize. Against this backdrop of COVID-19, South Florida Business & Wealth organized a virtual

South Florida Yachting Legend Passes

Robert “Bob” Roscioli, an icon in the South Florida marine industry, has passed away. Many recognize the name Roscioli from the widely-successful and world-renowned Roscioli Yachting Center, a full service shipyard catering to South Florida’s marine industry. Bob built this business as a passion project, and because of his attention to detail and unique skill,

Other Posts

Four key steps

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] What a crazy time we are all experiencing. Right now, getting back to basics is most important. It is not and will not be business as usual right away. As leaders, you need to do the right thing to create an atmosphere of support with processes.

Pandemic adds to worries about hurricane season

An above-normal 2020 Atlantic hurricane season is expected, according to forecasters with NOAA’s Climate Prediction Center, a division of the National Weather Service. The outlook predicts a 60% chance of an above-normal season, a 30% chance of a near-normal season and only a 10% chance of a below-normal season. The Atlantic hurricane season runs from

The difference between leading and managing

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] Leadership and management are often misunderstood as one in the same. They are not. Certainly, a good leader should be able to manage and vice versa. But, it is important to understand the difference. Both are important to the success of an organization. The key difference

Flattening the housing curve in a pandemic

By Josh Migdal In the classic film Groundhog Day (and yes, it is a classic), Bill Murray’s character wakes up over and over again in Punxsutawney, Pennsylvania, reliving the same day for (presumably) eternity. Every morning, the alarm goes off at 6 a.m. playing I Got You Babe, assuring both the protagonist and the viewer