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Six Ways Investing in Real Estate Can Save You Money

In Buyers, Commercial Real Estate, florida, Investing, Investor, IRS, miami, miami beach, Miami-Dade County, Multi-Family Real Estate, real estate, Roth-IRA, Self-Directed IRA, Sellers, tax deductions, Tax Matters on May 10, 2013 at 1:28 pm

There are many investment vehicles. Stocks, bonds, art, coins, postage stamps, toys, commodities and real estate, among others.

Some economists even suggest that as long as you are disciplined and can comfortably pay for it, you should buy any investment you can. If you can finance the purchase, even better.

However, real estate is probably the only one against which you can borrow and have the asset pay itself off through rental income, EVEN as it pays YOU.

In fact, I have spoken to property owners who have managed to leverage a property two, even three times in their lifetime, by borrowing against the property they now own free and clear, to buy another.

What’s more, the income from the new property (let’s call it property B), paid with borrowed funds from say, property A, plus the income they still generate from that newly leveraged property A, can over time, pay back the loan on A from rent collections on A and B, while proving the owner with a boost in passive income. In other words, party money.

Even if you can purchase property in cash, many recommend you consider financing after the fact. Leveraging allows you to possibly, acquire two or more properties, update or fix them up and let themselves carry the burden of paying down the loans with rental income.

Over time, you would have the ability to acquire even more properties and eventually, when you are at the right stage in your life, own them all free and clear while enjoying all that income in retirement. The ultimate 401K or IRA.

Of course, you must buy right and be disciplined throughout. With every payment received in rents, you must set aside a portion every month to pay for licenses, taxes, insurance maintenance and miscellaneous repairs, improvements, etc. In short, you must budget as you would with any business.

Below, we examine some of the advantages for owning investment property and in particular, multi-family property.

1. Economies of Scale

When you buy a single family house or condo unit, small investors often feel they’re easy to manage. That may be true to some extend. On the other hand, consider that with a multi-family building, you only deal with one roof and/or one yard to mow, you are the board that approves tenants or how many times a year you rent your property and in one single trip, you can fumigate, inspect and have a punch list ready for your handyman, plumber and/or electrician to take care of, minimizing headaches.

2. Lower Taxes

There are several tax incentives for real estate investors. If you are employed, deductions from real estate investments may be used to offset wage income. In addition, there are a number of tax breaks for real estate investment which often allow property owners to turn a loss into a profit. Deductions can include any actual costs involved in financing, managing and operating the property, to include maintenance, repairs, property management fees, travel, advertising, and utilities. In addition, the IRS allows a depreciation deduction that accounts for a portion of the building (not the land portion of the property) over time, usually some 27 years.

3. Cash Flow

A property can generate negative or positive cash flow. Cash flow simply refers to the amount of money that flows in and out in pursuit of maintaining a property. Rents are an example of cash flowing in while taxes and insurance must be paid out, typically from a portion of the rents received. When the amount of income received exceeds the payments, it is said you have a positive cash flow. There are times when the amount of payments exceed your income and in these cases, you are said to have a negative cash flow. Regardless, when it comes to real estate investment, there are two more important concepts involved: pre-tax and after-tax. A pre-tax positive cash flow for instance, may also be said to occur when income received is greater than expenses before taxes are paid. However, even if your are experiencing a negative cash flow, you may end up with an after-tax positive income when your expenses are more than your collected income, but the tax breaks bring you back in the black. Depreciation can often help turn a negative into a positive.

4. Use Leverage

An old rule of thumb in real estate is to never spend a dime on your real estate investment unless you have to and/or unless it will save you money. Leverage is an important aspect of saving money through real estate investment because a real estate investor uses leverage to increase their assets without spending their own money. By taking advantage of your equity, you also improve your return on equity and it provides you with tax-free funds to help fund your next deal or improve the value of your existing property by making updates, upgrades or repairs that entice tenants (to come in or stay) and should allow you to raise rents and improve your bottom line.

5. Equity Growth

The best way to save money and earn money, is to build up equity from real estate investments. That way, with high equity you are able to save on your mortgage while earning a nice chunk of profit. However, idle equity is like idle funds in the bank. Ideally, you are always utilizing your equity to improve the value of the property and/or pursuing and acquiring new opportunities. Often, selling is a great way to take advantage of existing equity, which would allow you to reposition yourself in a potentially better property with better opportunities. For instance, you may own a building sitting on prime land which may allow you to build a much larger structure for more potential. However, you are not a builder and you’re not in the mood to start. Even if that property is making money, selling it may bring enough to allow you to purchase a more suitable property or properties.

6. The Benefits of Inflation

Generally speaking, inflation can help you save money on your real estate investment because as rent increases, your mortgage costs will remain static (assuming it is a fix-rate loan), which means you will improve your position with the increased cash flow from the rent and equity growth. Although inflation is quite low these days, there is a typical amount of appreciation properties experience as a result of even low inflation, which adds to your equity without a single penny out of pocket.

Of course, it is not all rosey with real estate investing. There are a LOT of factors that deter people from getting involved. It is scary, you could lose a lot if you engage from an emotional standpoint and there are headaches and horror stories borne from bad tenant situations to fill a few books.

Regardless, I reiterate that if you buy properly, budget properly and stay involved, you may never have to worry about money when it counts – throughout the live of the property and during your retirement. What could be more beautiful than that?

Most real estate professionals can help a buyer or seller make the right buy or sell decisions. Obviously, as you would listen to a quality attorney, doctor or accountant, listening to a quality real estate professional’s valuable information will go a long way in helping you achieve your buying or selling goal. Budgeting however, is a function of habit and here again, you must proactively seek qualified, quality, professional advise.

Miami-Dade County – Mid Year Real Estate Report

In bank-owned properties, Buyers, closing, Commercial Real Estate, credit, Distressed Sales, First-Time Buyer, florida, forclosure, foreclosure, government, HAFA, Home Buyer, home sellers, Industry trends, lenders, Market Report, miami, miami beach, mortgage, Multi-Family Real Estate, new rules, real estate, REO, Sellers, Short Sales, tax credit, Trends on July 11, 2010 at 10:45 pm

Wow…the last 18 months have been a roller coaster ride in Miami-Dade county. Click Facts & Trends Report – June2010 to view full report and follow along.

With a drop in inventory of almost 34% since January, 2009 to an increase of 62% in Closed Sales in the same period with Pending Sales accounting for almost 80% more properties under contract, pointing to a great recovery. All this with slightly more than a 1% increase in new listings, one could ALMOST say we’re out of hot water. Until we look at more recent figures, that is.

True, year over year numbers still reflect quite a positive story considering what happened after the market collapsed. However, inventory for sale dropped only by 18% or almost by half as compared to the 18-month period. In addition, there are over 24% new listings in the system these days from June 2009 (compared to the easily ignored 1% in the 18 month period), and a drop in closed sales of almost 2% year-over-year, coupled by a much less than robust 20.3% of new pending sales from prior June’s numbers (as compared to the 79.5% increase in the 18 months since January, 2009.

Between May and June 2010, inventories increased for the first time in the entire 18 months (actually…for the first time since September 2008), by 2.1% to 24,150 units, while new listings jumped by 9.4% to 5,634 units. Closed sales however, increased by a measly 0.2% while pending sales went up by only 6.7% between May and June, 2010.

Based on Closed Sales, Months of Inventory dropped by 59.1% in 18 months (a drop from 30.4 months down to 12.4), and dropped by 16.3% year over year, only to jump by 1.8% (up from 12.2 months), from May to June, 2010. This type of activity has cased a substantial and noticeable change in the absorption rate, which deteriorated from a 144.2% increase in the 18 month period (from 3.3 units to 8), to a disappointing 19.4% between June 2009 and June 2010, and a drop of 1.8% from 8.2 in May.

At this pace, with stimulus no longer incentivising sales, interest rates not getting folks off the fence (not even to refinance at today’s 4.5% rates (not seen in about 60 years!), employment (or lack of), weighing on peoples minds, a mounting national debt, increase mandates for health care and the addition of thousands of IRS agents to ‘chase’ folks…it’s no wonder people may be scared and unmotivated by real estate.

This is quite sad because, prices in Miami right now are low enough that would make it cheaper to buy than to rent for the first time in years. The average list price of properties in Miami has dropped in recent months and was quite neutral over the 18 month period from January 2009 ($519,000) to June 2010 ($522,000), for a meager 0.6% increase. Compared to the year over year figures between June 2009 and June 2010, when the average price of a property for sale dropped by 4.6% (from $547k down to $522k) and by 2.8% between May and June, 2010 from $537k to $522k.

While the price of properties for sale was dropping, the price of properties sold was increasing as follows:

Chart

Closed Price trend


This trend of increased closed prices has been a reflection of the highly competitive market we are faced with. REO sellers are finding multiple cash offers, forcing the bottom to rise once more. With average Sold Price increasing by 17% in 18 months, sellers were beginning to see a light at the end of the tunnel (not a train coming for a change), buyers were beginning to feel the frustration of under bidding.

Serious buyers have been snatching bargains in Dade county because they have been aggressively competing for the low hanging fruit. Those REO / foreclosed properties banks were under-pricing in order to attract buyers and quickly sell their inventory. This tactic easily explains in part the drop in prices for properties for sale and the increase in sold inventory. Regular sellers and Short sellers also have had to adjust.

But with banks opting for foreclosure avoidance and more short sale negotiations using one of the HAFA programs now available, they’re also saving time, money and court costs, jams and errors by simply negotiating to avoid a foreclosure. In addition, there are laws lenders must now adhere to when they take a property back in foreclosure, which forces them into additional county and/or city compliance issues (like Miami-Dade’s Certificate of Use).

Nonetheless, the Median Price for sold property in Miami-Dade has dropped by 8.2% in 18 months (from $164k to $150k), by 6.2% from $160 in June 2009. It then dropped by as much as to $140k in February, 2010 before going up again to $160k in May and now, back down to $150k (another 6.2% drop but this time, not in a year’s time but in one month!). This places today’s Median Sold Price at $150k back down to levels not seen since about April, 2002! That was more than 8 years ago, in case you were wondering….

Overall…charts for the last 6 months can be seen Facts & Trends Report – 6Months ended June2010

So what does it all mean to YOU? Who knows! What does your Chrystal ball say? Will interest rates remain low, will hours work improve so that fold start to work regular hours again? Will wages increase and unemployment drop? Will the national deficit, debt and trade improve in the weeks and months ahead? Will the impact on new taxes, natural disasters, man-made disasters, continue to erode your way of life?

Will the government continue to dress up the CPI or measure of inflation (which compares prices of a basket of goods from period to period), begin to notice that items not listed in the CPI’s basket of goods are in fact increasing as told by your grocery bill any time you buy items not in that basket (I mean…aren’t meals at fast food restaurants costing more than a year or two ago? I think so), will real estate bring us out of this recession or are we headed into a double dip recession due to wars, taxes, health care, impact fees on pollution and other cost passed on to consumers? What about politics? Will November’s elections effect any positive change or will create no change at all or even make matters worse?

In my humble opinion…we have been doing great in Miami-Dade. There is just too much noise and confusion to properly read the future past today or even tomorrow. Changes in laws, politics and everything in between and not even related to them are coming as fast as lightning, giving business and folk few ways to find niche opportunities and have the time to recognize the brakes, devise a plan and execute it to any lasting degree. If you are not nimble enough to recognize change and implement a plan of action PRONTO…you are likely to miss the boat.

Rentals have continued to be difficult to gauge, for example. It used to be you could pretty well predict what rent values would be worth in a few year’s time, helping investors find buying opportunities and figure out cap rates and ways to improve property values with some changes. Now, this seems to be no longer possible without a long-term plan. Unless you are willing to invest today knowing that the likelihood of the property’s value improving over time is historically high, you may be quite reluctant to enter the market today.

If you are a renter considering whether to buy real estate or wait…I could quote an old real estate adage: Don’t wait to buy real estate…buy real estate…and wait. Specially with prices as low as they were more than 8 years ago and interest rates as low as they were some 60 years ago! Really! Why wait?!

The same goes for those in distress. Yes, property values may go up in the months and years ahead. This does you NO good if you cannot wait. Get out from under that cloud and in as few as 2 to 3 years, you may even qualify again as a first-time buyer, able to buy using an FHA loan program, hopefully at still attractive rates.

Investors on the other hands are finding it better to pool funds and either buy notes or buy in bulk. Flippers are finding the bottom market become a difficult, murky water to be in. However, opportunities abound and will continue to be seen in the luxury market (at least over $500k). Some of these properties can be acquired at substantial discounts from their high. With the right formula, and access to money, deals can still be made, all with more zeroes.

If you are curious about the state of a particular area in the county, let me know and I can create charts for that area for you (even for some buildings).

Expected improvement in rental market giving positive outlook to multifamily market

In Buyers, Commercial Real Estate, Distressed Sales, florida, Leasing, miami, miami beach, Military, Multi-Family Real Estate, real estate, Roth-IRA, Self-Directed IRA, Sellers on June 11, 2010 at 4:31 pm

Multifamily builders less pessimistic

WASHINGTON – June 11, 2010 – The multifamily market showed signs of moving toward stability in the first quarter of 2010, according to NAHB’s Multifamily Market Index (MMI). The current production index for market-rent apartments jumped to 30.6 – 14 points higher than a year earlier – while future demand expectations for Class A apartments rose to 49.6 from 34 and for Class B to 53.1 from 43.9. For lower-rent units and for-sale condominiums, the current production indexes rose to 38.2 and 25.0, respectively – more than 10 points higher than in the first quarter of 2009.

The MMI measures multifamily builder sentiment based on production and occupancy at the current time as well as builders’ expectations for conditions over the next six months. An index number greater than 50 indicates that the number of builders who view conditions as getting stronger outnumber the number who view conditions as becoming weaker. The values are not seasonally adjusted.

The current demand index for Class A apartments – among the hardest hit by the recession ¬– also showed improvement, rising to 41.7, or 19 points higher than a year earlier. The index measuring demand for Class B apartments rose to 43.4, up seven points. Demand for Class C apartments – the least expensive, and the most likely to stay occupied during hard times – actually showed a slight decline, falling about two points to 43.1.

Builders’ expectations for future production, though improved from a year ago, are still constrained by the difficulty in obtaining loans to fund development. Condo starts showed the lowest expectation for increased starts at 32.7. The future production index for lower-rent communities is 45.1 and for market-rate rent communities 43.5.

“The most encouraging part of the MMI is the number of multifamily builders expecting gains in rental occupancy over the next six months,” says NAHB Chief Economist David Crowe. “Builders’ optimism is directly related to recent positive employment news and expectations for the trend to continue. Current conditions are still depressed by multifamily builders’ difficulty obtaining financing for acquisition, development and construction.”

Reprinted by Permission: © 2010 Florida Realtors®

Crist approves $25k bridge loan for businesses – how to apply

In Commercial Real Estate, credit, Distressed Sales, florida, Florida Legislature, government, Grants, Industrial Real Estate, miami, miami beach, new rules, real estate on June 8, 2010 at 2:40 pm

Crist activates emergency bridge loan program for businesses

TALLAHASSEE, Fla. – June 8, 2010 – In an effort to assist businesses impacted by the Deepwater Horizon oil spill, Governor Charlie Crist activated Florida’s Small Business Emergency Bridge Loan Program, which provides emergency, short-term loans.

The program applies to small businesses in Escambia, Santa Rosa, Okaloosa, Walton, Bay, Gulf, Franklin, Wakulla, Jefferson, Taylor, Dixie, Levy, Citrus, Hernando, Pasco, Pinellas, Hillsborough, Manatee, Sarasota, Charlotte, Lee, Collier, Monroe, Dade, Broward and Palm Beach counties.

“Though BP may be the responsible party, we will continue to help ourselves by being proactive in supporting Florida businesses and families,” says Crist.

The Florida Small Business Emergency Bridge Loan Program provides a cash flow to businesses physically or economically damaged by a major catastrophe. The short-term loans help bridge the gap between the time the catastrophe hits and when a business secures other resources, including profits from a revived business, payment of claims or longer-term loans.

Crist allocated $5 million from general revenue to fund the bridge loan program. The appropriation is made through a budget amendment pursuant to the governor’s emergency declaration.

Florida’s Small Business Emergency Bridge Loan Program was first activated in the aftermath of Hurricane Andrew. Since then, the program has minimized the economic impacts of the Winter Storm of 1993, the Northwest Florida Floods of 1994, and Hurricanes Opal, Georges, Charley, Frances, Ivan, Jeanne, Dennis and Wilma.

Short-term loans of up to $25,000 will be available to owners of small businesses (less than 100 employees) in counties impacted by the recent oil spill. The interest-free loans come with 12-month maturities. To be eligible, a business owner must have been operational for one full year prior to the Deepwater Horizon oil spill on April 20, 2010, and demonstrate physical damage or economic injury as a result of the oil spill.

Applications for businesses will be available Monday, June 14, 2010. To receive an application or more information on the program, contact the governor’s Office of Tourism, Trade, and Economic Development at (850) 487-2568 begin_of_the_skype_highlighting (850) 487-2568 end_of_the_skype_highlighting, or the Florida First Capital Finance Corporation (http://www.ffcfc.com) at (850) 681-3601 begin_of_the_skype_highlighting (850) 681-3601 end_of_the_skype_highlighting.

The Emergency Bridge Loan program is in addition to a federal loan program approved by the U.S. Commerce Secretary on May 14, 2010. The federal Economic Injury Disaster Loan can help eligible small businesses meet the necessary financial obligations they could have met, had the disaster not occurred. Interest rates for businesses and small agricultural cooperatives are as low as 4 percent, and for non-profit organizations rates are as low as 3 percent, with terms up to 30 years. Affected business owners can visit the Small Business Administration website for more information on this program at http://www.sba.gov/services/disasterassistance.

Reprinted by Permission: © 2010 Florida Realtors®

Florida real estate news – is a true trend in motion?

In bank-owned properties, Commercial Real Estate, Distressed Sales, fannie mae, FHA, First-Time Buyer, florida, forclosure, foreclosure, government, HAFA, HAMP, Home Buyer, home sellers, HomePath, HUD, Industrial Real Estate, miami, miami beach, Multi-Family Real Estate, NAR, real estate, REO, Sellers, Short Sales on March 14, 2010 at 6:31 pm

ORLANDO, Fla. – Feb. 26, 2010 – Florida’s existing home sales rose in January, marking 17 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®.

Existing home sales increased 24 percent last month with a total of 10,465 homes sold statewide compared to 8,444 homes sold in January 2009, according to Florida Realtors.

January’s statewide sales of existing condos rose 81 percent compared to the previous year’s sales figure.

Sixteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in January; all MSAs had higher condo sales. A majority of the state’s MSAs have reported increased sales for 19 consecutive months. “Now is the time for anyone thinking of buying a home in Florida to make that decision,” said 2010 Florida Realtors President Wendell Davis, a broker and regional vice president with Watson Realty Corp. in Jacksonville.

“Markets across the state are seeing increased sales, yet conditions remain very favorable with still-low mortgage rates, a range of housing inventory and attractive prices. As an added incentive, buyers need to accelerate their plans because a purchase contract must be in place by the end of April to take advantage of the extended and expanded federal tax credit.

To find out more, consult a Realtor about options, qualification criteria and opportunities in your local housing market.” Florida’s median sales price for existing homes last month was $130,900; a year ago, it was $139,400 for a 6 percent decrease.

Analysts with the National Association of Realtors (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in December 2009 was $177,500, up 1.4 percent from a year earlier, according to NAR. In California, the statewide median resales price was $306,820 in December; in Massachusetts, it was $305,000; in Maryland, it was $244,820; and in New York, it was $222,000.

According to NAR’s latest outlook, homebuyers are taking advantage of the federal tax credit. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices,” said NAR Chief Economist Lawrence Yun.

In Florida’s year-to-year comparison for condos, 4,631 units sold statewide last month compared to 2,554 units in January 2009 for an increase of 81 percent.

The statewide existing condo median sales price last month was $97,300; in January 2009 it was $113,300 for a 14 percent decrease. The national median existing condo price was $183,700 in December 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.03 percent last month, slightly lower than the average rate of 5.05 percent in January 2009, according to Freddie Mac.

Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written. Among the state’s smaller markets, the Fort Walton Beach MSA reported a total of 143 homes sold in January compared to 118 homes a year earlier for a 21 percent increase.

The market’s existing home median sales price last month was $201,400; a year ago it was $188,300 for an increase of 7 percent. A total of 70 condos sold in the MSA in January compared to 25 units sold the same month a year earlier for an increase of 180 percent. The existing condo median price last month was $270,800; a year earlier, it was $268,800 for a gain of 1 percent.

Reprinted by permission: © 2010 Florida Realtors

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For more information on local Miami/Miami Beach, Surfside, Sunny Isles, Downtown Miami, Biscayne Corridor, Brickell, or Coconut Grove contact me today.

Commercial Real Estate owners need to hang on….

In bank-owned properties, Commercial Real Estate, Distressed Sales, florida, forclosure, foreclosure, Industrial Real Estate, lenders, miami, miami beach, mortgage, Multi-Family Real Estate, NAR, Office Space, real estate, Retail Space, Short Sales, SIOR on February 24, 2010 at 4:06 pm

No meaningful recovery in commercial real estate before 2011

WASHINGTON – Feb. 24, 2010 – Although the economy has been growing lately, fallout from the recent recession continued to negatively impact commercial real estate sectors in the fourth quarter, but there is hope for some improvement next year, according to the National Association of Realtors®.

Lawrence Yun, NAR chief economist, said commercial real estate almost always lags the economy. “Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher and many commercial property owners will need to make rent concessions,” he said.

“With the job market expected to turn for the better later this year, we’ll see rising demand for office and warehouse space, but that isn’t likely before 2011,” Yun said. “At the same time, improved consumer confidence would help sustain the retail sector and encourage more people to enter the rental market.”

Yun notes that commercial vacancy rates remain high in most market areas and are depressing rents.

The Society of Industrial and Office Realtors®, in its SIOR Commercial Real Estate Index, an attitudinal survey of more than 700 local market experts, suggests a flattening level of business activity in upcoming quarters with 55 percent of members expecting the market to improve in the second quarter.

The SIOR index rose a 0.2 percentage point to 35.5 in the fourth quarter, compared with a level of 100 that represents a balanced marketplace. This is the first gain following 11 consecutive quarterly declines. Although some indicators show that a decline in commercial property values is beginning to flatten, 86 percent of respondents report prices are below replacement costs.

Nearly nine in 10 survey participants said new commercial development is virtually nonexistent in their market areas, and rent concessions are reported almost everywhere.

An independent survey earlier this month showed a couple dozen banks are willing to expand commercial credit this year, which is critical. The lending expansion is aided by the Federal Reserve’s Term Asset-Backed Loan Facility, which is encouraging issuance of commercial mortgage-backed bonds. In addition, regulators are prodding lenders to extend terms for many existing commercial loans.

“We have a long way to go for satisfactory levels of commercial credit, but these are important first steps,” Yun said. “Given that about $1.4 trillion in commercial debt will come due over the next three years, more extensive action is needed and the Fed needs to more actively help resuscitate commercial mortgage-backed securities. The credit improvement will mean more commercial property sales in 2010, even some at deeply discounted prices.”

Looking at the overall market, commercial vacancy rates generally will stay at elevated levels, according to NAR’s latest Commercial Real Estate Outlook. The NAR forecast for four major commercial sectors analyzes quarterly data in the office, industrial, retail and multifamily markets. CBRE Econometric Advisors provided historic data.

Office market

With a lot of sublease space currently on the market, vacancy rates in the office sector are forecast to rise from 16.3 percent in the fourth quarter of 2009 to 17.6 percent in the fourth quarter of this year; the longer term outlook is for vacancies to average 17.4 percent in 2011.

Annual office rent is projected to decline 7.2 percent in 2010, following a drop of 12.7 percent last year. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be a negative 27.3 million square feet in 2010.

Industrial market

There is proportionately less industrial sublease space on the market than in the office sector, but obsolescence remains a factor. Industrial vacancy rates will probably rise from 13.9 percent in the fourth quarter of last year to 14.9 percent in the closing quarter of 2010; they could average 14.5 percent next year.

Annual industrial rent is likely to fall 9.6 percent this year, after declining 10.9 percent in 2009. Net absorption of industrial space in 58 markets tracked is seen at a negative 93.5 million square feet in 2010.

Retail market

Retail vacancy rates are expected to edge up from 12.4 percent in the fourth quarter of 2009 to 12.7 percent in the same period of this year, and may hold at that level in 2011.

Average retail rent is forecast to decline 2.4 percent in 2010, following a drop of 4.0 percent in 2009. Net absorption of retail space in 53 tracked markets should be a negative 3.4 million square feet this year.

Multifamily market

The apartment rental market – multifamily housing – is poised to gain from a rise in household formation. Multifamily vacancy rates are likely to decline from 7.4 percent in the fourth quarter of last year to 6.6 percent in the fourth quarter of 2010, and possibly edge down to 6.1 percent next year.

Average rent is projected to decline 3.4 percent this year, following a decline of 3.6 percent in 2009. Multifamily net absorption is expected to be 115,000 units in 59 tracked metro areas this year.

Reprinted by permission: © 2010 Florida Realtors

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