Job Recovery

August 6, 2010

In a recent report by the NAI Global national economist, Dr. Peter Linneman, he stated all major industries except for the information sector have registered employment gains.  He noted, “Aside from the government sector (591,000), the largest absolute job increases were in professional and business services (314,000), manufacturing (108,000), leisure and hospitality (95,000), and trade, transportation, and utilities (74,000)”.

In our market, the Raleigh-Cary metropolitan area gained 22,100 private-sector jobs between June 2005 and June 2010, the fifth best total among the 100 largest US metros according to the US Bureau of Labor Statistics.  This was the biggest job gain of any metropolitan statistical area outside of Texas.  Eighty-four major markets suffered declines in private-sector employment during the half-decade, while only 16 finished on the upside as reported by the Triangle Business Journal.

Just this week, additional positive job growth news included Caterpillar’s plans to expand its manufacturing facility in Lee County adding 325 jobs to its operations in Sanford over the next four years.    A Caterpillar supplier is also expected to locate 160 workers at the Sanford site bringing the expansion’s job total to 485 new positions.  Triangle Business Journal reported Caterpillar was offered almost $5 million in economic incentive grants from state and local governments to pick Sanford over a competing site in Florence, South Carolina.

Jake Plotkin, Broker, NAI Carolantic Realty,

I think you would agree we live in a unique area.  We have an educated workforce, a strong housing market, low cost of living and a high quality of life.  These traits are just a few reasons why Wake County has experienced such strong job growth since 2005 (rated #5 by Manpower out of all US Cities).

Investment Sales – Where Cash & Credit are King

March 29, 2010

While real estate is a cyclical business, the real estate market has not undergone a significant downturn like this since the Telecom Bust.  This is a direct result of bank reform, where lenders are tightening their lending requirements and fewer buyers qualify for properties that aren’t owner occupied.  As a result, cash and credit are more important than ever. 

Jake Plotkin, Broker, NAI Carolantic Realty,

It is difficult to get an investment property financed, however, if a prospective purchaser is not overly leveraged and has a reasonable cash reserve along with good credit, then the sky is the limit.  Cap rates have risen over the past 18 months as savvy investors have taken advantage of a down market.  With less qualified buyers, sellers have to increase the yield to lure qualified prospects into an investment sale transaction.  In an effort to clean up their balance sheets, banks are reigning in on investment lending and are either calling notes due or are simply not renewing notes as they have in the past.  This creates a unique opportunity for the right investor. 

Although a property may be cash flowing and that particular owner has never been late on a payment, the inherent risk that banks see trump all logic, resulting in a distressed owner, but not a distressed asset.  Mom and pop stores with long histories are trading between 9-11% and investment grade properties have seen Cap Rates rise from 6-7.5% to 7-9%.  While many people are upset that this is a tough market, I have not heard any complaints from my qualified investment buyers.  They have not seen opportunities like this in some time and can’t wait to capitalize on tighter lending guidelines.