According to The CoStar Group, The Zylberglait Group has sold more office buildings than any other broker over the last 10 years throughout Miami Dade County.

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A Plunging Stock Market Can Push CRE Owners to Sell Stabilized Assets

  • Posted on February 9th, 2018
  • at Uncategorized

The unpredictability of the stock market may cause property owners to consider selling their stabilized commercial properties. If the market uncertainty is here to stay for the long haul, property values will suffer. I often talk about ‘the window of opportunity’ to maximize profits when selling a property. I think that window may be closing sooner rather than later.

 

Consider the facts:  Over the weekend, former Federal Reserve Chair Janet Yellen said, “U.S. stocks and commercial real estate prices are elevated but stopped short of saying those markets are in a bubble,” according to a recent Bloomberg article. Less than 24 hours after her comments, the stock market plunged on Monday, with the Dow Jones industrial average dropping 1,179 points. This has been the largest one-day points fall on record and erased all 2018 gains.

 

The good news is that our region’s market fundamentals remain strong, including low unemployment, continue job and population growth, and a healthy demand for commercial space. Yet, Yellen isn’t too confident about what is coming ahead of us.

 

Commercial real estate prices are now “quite high relative to rents,” Yellen said on CBS’s “Sunday Morning” in an interview “Now, is that a bubble or is it too high? And there it’s very hard to tell. But it is a source of some concern that asset valuations are so high.”

Yellen, 71, stepped down as Fed chief on Saturday after one term, after President Donald Trump opted to replace her with Republican Jerome Powell, who’s been a Fed governor since 2012.

 

During the CBS interview, she added that the financial system is now “much better capitalized” and the banking system “more resilient” than they were entering the global financial crisis a decade ago. She concluded by saying that if stock prices or asset prices more generally were to fall, hurting valuations, “it would not damage unduly the core of our financial system,” as reported by Bloomberg.

 

The current U.S. economic expansion is now approaching nine years and is the third longest in duration since 1945, according to the National Bureau of Economic Research. Yellen said the economy can continue to grow.

 

To read the Bloomberg article, go here

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