Properties Magazine January 2013 : Page 26

2012 FINANCIAL REVIEW & FORECAST 2013 A Long Way Back Toward ‘Normal’ T ALEC J. PACELLA he past five years have certainly been a wild ride. Looking back at the general economic sentiment in the early months of 2008, everyone agreed that the good times had probably come to an end and the market was in for some tough times. And back in those early months of 2008, everyone had their specific thoughts and opinions on how the coming months and years would play out. Looking back now, all of those thoughts and opinions had one thing in common: the tough times were certainly much longer and more severe than most had anticipated. But five years and two presidential elections later, it is generally acknowledged that the worst is behind us and things are getting better. To find out how much better the Cleveland real estate investment market was in 2012, read on. result of STNL transactions. And while pricing has been off the peak previously achieved, this sector became increas-ingly popular as the year wore on, with demand beginning to outpace supply. Strong credit tenants were favored but moderate credit and private tenants also gained some attention, which is another good sign. Distress-less Problem properties, such as work-out, foreclosed or otherwise distressed situations, continued to significantly shape the investment market last year. This was particularly true within the office and retail segments, as several high-profile properties worked their way through the disposition process. Approximately 20% of the overall sales volume originated from distressed properties. But the good news for 2012 was a shrinking pipeline of distressed assets, as far fewer properties were slip-Return of the STNL While not quite a Jedi, a STNL (single tenant net lease) deal is a great indicator of the health of the market. This sector raged during the strong market in the mid-2000s, marked by surging demand, upward-spiraling prices and compressed CAP rates. But as the broader market weakened, this sector became dormant. The good news for 2012 was that this sector came back to life. Approximately 15% of the overall sales volume was the 26 Properties | January 2013

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