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Commercial brokers couldn't get much rest this holiday season and, compared with the prior lackluster activity since the real estate market decline, most are grateful for it.
December is typically a strong month for sales, but commercial brokerages say last month's transaction volume was larger than normal. Probably the biggest contributing factor was the real threat of higher capital gains taxes. This drove a flurry of 1031 tax-deferred exchanges, as investors looked to reduce their taxable income.
At the same time, banks and special servicers continued to approach the end of the year with a renewed willingness to bargain on property prices to clear distressed assets.
“This year is the strongest year we've had since the crash in 2006, and December is the strongest month all year,” says Tony Veldkamp, managing director of Sperry Van Ness Commercial Advisory Group in Sarasota. “We're probably doing 30% of our business for the year this month.”
Lee Arnold, CEO of the Arnold Cos., which includes Colliers International Tampa Bay, says the increased transactions spurred sales-related businesses, such as engineers, consultants and appraisers, to charge premiums to meet the Dec. 31 deadline. Speaking on Dec. 20, Arnold said his brokerage's December revenues were already up 25% from December 2011.
“This dramatic increase in closing activity really started to accelerate after the elections,” he says.
While the spillover of deals into January could be smaller than in past years, brokers are predicting another increase in sales this year over 2012.
“It's not going to be setting the world on fire,” says Greg Andretta of Andretta Properties in Tampa. “But compared to the '09, '10 and '11 levels it may seem like the world's on fire. People are starting to think about building buildings. It may not happen this year, but you're at least going to start to see people drawing up plans.”
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