Misconceptions continue to plague off-market commercial real estate, despite becoming an increasingly popular niche over the last few years. Its attractiveness as an asset is based on five key factors:
- Smaller Pool of Qualified Buyers
- Greater Access to Unique Opportunities
- More Time for Due Diligence
- Buyer & Seller Anonymity
- Fewer Deal Killing Roadblocks
Very simply, traditional public listing platforms (MLS's) do not list off-market properties. Instead, they are typically made known through pre-existing relationships, broker and broker networks, and word of mouth.
Property is marketed and sold off-market for a variety of reasons. An owner could be concerned about anonymity, interested in testing the waters without committing to listing, or hoping to create an air of exclusivity around their property.
Off-market real estate is perceived as some amorphous entity, available to only the most well-connected and wealthy individuals. Market analytics suggest that nearly one-quarter of all commercial real estate transactions occur off-market.
Savvy investors have been transacting real estate off-market for decades. Until recently, the general investment community has been mostly oblivious to the opportunities, but more importantly, how to source them.
As volatility headlines equity and fixed-income markets, more individuals are looking towards alternative assets to house their capital. With increased demand comes a reduction in quality real estate supply; off-market may be the only place to find good deals in the short term.
Unfortunately, given the relationship-driven nature of commercial real estate, an individual investor would have difficulty finding an off-market deal themselves.
Knowing where to look and how to cultivate the opportunity requires extensive knowledge of the local market and an insight into what drives the timing and disposition of certain asset classes.
It’s more than just sifting through the Yellow Pages and making a phone call.
Any real estate portfolio strategy must be carefully crafted and refined to ensure the highest probability of success.
Successful off-market deals require a nuanced approach and skill set that many brokers don’t possess. As the market rapidly evolves, pre-existing relationships with property owners and capital market players put Commercial Group of Tampa Bay in a unique position to deliver buy and sell-side value in this niche.
These are harder to source, but when successfully acquired, they can increase a real estate portfolio’s return exponentially.
