Page 42 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

Sellers ’ Market, Phase I

This is the second half of the emerging market. It occurs when a mar-
ket reaches equilibrium . Rental and lease rates have risen to the level
that can support new construction of commercial properties.
In this phase, even the local die - hard pessimists have become
believers. Everyone is convinced that the good times are here to stay,

and money flows into the market. Investors from far away now read

about the market and add to the inflow of money.
With all these investors now seeing positive signs everywhere they
look, demand for investment properties is at the highest point of any
phase in the cycle.
Demand now increases even more and soon surpasses the supply
of investment properties. The same is true of commercial space and
rental units. Construction again takes off. Properties sell very quickly
and time on the market reaches its lowest point of all the phases.
Needless to say, this phase is very competitive for property buyers.
Bidding wars occur when properties come onto the market. Buyers
offer more than asking price to ensure they buy something in this hot
market.
Speculation is in full swing. Raw land is snatched up for develop-
ment, and properties that suffer from any sort of obsolescence are
bought and quickly converted to their highest and best use.
Just try getting a contractor to do repairs to your property at this
point in the cycle! You won ’ t get your calls returned, because the con-
tractors have decided to become developers: They see the money that ’ s
being made.
Employment continues to increase, as do wages. The number of
people per household decreases as people start new jobs and move away
from the family sanctuaries that housed them during the lean times.

Sellers ’ Market, Phase II

This is the riskiest phase of all in the market cycle.

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