ask the ADVISORS
What kind of impact will
the Federal Reserve’s
recent interest rate cuts
have on commercial real
estate in Florida?
Ken Krasnow, COO, Apartment Realty Advisors
In terms of prospective buyers of rental apartments, na-
tional prospects will be encouraged by the drop in the
10-year Treasury rate and greater availability of financ-
ing. Although rates have dropped, a recent widening of
risk premium spreads has made financing acquisitions more diffi-
cult for leveraged buyers, driving up their return requirements. As
a result, cap rates have risen slightly but are still historically low
compared to pre-condo conversion years. As institutional buyers
continue to aggressively re-enter the Florida multifamily market,
we see cap rates increasing only slightly or possibly remaining at
current low levels due to the ability of these buyer types to pur-
chase properties with little or no debt.
David J. Schwartz, Managing Principal, Management Consortium Inc.
As a developer and advisor to developers of condo hotels and re-
sorts, along with other “second home” projects, I believe lower-
ing interest rates will only stimulate the sale of units to the end
user, as well as stimulate development of such projects by seri-
ous developers.
Edgar Jones, VP & Regional Development Officer, Rockefeller Group
Development Corp.
As is almost always the case, there are some developers who are not
concerned with the long term since they are trying to survive today.
The rate cuts have got to help, but most importantly we need to
build stability in the market. Rate cuts should help at least in the
short term.—REFLA
If you have a question you’d like to “Ask the Advisors,” e-mail it to Carl
Cronan at ccronan@remedianetwork.com. Questions and responses will
appear in future issues of Real Estate Florida.
RealEstateFlorida
EDITORIAL ADVISORY BOARD
MICHAEL F. BEALE
Highwoods Properties
WALTER BYRD
Transwestern
F.B. “TED”
BYWATER
Bywater Co.
PHILIP CARROLL
KeyBank Real
Estate Capital
JOHN F. COLEMAN
EastGroup
Properties
SUSAN CUSICK
Imperial Capital
Bank
WILLIAM H. HOLLY
Holly Real Estate
EDGAR JONES
Rockefeller Group
Development Corp.
JOSE I.
JUNCADELLA
Fairchild Partners
KENNETH M.
KRASNOW
Apartment Realty
Advisors
JACK LOWELL
Flagler Real Estate
Services Inc./Oncor
International
STEVEN W.
MOREIRA
Magic Cos.
KEN MORRIS
Morris Southeast
Group/Corfac
International
WILLIAM S. MOSS
CB Richard Ellis
LARRY RICHEY
Cushman &
Wakefield of
Florida Inc.
MOSES L. SALCIDO
Panattoni
Development Co.
LLC
DAVID J.
SCHWARTZ
Management
Consortium Inc.
JERRY SHAW
Opus South Corp.
CYNTHIA C.
SHELTON
Colliers Arnold
DAVID SOBELMAN
Calkain Realty
Advisors
MICHAEL STEIN
Aztec Group Inc.
SCOTT STEPHENS
HREC Investment
Advisors
KEITH A. TICKELL
Flagler Development
Group
TODD M. YATES
