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Tuesday, June 05, 2007


ANALYSIS: RECORD GASOLINE IMPACT ON COMMERCIAL REAL ESTATE 

Record Gasoline Price Impact on Commercial Real Estate - Analysis by Net Gain Real Estate

Further proof how the high price of oil trickles down to all aspects of the economy. This analysis says the commercial real estate industry is being affected by high gasoline prices.



According to a recent analysis by Net Gain Real Estate, record gasoline prices are bringing about significant change in the shopping and buying habits of the American consumer. The company says more and more consumers are not getting into their cars to shop and buy. All the anchors, national franchises, and independent lessees at the different retail centers have hedged their bets with their own Internet web sites. Consumers are finding that these web sites are becoming more reliable, are able to satisfy their needs, and they are using them at a progressively faster rate. The result of these changes will be weaker leases and lower cash flows at many retail properties.

Multi Housing

Multi housing communities will benefit from the record gasoline prices. The reason is that most multi housing communities were developed with excellent egress and ingress and are near major employment centers. Those that are close to public transportation will have an even greater advantage. Needless to say, those developers that bought cheap land in the hinterland will not see an advantage to the record gasoline prices.

Office Building

Office buildings have been going through an evolutionary change. Technological advances have eliminated many types of office positions. However, these same efficiencies have created sufficient growth to offset the loss of demand. Those office buildings that have participated in this offset and are located near public transportation and/or have minimal commute times will be a strong beneficiary of today’s record gasoline prices.

Warehouses

The higher cost of transportation has motivated many businesses to manage their inventories more efficiently. One method is to use more warehouse space by reducing the number of times they replenish their inventories. Warehouses and particularly modern and large ones that are well located in relation to major highways and railroads are going to play an important role in the efficiencies of today’s businesses.


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