CRE Transaction Timelines Shrink


ST. PETERSBURG, FL—The commercial real estate market is becoming more and more competitive, with national transaction volumes hitting new records. As a result, investors have been forced to get increasingly creative with the terms of their offers—as well as increasing bids—to win the best deals. According to Mike Harris, a managing principal at CREModels Real Estate Consulting, faster due diligence timelines are a very common way for bidders to get their offer to the top of the list. In some cases, it can even move investors above higher offers, since a longer transaction timeframe can potentially risk the property going back on the market. But a speedy due diligence process has its own risks, says Harris, and protecting against them is where CREModels comes in. GlobeSt.com sat down with Harris for this exclusive interview on how investors are able to bid with these tight transaction timelines and what investors need to know to make smart decisions during the due diligence process.

GlobeSt.com: What is driving these condensed timelines of CRE transactions?

Mike Harris: This is a natural response to high levels of demand in the overall commercial real estate market. Transaction velocity remains very high; last year was strong and this year looks like it is going to be the same way. Volume is being driven by low interest rates and strong fundamentals, which leads to heavier competition for all property types in all markets. One of the primary terms sellers look for during the bid process, other than pricing, are the proposed due diligence and closing timeframes offered by each bidder. Sometimes sellers will accept a lower price if a strong bidder can close quickly with a short due diligence window.  Almost every seller has experienced a situation where they accepted a higher initial bid only to ultimately have the buyer retrade them down to a lower price, or even withdraw completely during due diligence…

CRE Transaction Timelines Shrink

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