Where are the Sellers?

Where are the sellers? Forget where are the deals, just give me a property that is even for sale.  There has not been a new apartment building for sale in well over a month despite buyers everywhere.  It as if people stopped retiring, passing away, moving up (via exchange), or simply taking massive profits. 

Seattle remains an awesome market with nothing but great signs of success for the future.  Still, couldn’t a guy sell a 4 CAP in Seattle today and trade into a 6 CAP in a relatively close market like Olympia?  Especially if the owner was older and seeking cash flow as a more important criteria over appreciation. 

Still…no one is selling!

Posted by Michael McQuaid

What brings an owner to become a seller?

I was at an event last night when a guy I know to own several nicely located apartment buildings says to me that it is a great time to be a seller these days.  He is not a seller, of course, just an observer of the current marketplace.

I have been representing buyers and sellers of apartment buildings since 1987.  In that time I have been through a few market cycles.  This friend’s comment last night caused me to think about what turns an owner into a seller. 

It is rarely market timing from greed or fear.  It is usually some life style change that has or is about to occur.  Those lucky enough to have the lifestyle alter during a bull market for real estate are simply that: lucky.  It is interesting to me to drive around Seattle after selling apartment buildings for so many years and still see buildings that I have never seen sell in my entire career.  Will they ever?  Probably not due to fear or greed but maybe due to some external event that causes the owner to convert to a seller. 

If they are lucky they convert during a great sellers’ market like we have today.   

Posted by Michael McQuaid


I have been very erratic  in posting any new blog comments.  Here is why: the market for selling buildings is on fire.  Interest rates remain at all time lows, buildings are full (despite record new supply), and alternative investments continue to look super risky.  This keeps a broker busy. 

I was recently asked by a buyer if I thought there is a bubble in pricing today.  Maybe, but not compared with alternatives.  I think this has been, and continues to be, due to the extremely low cost of debt. About  two years ago I finally stopped saying rates are going up soon.  Still, even if rates do go up which alternative investment would one prefer given the way the Dow has been jumping up and down now in a near regular pattern with no apparent cause. Scary. 

So this is interesting:  if rates go up it will be due to an improved economy (according to the Fed) so if the economy has improved how will that negatively impact real estate?  This should mean that regardless of the pricing/values on income property today it should provide long term, stable, and reliable income regardless of what happens to rates.  In other words, higher rates will actually mean things are good.  Not sure when they come but I am not sure there is much to fear. 

Posted by Michael McQuaid

I wonder why.

I wonder why… if an investor has owned a well located apartment building in Seattle and has experienced nearly crazy appreciation in value recently, though not necessarily cash flow, and is at an age that is probably the last ¼ of his life,  why not sell the great location building for a great price and trade that equity into a less well located property that is much bigger and trades at a much higher CAP rate?  Just for example:  sell the 25 unit Queen Anne property that is worth $7-8M but generating only $250,000 in cash flow and take the proceeds (via a tax-deferred exchange) and buy a 100 unit property in Eastern Washington that generates $640,000.  It seems to me that later in life one often cares more about cash flow than about appreciation and the delta in CAP rates between great located Seattle properties and stuff in Eastern Washington is huge.  The investor stays in the same investment type he likes but more than doubles his cash flow!  While this makes great sense to me I find few people willing to do this. 



Posted by Michael McQuaid

Knowing your position…

I attended a conference today and one of the speakers talked about how to best use Board members in the non-profit world.  One of the phrases that caught me was “play your position really, really well”.  It occurred to me then that there are a lot of real estate brokers that forget their position and end up playing it poorly as a result.

Brokers are here to facilitate transactions to the clients benefit.  Simple.  Always focus on how to improve your clients’ positon, not yours.  That is how you play really, really well as a broker. 

Posted by Michael McQuaid

I just saw it!

Yesterday driving Capitol Hill I saw a rent concession sign on a new building saying one month free.  I have only seen one such sign so far so it certainly does not mean the end is near but it was notable enough since I haven’t seen such a sign or offer in the urban Seattle market for several years.  I don’t know the backstory on this one but usually this means…


Regardless, almost every building owner who has owned for over 5 years is behind the market on their rents.  Even if the rental market is softer today than three months ago it is still far ahead of last year.  

Posted by Michael McQuaid

How much better can it get?

Boeing settles its labor issues, Amazon keeps growing in South Lake Union, Microsoft is thriving with its Xbox, etc., etc., etc. And now the Seahawks are going to the Super Bowl? What a great city to live in, work in, and invest in.

If you were from out of town this past weekend you would have been thoroughly impressed by the sheer number of people walking around downtown. Shoppers, diners, and tourists were everywhere. I went to a newer restaurant the weekend before and it was standing room only. Literally. This city has never performed so well as it is now.

The only thing that seems out of place now are the lingering For Rent signs. I don’t know if this is due to increased rents or fewer new tenants coming around but I cannot help but notice signs are out longer lately.


Posted by Michael McQuaid