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March 22, 2010 - PRLog -- Evaluating the future of Charlotte's land market
2010 will be a year of survival, says veteran property appraiser.

Fitzhugh Stout of Integra Realty Resources is a second-generation appraiser and has calculated the value of many of Charlotte's most visible properties.

A second-generation appraiser, Stout has assessed the value of many of the Charlotte area's most visible commercial properties, from the land assembled for Bank of America Stadium to acreage along the light rail line in South End to Charlotte Motor Speedway in Concord.

I had asked to meet with Stout, managing director of Integra Realty Resources' Charlotte office and past president of the N.C. Chapter of The Appraisal Institute, to hear his insights into the local market. When I started writing about commercial real estate last year, I asked developers and brokers who they look to for advice. Stout's name came up often.

Stout works out of an office at 214 West Tremont St., his office emboldened with colorful splashes of orange, green and purple. He moves his office roughly every two to three years, he said, because "the best way I know to learn about real estate is to be an owner-occupier."

The first office property he bought was an apartment building that had been converted into office condos in Elizabeth. The value of that property, which he purchased with a partner, quickly doubled, then stayed flat for the next 15 years.

"I learned not to fall in love with a piece of property," he said. "I should have sold the property within a short period after the initial doubling in value, as real estate always has a cycle."

Appraisers are the linchpins of the real estate market because deals hinge on their conclusion for what a property is worth. And their jobs have grown increasingly difficult these days as real estate sales have slowed to a trickle, leaving little data for comparison.

On his profession

During his more than 30-year career, Stout has upset people with his conclusions. That's happening more often as investors and property owners find themselves holding property worth considerably less than what they paid for it.

"If I'm making everyone happy, I'm probably not doing my job," he said.

When he's determining a property's value, he said, lenders want him to consider a 12-month timeframe, meaning he needs to base the value on what he thinks the property could sell for within a year.

That's tricky, he said, because "there are no buyers" and few sales on which to base values. Stout draws on his experience, plus national surveys and interviews with brokers and listing agents, to determine a property's worth.

On the current market

Nationally, commercial real estate lost 15 percent to 30 percent of its value between the fourth quarter of 2007 and the fourth quarter of 2009, various reports indicate. Charlotte-area commercial real estate prices, on average, have fallen 10 percent to 40 percent, Stout said.

He was surprised by the speed with which some properties' worth plummeted during the downturn, and particularly shocked by how fast vacant land lost its value. Area investors typically expected to double their money within two to three years when buying land, he says. With the market at a near standstill, he said, the same land might be worth 40 cents on the dollar today.

"We had so much momentum, I never thought it would fall across the board," he said.

On the challenges ahead

Overall, he said, he is optimistic and believes Charlotte is positioned to outperform the nation in the long term.

Locally, he expects industrial properties could recover first, because there was relatively little supply when the recession started.

He also anticipates Mecklenburg County tax assessors will have a difficult time determining new property tax values this year. He expects many commercial real estate owners will appeal the new valuations.

His firm, which works heavily with local banks and government agencies, has seen an increase in its workload this year. He's already involved in tax appeals from commercial property owners.

County tax revaluation difficult

"To me, this is one of the most difficult times to go through any evaluation because of the lack of information that's out there. I don't know how (the assessors) are going to do it," he said. "I think that I will be busy."

Retail properties will continue to struggle as stores and restaurants close, he said. Owners of multifamily properties, particularly luxury apartments that were built or bought near the peak around late 2008, could also face problems because rents have fallen. But in general he feels multifamily properties have reached or are near the bottom and that sector could stabilize, or decline only slightly this year.

Like many economists, he envisions a recovery that unfolds slowly over the next two years.

"I think there will be deep discounts in commercial real estate," he said, and "significant buying opportunities for people with cash."

Platinum Real Estate Group
P.O. Box 78392
Charlotte, NC 28271
704-497-0038 Cell
980-225-1100 Fax
Email: e@rodneyalmeida.com

http://www.avancecorp.com
http://www.rodneyalmeida.com

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Platinum Real Estate Group
P.O. Box 78392
Charlotte, NC 28271
704-497-0038 Cell
980-225-1100 Fax
Email: e@rodneyalmeida.com
Website: http://charlotterelocationguide.com