Part of evolution is when the forces of nature step in to clean up a mess. Whenever I see the tragic carcass of a squirrel on the road, I'm amazed at how quickly the hawks, crows and vultures emerge - seemingly from nowhere - to scoop up the remains. We shouldn't underestimate the power of vultures in real estate too. They're often unseen, quiet, patient, and on standby, armed with loads of cash to swoop in FAST when opportunity emerges.
Recently, Old Dominion Freight Line agreed to buy bankrupt Yellow Freight’s network of about 170 truck terminals for $1.5 billion, surpassing an earlier offer of $1.3 billion from another firm. Both bids exceeded the value Yellow placed on its real estate in its bankruptcy filing, signaling the high value trucking companies place on the sites.
And we thought Yellow's primary assets were trucks......often big companies have incredible assets very removed from their primary business. Often those assets are in real estate. Burger-seller McDonald's owns roughly 70% of its buildings and 45% of the land (around 47,000 acres).
I still hear many home buyers waiting for a big drop in home values and the opportunity to buy 'bargains' when/if a big recession hits triggering bankruptcies and desperate sellers. While they may be disappointed by the extreme imbalance in supply and demand that cannot be resolved in a few months (maybe 10 years?), they may be even more disappointed by how much competition there would be if that happened.
Many entities and individuals are armed with tons of capital waiting for this moment. The more bidders, the smaller the 'bargains'.....if any. The bigger and more powerful bidders almost always win in these scenarios. Already we are seeing these entities buying up many commercial properties, and the competition is heating up as herd mentality exists everywhere.
