Judah Hertz is buying office buildings

California investor Judah Hertz is buying office buildings


After a four-year hiatus on the sidelines, California investor Judah Hertz is buying office buildings in small cities with some of the highest vacancies and lowest demand in the country. That probably means more torment for other landlords in these markets.
Attractive yields are increasingly luring investors like Mr. Hertz further afield to office markets in smaller cities and suburban areas. During most of the downturn, investors have focused on major cities like New York and Washington, but this has driven prices up and yields down, to under 5% in some cases.

"I should be in a very competitive situation," Mr. Hertz says.

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U.S. commercial Rents Will Reach Their Former Peak Levels By 2015

U.S. commercial rents will reach their former peak levels by 2015, with growth in office and warehouse rates surpassing the apartment sector in two years, according to a forecast by RREEF.

Buildings in New York, San Francisco, Boston, San Diego and San Jose, California, will have some of the strongest growth after office rents fell 4.9 percent nationally last year, Alan Billingsley, head of research for RREEF, an investment unit of Deutsche Bank AG (DB), said yesterday at a conference in San Francisco.

“Net operating income is still moving downward, but when rent growth starts, it really takes off,” Billingsley said.

U.S. commercial property prices fell 4.3 percent from a year earlier in January, the second straight monthly decline, as distressed sales in all sectors held back values, the Moody’s/REAL Commercial Property Price Index showed March 22. The delinquency rate on loans packaged as commercial mortgage- backed securities rose to a record 9.2 percent in February, Moody’s said March 15.

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