Search
 

Bubble Boys and The Scarcity Premium

Last year's hyped deluge of distress has materialized into a drip. Yet, the promise of 2009 was that the lemons of 2005, 2006 and 2007 would finally…

By Ryan Clark - Managing Editor of GlobeSt.com. | Updated on December 09, 2011

Last year’s hyped deluge of distress has materialized into a drip. Yet, the promise of 2009 was that the lemons of 2005, 2006 and 2007 would finally be ripe for the squeezing and investors readied their capital accordingly. The result is a highly competitive market with, perhaps, inflated pricing. The question is whether or not a price can be considered too high on assets that are in the process of price discovery.

“People are referring to it as a scarcity premium,” explains Stath Karras, executive managing director of national investment sales at Cushman & Wakefield. “And many believe that the prices being paid have been pushed unusually high” for this point in the cycle. With more than a few funds on expiring deadlines to spend capital, the money ready to bid-especially on class A properties-is increasing demand rapidly, not necessarily consistent with the cash-flow valuation of the assets themselves.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2025 ALM Global, LLC. All Rights Reserved.