Once Bitten: Investors Tepidly Shopping in Secondary Property Markets
Wall Street Journal reports: Entering the New Year on a wave of purchasing activity, buyers of commercial property are beginning to look beyond the handful of major US markets they had their sights on almost exclusively in 2010. One such “spillover” market, as Wall Street Journal reporter Maura Webber Sadovi stated, has been Atlanta. Most recently, a fund managed by CB Richard Ellis Investors picked up a bargain from battered American International Group Inc (AIG).
According to Real Capital Analytics (RCA) data, AIG sold over one million-square-feet of office and retail space in Atlanta, along with a parking garage and additional developable land, for just $165 million. The property was all part of a significant decade-long, still-unfinished mixed-use redevelopment known as Atlantic Station, of which AIG was originally the master developer.
Along with other fourth quarter sales in Atlanta, some of which sold for more–palatable prices, the AIG disposition signals investors’ gradual return to secondary markets. However, according to RCA’s Ben Carlos Thypin, the pace of recent sales in Atlanta may not indicate a clear, upward trajectory for that market. “That someone is willing to shell out this kind of money is certainly not bad news, but I’m not sure it implies any blessing on the Atlantic market…There’s still a lot of pain.”
Importantly, sales of significant commercial properties in Atlanta increased by just 6% between 2009 and 2010 according to data aggregated by RCA. By way of comparison, sales of retail and office properties in Manhattan more than tripled over the same year-over-year period.
View the full article on Wall Street Journal: Once Bitten: Investors Tepidly Shopping in Secondary Property Markets
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