Slow But Steady Pace in CRE Recovery
REALTOR Magazine reports: At Friday's REALTORS Commercial Real Estate Forum (NAR's Annual Convention in Anaheim, CA), analysts predicted modest but steady improvement in commercial real estate continued into 2012 and 2013.
NAR Chief Economist Lawrence Yun said that corporations are sitting on big cash reserves, the stock market is performing and job gains are slowly improving. Foreign buyers, attracted to U.S. investment opportunities are on the lookout for properties, according to Yun.
The weak housing market, with financially struggling owners transitioning to rentals or doubling up with family rather than buying, is helping to stir activity in multifamily properties, which is the strongest of the commercial property sectors by far, Yun said.
SVP Richard Peach of the Federal Reserve Board of New York offered a unique suggestion that was particularly suitable for Veteran’s Day: to improve the housing sector, help military personnel who served abroad purchase foreclosed properties.
Robert White of commercial real estate research firm Real Capital Analytics says much of the activity across sectors has been in higher-end properties in primary markets. However, the industry is now starting to see more activity in other property types and in secondary or tertiary markets. “It’s been a bifurcated market,” he said, “and that's starting to change.”
White predicts $200 billion in sales volume across sectors by the end of the year and a slight increase from that in 2013. “Lots of buyers are interested,” White said, in part because the risk premium is so attractive right now. Cap rates, at 7.9 percent, are particularly attractive in the industrial sector. The continuing difficulty in getting financing is still the biggest obstacle standing in the way of further recovery.
View the full article on REALTOR Magazine: Slow But Steady Pace in CRE Recovery
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Posted by: Hermann Lademann