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Commercial Real Estate News
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The Case for FIRPTA Reform
Thu, 18 Feb 2010
Foreign investment in U.S. market has the potential to grow substantially over the next few years.
China Swelling with Investment Capital
Tue, 15 Dec 2009
Led by a flood of capital into China's property markets – especially in the sale of development rights - investment activity in the Asia Pacific region accelerated significantly in September. While investors plowed approximately $25.8 billion into property acquisitions during the month, China attracted the lion's share of the deal volume with $21.6 billion, or 84% of the total.
REITs Are Stocked Up on Capital
Fri, 18 Sep 2009
The success of REITs this year in raising capital on virtually every front is unparalleled by any other investor group, and it's something of a surprise as well. Through August, REITs had raised nearly $19b in new equity and another $6b in unsecured debt. In addition, many REITs have been adding to or funding new credit lines. And to top it off, REITs are the largest net sellers so far in 2009, selling $6.1b of assets against just $1.3b of acquisitions.
Bulk Condos: A Booming Business
Mon, 14 Sep 2009
A growing niche in the multi-family sector is bulk condo sales. Since the start of 2008, over $1.0b of significant bulk condo sales have closed, comprising close to 8,700 units across 70 properties.
Where's Manhattan's Recovery? London office properties start to trade again
Mon, 24 Aug 2009
In Manhattan and London, office sales have been few and far between since the onset of the financial crisis. But that is starting to change. Since April, 37 office properties greater than US $20 million have traded or gone into contract in London—versus only 15 in Q1'09. Manhattan's office market, with three trades in Q1 and six since April, is months behind London's.
Drug Store Retail Cap Rates Volume and Pricing
Mon, 3 Aug 2009
Typically a safe haven for investors, sales volume over the past 12 months in the drug store sector declined 49% to $599 million from a year ago. On a quarterly basis, sales volume of this niche asset declined a staggering 74% to $57 million from a year ago. Sellers of drug stores have reevaluated their expectations as they were willing to accept 92.6% of their asking price. Other retail sellers achieved the 91.3% of their asking price.
Big Box Retail Cap Rates Volume and Pricing
Mon, 3 Aug 2009
Over the past 12 months, big box property sales volume totaled over $460 million, a 63% year over year decrease. Sales for Q2'09 totaled only $29 million, a 90% decrease from Q2'08 and a 34% decrease from Q1'09. Big box properties represent 4% of all retail assets. Big-box retail property sellers have been achieving 94% of their asking price, and all other retail assets have been achieving only 91.5% of their asking price.
Distressed Assets By Country
Thu, 26 Aug 2009
The list of Troubled Assets around the globe touches almost every country, with the largest concentrations in the US, UK, Australia, Spain and Japan. Learn how deeply distress has penetrated into a specific national market.
Distressed Assets: Where Does it Hurt? Everywhere.
Thu, 13 Aug 2009
Troubled U.S. commercial properties have more than doubled this year with the value of assets in default, foreclosure or bankruptcy topping $107 billion. April was the record month with $19.5 billion added to the total, approximately $13.5 billion of which is attributed to the bankruptcy of General Growth (GGP). Many of GGP's mortgages were in trouble before the April filing; GGP's secured debt obligations account for about 100 properties with $18 billion of mortgages, most of which were securitized.
Among Asian Markets, Tokyo is Tops
Thu, 6 Aug 2009
The combination of softening business activities in Asia and turmoil in the global financial markets continues to limit commercial real estate investment activity in the Asia Pacific region. Investors remain cautious as property values and rents decline. Cross-border investment especially has been subdued by a lack of debt financing and heightened risk aversion on the part of institutional investors.
The Big Picture - Trillions of Property at Risk
Wed, 29 Jul 2009
2.2 trillion of properties acquired or refinanced after this point in early 2004 have lost value since the transaction. Many of these properties, typically leveraged 70%-80%, would face significant refinancing hurdles even if prices held firm. Few lenders now are willing advance more than 50%-60% of value.
Unanchored Strips Cap Rates, Volume, and Pricing
Wed, 15 Jul 2009
Sales of unanchored retail strip centers over the 12 months ended March 31 declined 69% to $1.7B (billion). On a quarterly basis, sales of unanchored assets dropped more than 90% from a year ago. Sellers were willing to accept 91.8% of their asking price, down from what was achieved a year earlier. Sellers of anchored properties are faring slightly better, accepting 92.8% of the asking price, a sizable drop from what they accepted the previous year.
Single Tenant Retail Cap Rates, Volume, and Pricing
Wed, 15 Jul 2009
Over the 12 months ending March 31, single-tenant retail sales volume totaled $1.5 billion, 10% of retail assets, a 56% decrease from the prior 12 months. Single-tenant retail sales fell in Q1'09 to $84 million, 62% of Q4'08 volume and 87% YOY (year over year). While single-tenant retail sales have been hit very hard, multi-tenant retail fell only 76% versus the prior 12 months. Single-tenant retail property sellers have been achieving 93% of their asking price.
Single Tenant Industrial Cap Rates, Volume, and Pricing
Wed, 8 Jul 2009
Over the 12 months ended March 31, single-tenant industrial sales volume totaled just $3.3B (billion), a 65% YOY (year over year) decrease. On a quarterly basis, single-tenant industrial sales were down just over 87% from the year ago quarter. While single-tenant industrial sales have been hit hard, multi-tenant industrial assets have fared no better by almost any measure. Single-tenant industrial property sellers are still adjusting expectations, and have been achieving 90.6% of their asking price.
Single Tenant Office Cap Rates, Volume, and Pricing
Wed, 8 Jul 2009
Over the 12 months ended March 31, single-tenant office sales volume totaled $4.1B (billion), a staggering 71% decrease versus the same period one year earlier. On a quarterly basis, single-tenant office sales are down almost 27% from the year ago quarter. Despite a 39% jump in single tenant office sales to almost $1.0B during Q1'09 from Q4'08, niche activity is still far below peak levels. On a PSF basis, single tenant properties are trading lower than multi tenant offices, as investors are concerned by the bankruptcy of a tenant impairing their ability to service debt. Consequently, single tenant office cap rates have increased to 6.5% from year-earlier levels, while multi-tenant caps have climbed to just 5.9%.
Hotel Cap Rates, Volume, and Pricing
Wed, 1 Jul 2009
After a dismal 2008, it seemed that hotel sales volume could not fall any further. Alas, Q1'09 transactions dropped to $644M (million), an 85% YOY (year over year) decline and 98% off the 2007 market peak. Sales of limited service properties have fallen 77% from Q1'08 levels while full service properties have endured an 88% decline in sales volume. With only small loans available to finance purchases, limited service assets have continued to increase their share of transaction activity, to almost 30% on a dollar volume basis and nearly 60% by number of properties traded during the twelve months ended March 31.
Lifestyle and Power Center Cap Rates, Volume, and Pricing
Wed, 1 Jul 2009
Over the 12 months ended March 31, lifestyle and power center sales volume barely topped $1.8 billion, a steep 72% YOY (year over year) decrease. Other retail strip sales fared about the same with a 74% drop year over year. Sales were $276 million for Q1'09, off 54% from Q1'08 but a surprising 129% jump from Q4'08. However, lifestyle and power center investors continue to achieve 94.4% of asking price while sellers of other strips only achieved 92.5%. Lifestyle and power centers made up 12% of retail sales.
All Fall Down - Is there opportunity in the unanimous decline?
Wed, 1 Jul 2009
There is no escaping the obvious: across all property types, in every subtype and niche, the trends in sales volume and yields are in sync. Sales volume has fallen with uncanny consistency by 71% over the past twelve months as investor appetites have subsided in equal measure across the property spectrum.
Drug Stores Volume, Pricing, and Cap Rates
Mon, 29 Jun 2009
Typically a safe haven for investors, sales volume for drug stores over the 12 months ended March 31 in the drug store sector declined 45% to $699M (million) YOY (year over year). On a quarterly basis sales volume of this niche asset class declined 62% to $100M YOY. Sellers of drug stores have reevaluated their expectations slightly, but were still achieving 94.5% of their asking price. Sellers of other single-tenant retail assets lost less ground, but from a slightly lower starting point, achieving 92.1% of their asking price.
Grocery Strips Volume, Pricing, and Cap Rates
Mon, 29 Jun 2009
Volume of grocery strip asset sales for the 12 months ended March 31 dropped a striking 80% YOY (year over year) to $2.2B (billion). Volume for Q1'09 declined 74% from Q1'08 to $261M (million). Sellers of grocery strips were forced to readjust their expectations as they accepted 91.9% of their asking price, a substantial drop what was achieved one year earlier. Sellers of other strip assets had to adjust expectations as well, and achieved 92.6% of their asking price.
REIT Offerings Provide an Opening for Capital
Thu, 18 Jun 2009
So far in 2009, REITs (Real Estate Investment Trusts) have attracted $7.1 billion in equity capital through more than 15 equity offerings—or a stunning 63% of the $11.1 billion in combined equity and debt capital invested on direct property acquisitions YTD. And with $4.2 billion of the REIT investment total raised in April alone, it is clear that equity capital interested in real estate is currently more attracted to the liquidity and pricing offered by REIT shares than by direct investment. Including IPOs, REIT offerings for any year since 2000 have never exceeded 11% of total domestic sales volume.
Medical Office Volume, Pricing, and Cap Rates, Investment Trends for MOB Property
Wed, 17 Jun 2009
Over the 12 months ended March 31, medical office volume totaled $2.9B (billion), off more than 40% versus the same period one year ago. On a quarterly basis, medical office sales fell more than 83% YOY (year over year), compared with a 77% YOY drop in the total office market. Healthcare's image of resilience during recessions is a strong contributor to the growing percentage of medical office sales are in the overall office market.
Student Housing Volume, Pricing, and Cap Rates, Investment Trends for Campus Residences
Wed, 17 Jun 2009
For the 12 months ended March 31, sales of student housing properties of nearly $2.3B (billion) comprised 8.7% of overall apartment market activity, marking the largest percentage ever for this niche. Pricing of $169,600/unit on a 12-month basis was up 63%, led by the sale of Gramercy Green, a Manhattan property, which sold for more than $900,000/unit. Per-unit pricing for all other apartment properties decreased 6%. Sales volume for student housing properties in Q1'09 was only $80 million, off 50% from Q4'08 and down 80% from Q1'08. Sellers are achieving just 88.7% of their asking price.
Billion Dollar Markets: 2007 vs 2008
Thu, 21 May 2009
In 2008, a total of 78 cities recorded $1 billion or more of commercial property sales. The mix of billion-dollar markets changed dramatically: 59 cities on last year's list missed the cut - including 26 in the Americas - but three new markets arrived.
Property Transaction Volume Continues to Decline in China and Australia
Fri, 1 May 2009
The Asia Pacific commercial real estate markets continue to absorb the debilitating effects of a double whammy: limited liquidity has sucked capital from the market, and the global recession has produced a contraction in exports and manufacturing, which is adversely affecting property fundamentals.
Asian Property Investment Volume Remains Muted
Wed, 15 Apr 2009
Financial market volatility and a deflating global economy continue to inhibit commercial property investors worldwide. The Asia Pacific region has experienced a pronounced slowdown in real estate transaction volume as unprecedented events around the globe have effectively reduced capital market liquidity and investor confidence.
Another Real Estate Myth Busted
Tue, 31 Mar 2009
For a period after the housing markets began to slow, the commercial property markets surged. The vast overbuilding in housing compared to modest commercial development and the relatively healthy fundamentals (rents and occupancies) on the commercial side continued to lure both debt and equity capital to commercial property. That last hurrah is now coming back to haunt the industry and may cause the commercial downturn to be more severe than the residential one.
Troubled Assets - Mining Distress for Opportunity
Tue, 24 Feb 2009
Since the credit crunch took hold in the fall of 2007, questions about its impact on commercial real estate have been front and center. But assessing the damage has remained largely guesswork—until now.
Medical Office Volume, Pricing, and Cap Rates, Investment Trends for MOB Property
Tue, 17 Mar 2009
In 2008, sales volume for Medical Office properties valued at $5 million or more totaled $3.5 billion, a 26% decline from the same period a year ago. MOB properties have faired better than other office properties, which declined 76% from last year to $50.4 billion. Quarterly comparisons highlight the deeper struggles of these perceived safety assets by revealing a 44% drop in dollar volume from Q4'07 to Q4'08.
Student Housing Volume, Pricing, and Cap Rates, Investment Trends for Campus Residences
Tue, 17 Mar 2009
In 2008, over $2.6 billion worth of significant U.S. student housing properties sold, representing 6% of overall apartment market activity, which is the most since student housing became a niche. For student housing valued at $5 million or more, pricing on 12-month average basis was up 50 percent due to Gramercy Green selling for over $900K/unit. All other multifamily properties have decreased 4% on a per-unit basis. Sales volume activity for the quarter was down 90% compared to 4Q07. Sellers are achieving only 90% of their ask price compared with nearly 94% from 2007 and 97% from 2006.
Changes That Count - The Big Shift in 2008
Mon, 22 Dec 2008
The credit crunch that began in the middle of 2007 now permeates the commercial real estate investment market—not to mention the economy as a whole. Trying to disentangle the threads of its influence in order to understand the behavior patterns that now govern the capital markets yields important lessons on just how closely linked all aspects of real estate investment are, not only with each other but also with the forces shaping global commerce. Each strand leads back to the erosion of debt as the market's principal instrument. That market certainly no longer behaves as it once did, and dramatic changes have taken root and are becoming the new normal. Here is a look at what these new realities are, and what they have replaced.
A Shift in Real Estate's Global Positioning System
Tue, 11 Nov 2008
As the United States stood poised to benefit from positive international reaction to the presidential election, global real estate transaction volumes seemed to indicate that the US has lost its place as the top target for cross-border property investors. Whether that shift represents a long-term realignment of investment capital or a shorter-term response to turbulent markets has yet to be defined. However, some macro trends beginning to take shape indicate that the latter could be the case. But any recovery could also prove temporary.
Pricing Difficulties
Tue, 25 Nov 2008
Determining the market value of a property in the current environment is a challenge. Such low levels of volume result in few data points for comparison and leave market averages vulnerable to being skewed by one or two deals.
Redefined TARP (Troubled Asset Relief Program)
Tue, 25 Nov 2008
Treasury Secretary Henry Paulson's recent announcement that the Troubled Asset Relief Program (TARP) will not be buying troubled mortgages as originally planned was not taken as good news in the CMBS market: spreads widened considerably. Yields on “super senior” AAA CMBS spiked to an astounding 11%.
Another Turn in the Market
Thu, 23 Oct 2008
In September '08, a year after the mortgage markets seized up, the entire financial system froze—and the already limping property investment markets suffered another tremendous blow. It became clear that the economic ramifications of the credit crunch and this ongoing de-leveraging period would seriously undermine rent and occupancy fundamentals. Both the capital markets and space markets started moving solidly in the same direction: down.
10 Implications of the Credit Crunch Revisited
Thu, 25 Sep 2008
A year ago, as the credit crunch began to settle in, chilling markets worldwide, we went out on a limb and offered “10 Implications” for commercial real estate investment and finance. For the most part, we were right on the money; if anything, the repercussions have been deeper and the challenge has lasted longer than we thought. Here is a reprise of what we said would happen, what actually has happened and most importantly, further implications as the credit crunch enters its second year.
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