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Monthly Archives: January 2014

Weak Markets Rebound in 2013

In 2013, there was an especially strong rebound for the property types and markets that had been the weakest in terms of recovery according to commercial property data and analytics firm Real Capital Analytics.

This rebound occurred amid a 19% year-over-year increase nationwide in commercial property sales worth $5 million or more. While nationally, transaction volume reached reached $355.4 billion. The Moody’s/RCA Commercial Property Price Indices were expected to post a 15% increase nationally year-over-year.

Driving the resurgence in markets and property types that time forgot was investors’ appetite for risk and higher yields. “Las Vegas is a prime example and it posted the largest price and volume gains of any market,” according to RCA’s US Capital Trends Big Picture overview report. “Atlanta, Tampa, Sacramento and even some of the tertiary markets also outperformed. Riskier property types such as unanchored shopping centers, resorts and limited-service hotels, and suburban offices also experienced strong rebounds.” If the trend continues, Vegas along with Phoenix, Jacksonville and Sacramento “are poised to outperform again in 2014.”

Weak Markets Rebound in 2013

In 2013, there was an especially strong rebound for the property types and markets that had been the weakest in terms of recovery according to commercial property data and analytics firm Real Capital Analytics.

This rebound occurred amid a 19% year-over-year increase nationwide in commercial property sales worth $5 million or more. While nationally, transaction volume reached reached $355.4 billion. The Moody’s/RCA Commercial Property Price Indices were expected to post a 15% increase nationally year-over-year.

Driving the resurgence in markets and property types that time forgot was investors’ appetite for risk and higher yields. “Las Vegas is a prime example and it posted the largest price and volume gains of any market,” according to RCA’s US Capital Trends Big Picture overview report. “Atlanta, Tampa, Sacramento and even some of the tertiary markets also outperformed. Riskier property types such as unanchored shopping centers, resorts and limited-service hotels, and suburban offices also experienced strong rebounds.” If the trend continues, Vegas along with Phoenix, Jacksonville and Sacramento “are poised to outperform again in 2014.”

Investors See Potential in Medical Office Buildings With Changing Healthcare System

Developers and investors see the changing US healthcare system as an opportunity to earn big on medical office buildings.

“To do this type of development, it does dictate the need for additional expertise,” said Dan Fasulo, managing director of global data and analytics firm Real Capital Analytics. For example, floors need to be able to withstand a certain weight, and the power supply needs to be adjusted to medical needs.

Despite these challenges, a growing number of investors see medical offices as a good pick. “There’s a lot of smart money that’s building medical office platforms,” said Dan Fasulo. “The demographics say they’re going to win.”

Investors See Potential in Medical Office Buildings With Changing Healthcare System

Developers and investors see the changing US healthcare system as an opportunity to earn big on medical office buildings.

“To do this type of development, it does dictate the need for additional expertise,” said Dan Fasulo, managing director of global data and analytics firm Real Capital Analytics. For example, floors need to be able to withstand a certain weight, and the power supply needs to be adjusted to medical needs.

Despite these challenges, a growing number of investors see medical offices as a good pick. “There’s a lot of smart money that’s building medical office platforms,” said Dan Fasulo. “The demographics say they’re going to win.”

Shifting Interest towards Secondary Markets, Secondary Properties, and Development in Europe

The “Battle for Assets” in Europe has brought huge turnarounds for markets once seen as less opportunistic. With investments to Europe in 2013 reaching their highest levels since the financial crisis, Ireland’s market was brought back to life with activity from both domestic and international levels. The resurgence of Ireland’s market has led many investors to move their sites towards other recovering markets such as Spain.

Immense competition for core assets in major metros such as London, Munich and Paris has led many investors to shift their sites towards secondary markets, where they are likely to see higher yields. Investors also have sights on secondary properties in major markets, where they focus on transforming good existing income streams into core assets.

Another consequence of the Battle of Assets is a renewed interest in the development sector.

Joseph Kelly, RCA’s director of Market Analysis EMEA, said: “After an initial wave of investment by sovereign wealth funds, that was focused on large trophy assets in London, wealthy individuals, developers and insurers have become increasingly active across a broader range of property types, lot sizes and European locations.”

Shifting Interest towards Secondary Markets, Secondary Properties, and Development in Europe

The “Battle for Assets” in Europe has brought huge turnarounds for markets once seen as less opportunistic. With investments to Europe in 2013 reaching their highest levels since the financial crisis, Ireland’s market was brought back to life with activity from both domestic and international levels. The resurgence of Ireland’s market has led many investors to move their sites towards other recovering markets such as Spain.

Immense competition for core assets in major metros such as London, Munich and Paris has led many investors to shift their sites towards secondary markets, where they are likely to see higher yields. Investors also have sights on secondary properties in major markets, where they focus on transforming good existing income streams into core assets.

Another consequence of the Battle of Assets is a renewed interest in the development sector.

Joseph Kelly, RCA’s director of Market Analysis EMEA, said: “After an initial wave of investment by sovereign wealth funds, that was focused on large trophy assets in London, wealthy individuals, developers and insurers have become increasingly active across a broader range of property types, lot sizes and European locations.”

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