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Monthly Archives: May 2014

Rising Cross-border Investments to Europe Evokes Both Confidence and Fear

Signs of economic recovery and market reforms in Europe has helped spur increasing numbers of cross-border investments, particularly in Spain, Italy, Greece and Portugal. Slow improvements continue to boost confidence in the European commercial property market, with many investors hopeful that undervalued assets will soon revert to trend.

Still, the improved outlook for Europe’s commercial property market has led many to question whether rising foreign investments will truly benefit the economies of individual countries in the long-term.

Many investors anticipate a plethora of assets to soon enter the marketplace as a result of the European Central Bank’s asset review taking place this summer, a phenomenon that has left banks fervid to dispose of old loans.

Data from Real Capital Analytics (RCA), a global research firm focused exclusively on commercial real estate transactional data and analytics, shows that cross-border capital currently accounts for over 60% of commercial and multifamily property deals in Spain and over 70% in Italy.

Moody’s/RCA CPPI: Commercial Property Prices up 15% in the year through March 2014

In the next three years, over $300 billion originating from 10-year loans of commercial mortgage-backed securities are set to mature. Whereas industry experts previously feared this would lead to increased defaults resulting from lack of refinancing, improved real estate values and increased financing in recent years have lessened worries.

According to the Moody’s/RCA CPPI, prices in the year through March have risen 15%. Data from Real Capital Analytics (RCA), a global commercial real estate data and analytics firm, shows transaction volumes increased 20% in 2013 to $360 billion.

Declining Assets Lead to Slower Transactions for Europe in Q1’14

After five consecutive quarters of growth, European property transactions declined by 10% to €35.2 billion in Q1’14. The most marked declines were in Germany and Russia, where transaction volumes sank 31% and 83% from Q1’13, respectively.

“A pause was inevitable as difficulties in finding suitable investment-grade product has become a familiar refrain from investors who are frustrated by the intense competition for a shrinking pool of assets. This situation has forced many to re-think their investment strategy, helping revive peripheral European markets, where pricing of prime assets is still attractive, and stimulate demand for secondary assets or locations in core markets,” says Simon Mallinson, RCA’s Managing Director for EMEA.

Investors are now turning to lower-priced assets. According to data from Real Capital Analytics (RCA), a global data and analytics research firm focused on commercial real estate transactions, nearly half of office transactions in Germany are currently priced below €2,000. The rise in property prices has created an exit route for those who made opportunistic purchases during the 2009-2011 downturn. RCA data also shows that approximately 20% of London office assets acquired between 2009-2011 have since re-traded.

Moody’s/RCA CPPI: Commercial Property Prices up 15% in the year through March 2014

In the next three years, over $300 billion originating from 10-year loans of commercial mortgage-backed securities are set to mature. Whereas industry experts previously feared this would lead to increased defaults resulting from lack of refinancing, improved real estate values and increased financing in recent years have lessened worries.

According to the Moody’s/RCA CPPI, prices in the year through March have risen 15%. Data from Real Capital Analytics (RCA), a global commercial real estate data and analytics firm, shows transaction volumes increased 20% in 2013 to $360 billion.

Declining Assets Lead to Slower Transactions for Europe in Q1’14

After five consecutive quarters of growth, European property transactions declined by 10% to €35.2 billion in Q1’14. The most marked declines were in Germany and Russia, where transaction volumes sank 31% and 83% from Q1’13, respectively.

“A pause was inevitable as difficulties in finding suitable investment-grade product has become a familiar refrain from investors who are frustrated by the intense competition for a shrinking pool of assets. This situation has forced many to re-think their investment strategy, helping revive peripheral European markets, where pricing of prime assets is still attractive, and stimulate demand for secondary assets or locations in core markets,” says Simon Mallinson, RCA’s Managing Director for EMEA.

Investors are now turning to lower-priced assets. According to data from Real Capital Analytics (RCA), a global data and analytics research firm focused on commercial real estate transactions, nearly half of office transactions in Germany are currently priced below €2,000. The rise in property prices has created an exit route for those who made opportunistic purchases during the 2009-2011 downturn. RCA data also shows that approximately 20% of London office assets acquired between 2009-2011 have since re-traded.

Chicago Commercial Property Sales Jumped 59% in Q1’14

Commercial property sales in the Chicago region reached their highest levels since 2008 in Q1’14 as a result of rebounding rents and occupancies as well as increased lending.
Data from Real Capital Analytics (RCA), a global data and analytics research firm focused on commercial real estate transactions, shows that investors spent over $3 billion to acquire 192 apartment properties, retail centers, industrial buildings and hotels in the first quarter, generating a 59% increase from the same year-ago period to $1.9 billion.

“That’s really strong for the first quarter especially considering the weather we had,” says Dan Fasulo, Managing Director at RCA.

RCA data shows a fairly even distribution of sales across property types in Q1’14, with $855 million in the office sector, $666 million in retail, $616 million in industrial, $620 million in apartments, and $288 in limited-service hotel sales.

“Where sales go from here will depend on whether the local economy continues to improve, further boosting occupancies and rents,” adds Fasulo.

Chicago Commercial Property Sales Jumped 59% in Q1’14

Commercial property sales in the Chicago region reached their highest levels since 2008 in Q1’14 as a result of rebounding rents and occupancies as well as increased lending.
Data from Real Capital Analytics (RCA), a global data and analytics research firm focused on commercial real estate transactions, shows that investors spent over $3 billion to acquire 192 apartment properties, retail centers, industrial buildings and hotels in the first quarter, generating a 59% increase from the same year-ago period to $1.9 billion.

“That’s really strong for the first quarter especially considering the weather we had,” says Dan Fasulo, Managing Director at RCA.

RCA data shows a fairly even distribution of sales across property types in Q1’14, with $855 million in the office sector, $666 million in retail, $616 million in industrial, $620 million in apartments, and $288 in limited-service hotel sales.

“Where sales go from here will depend on whether the local economy continues to improve, further boosting occupancies and rents,” adds Fasulo.

BNY Mellon is Deciding Between NYC and New Jersey for their New HQ Location

Since selling their Wall Street headquarters last year, Bank of New York Mellon (BNY Mellon) is currently deciding between a lower Manhattan skyscraper or a smaller office building in New Jersey for it’s new headquarter location. Mayor Bill de Blasio and Governor Andrew Cuomo have not ruled out taxpayer-funded incentives to help keep the bank’s headquarters and 850 employees in New York.

BNY Mellon is also in the process of selecting a buyer for their 52-story office tower located on Wall Street near Broadway, with bids expected to reach as high as $600 per-square-foot.

According to data from Real Capital Analytics (RCA), a global data and analytics research firm focused on commercial real estate transactions, the highest PPSF for a lower Manhattan office building of at least 250,000 square feet was $732, a sale that took place in 2007 when Paramount Group bought Deutsche Bank AG’s headquarter office on Wall Street. RCA data also indicates that the highest post-recession PPSF has been $577.

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