Investors See Commercial Real Estate as Good Investment
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According to Roger Vincent with the LA Times. “As 2011 came to a close, some commercial real estate experts found promising signs in often troubled markets.”
I agree, but that’s quite an understatement in certain segments. In certain market segments, it’s getting real competitive and in others, it’s still lagging. Primary markets are doing much better in just about all segments and caps rates are showing it. Secondary and tertiary markets are doing better in retail and multiunit residential. Single tenant, corporate backed, long lease, triple net or absolute net retail is hot all over the country. National brand retail, triple net leased by large franchisees are gaining strength because the corporate leased NNN product is so hard to find. Multi tenant retail is still lagging and it still can be a PITA.
The office market is coming back slowing due to gaining interest from investors amid mixed economic and job growth news. We still need solid job growth numbers before we’re going to see major recovery here.
Commercial real estate continues to offer attractive yields compared with alternative investments, said respondents to a quarterly poll by consulting firm PricewaterhouseCoopers.
“Despite a sluggish U.S. economic outlook, the majority of surveyed investors view commercial real estate as favorably priced and a good play,” said Mitch Roschelle, the U.S. real estate advisory practice leader at PwC, as the firm brands itself.
Investors are bullish for 2012 and expected this year to gain some strength. Office districts that have abundant tenants in technology or energy businesses are set for growth.
Rent growth is expected to be highest in San Francisco, New York and the Pacific Northwest. Los Angeles ranked ninth among 51 markets as a desirable place to invest.
The apartment, multi unit residential segment continues to be strong as it did throughout most of 2011. This is due to what has happened in owner occupied single family over the last several years, limited new construction because of the lack of construction financing and stiff lender requirements for mortgage financing.
Provided that we don’t have some massive international geopolitical disaster (Iran) that sends gas prices through the roof, we should be off to a greatly improved 2012
