Commercial Investment Real Estate July/August 2019 | Page 8

MARKET
TRENDS
Shifts in the
Seniors Market
The seniors housing industry is “undergoing a significant
transition, finding a new normal for investment and
development activity,” says Real Capital Markets’ April
2019 Senior Housing Snapshot. The report notes one
trend showing that delivery of new construction dropped
14.8 percent in 2018 from 2017, although many consider
the contraction a necessary slowdown as demand catches
up to the strong supply cycle, particularly in major markets.
The buyer profile has also changed. Five years ago, REITs
were the most prolific buyers; in 2018, private buyers
and institutional investors were the most active. Among
industry practitioners surveyed for the report, 61 percent
said that partnering with a strong operating firm was the
most critical factor to impacting a property’s profitability.
Hot Spots for Coworking
Choice for a Coworking Space
T own or city centers . . . . . . . . . . . . . . . . . . . . 74.2%
Shopping centers or malls . . . . . . . . . . . . . . . .73.1%
Cafes or restaurants . . . . . . . . . . . . . . . . . . . .53.2%
Industrial parks . . . . . . . . . . . . . . . . . . . . . . . .43.7%
Travel hubs (airports, train stations, etc.) . . . . .43.2%
Residential areas. . . . . . . . . . . . . . . . . . . . . . .32.0%
Source: Colliers, GlobalData
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July | August 2019
Smaller Retail Markets
Catch Investors’ Eye
Retail investors casting a wider net to increase their portfolio yields
are looking toward secondary and tertiary markets. Marcus &
Millichap’s 2019 Retail North American Investment Focus notes
that smaller metros offer opportunities for undervalued properties,
although demand has focused on existing properties because of
limited new construction in these areas. “Multi-tenant cap rates
in primary markets averaged in the low-6 percent range over the
past 12 months,” the report says, “whereas tertiary metro first-
year returns averaged in the low-7 percent area.”
COMMERCIAL INVESTMENT REAL ESTATE
City centers boast the most opportunities for coworking spaces,
though consumers wouldn’t mind adding some retail to the mix.