Commercial Investment Real Estate March/April 2016 | Page 10

MARKE T
TREND S
U.S. Offi ce Snapshot, 4Q15
Vacancy
Hospitality — Excluding mergers and acquisitions
activity, last year saw 1,575 individual hotel and portfolio
transactions in the U.S., up from 1,491 in 2014, reports
Lodging Econometrics. Although 2015 marked an eight-year
high, hotel sales were still 28 percent lower than 2007’s peak
at 2,178 transactions.
Industrial — Industrial topped January’s Ten-X Commercial
Real Estate Nowcast. It showed the greatest increase in
valuations — 215 bps — according to the pricing index, which
combines Google Trends data, Ten-X’s proprietary transaction
database, and investor surveys to forecast commercial real
estate pricing trends in real time. Altogether, commercial
valuations in January increased 19 bps from December 2015,
the slowest increase since early 2014 across the fi ve major
commercial real estate sectors.
Multifamily — The multifamily boom is not over, according
to the Yardi Matrix report. Recent deals “indicate that the
biggest and most sophisticated investors in commercial real
estate are betting on the multifamily sector over the long
term. Given that other capital sources traditionally mimic
the activities of the Blackstones and Starwoods of the
world, there is not likely to be a shortage of equity capital
in the sector anytime soon,” the report says. Cap rates on
apartments dropped to 5.8 percent nationally and 3 to 4
percent in gateway markets in 4Q15.
Offi ce — Offi ce is the most popular sector for investment
in 2016 among both investors and fund managers responding
the Pension Real Estate Association’s 2016 Investment
Intention Survey. While international investors continue to
target the major markets, domestic U.S. investors are more
geographically diverse in their choices, eschewing San
Francisco and Washington, D.C., in favor of less-well-known
markets.
Retail — Off-price is where it’s at in brick and mortar
retailing, as TJX — the parent company of T.J. Maxx and
Marshall’s — has become the top clothing seller in the U.S.
and possibly the world, according to The Economist. Investors
love off-price retailers as well: As the Dow Jones U.S. Apparel
Retailers Index fell by 6 percent during 2015, the shares of
Ross and TJX rose by 15 percent and 4 percent respectively.
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March | April | 2016
Asking rents
4Q15
14.7 13.9
21.5 msf 21.3 msf
$26.96 $28.15
Source: Cushman & Wakefi eld
Foreign
Investment in U.S.
64% of foreign investors
plan modest or major CRE
investment increases
60% said U.S. was most
stable and secure country
for CRE
46% said U.S. of ered best
capital appreciation
Most Favored Property Types
1. Multifamily/Industrial (tie)
2. Retail
3. Of ce
4. Hotels
Source: Association of Foreign Investors of Real Estate
A Pretty Good Year
2015 CRE volume: $128.3 billion, up 26.2% YOY
U.S. Composite Index (lower-value properties in
secondary and tertiary markets): up 12.6% YOY
Source: CoStar
Briefl y
Noted
Net absorption
4Q14