The commercial real estate market has seen some dramatic changes in 2007. It will be interesting to see what 2008 has in store as well.
Recent housing data shows a major uptake in multi-family start with home developers reorienting towards multi-family purchases.
One of the reasons for this move is that many developers feel that the current housing slowdown will create more renters who will be looking for apartments. As well, the condo marketplace has been hit fairly hard as the housing slowdown has unfolded.
Another note of interest is that there has not been the rise in c
commercial real estate foreclosures that the residential market has been seeing. Because the two markets are so distinctly different, some feel that if the US is able to stay out of a deep recession that it is unlikely that dramatic commercial real estate foreclosures will develop in the near future.
Of course some markets have been affected more.
Real Capital Analytic tracks sales volumes and their data shows that the volumes are off significantly compared to the same periods last year. For most of the major property types the sales activity is off by 50% for the months of September, October, and November. So far, the property types that have been doing the best are industrial and hotels, even though these are off somewhat as well.
There has been another change that came with the shift in the US dollar. Overseas investors are finding US real estate to be far more attractive as they have greater buying power now. Many European investors are using this time to diversify their portfolios. This is true even though there may be a bit of overpayment involved to get into commercial real estate.
The credit crunch is creating opportunity for some buyers.
The US markets are supply-constrained and those which are closely linked to the global economic expansion have done the best. Another niche market to take note of is in the mezzanine space market which is doing very well.
Secondary markets in general, hold up well such as markets that are dominated by private investors.
Real Capital Analytic offers a variety of different subscriptions. Capital Trans Monthly Reports and individual market reports. We also have a new global product that has been tracking transaction activity overseas for over 12 months with $400 billion worth of transactions globally, non-US.
Based on excerpts from the commercial real estate investment talk show Capital Synergies. Capital Synergies is sponsored this week by Steelhead Capital, your commercial loan advantage.
This episode's contributing guest speaker was Mr. Dan Fasulo, Managing Director of research for Real Capital Analytics Direct.
By Senior Staff Writer, William K. Matthews,
Capital Synergies.
