Investors still see room for growth in commercial market.Despite signals indicating a coming slowdown, the vast majority of commercial real estate investors recently surveyed believe the investment real estate market still has room for growth. Over 40 percent of respondents to Cushman & Wakefield's Real Estate Outlook survey believe the market is in the middle of its traditional cycle and improving, while 25 percent believe the market is at the top of the cycle and static. "The investors we talked to clearly believe the fundamentals of the investment marketplace are still strong," said Brian Corcoran Brian Corcoran (born 23 March, 1973) is a former Irish sportsman. He played hurling and Gaelic football with Erin's Own and Cork in the 1990s and 2000s. He is regarded as one of the greatest players of his generation/ Early life , executive managing director of Cushman & Wakefield's Valuation Advisory Services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal . "And about two-thirds of respondents believe the current market conditions will continue at least through the new millennium." Real Estate Outlook, published twice a year by Cushman & Wakefield, surveys a number of significant and active commercial real estate investors across the country to gain an inside view of the investment market. Accompanied by analysis and articles on trends in the investment real estate market, it is one of the few comprehensive studies of its kind in the commercial real estate industry. Other findings from the investor survey include: Players in Investment Real Estate As in the previous survey completed in Summer 1997, the number one sellers of real estate are insurance companies, followed by banking/lending institutions and individual investors. On the buy side, the number one and two buyers continue to be real estate investment trusts and pension funds, respectively. Just over 50 percent of investors surveyed are acquiring portfolios of properties, down from two-thirds in the previous survey. And nearly 50 percent are acquiring properties for all cash, compared to two-thirds in the last survey. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Corcoran, "This indicates that investors are seeking to spread the risk and are investing for the long term, consistent with their optimistic view of the real estate marketplace." Financing According to the survey, capital remains abundant and available from many sources. Pension funds and life insurance companies remain the primary sources of capital, representing just under 50 percent of the investment market. In addition, a higher percentage of leverage is being obtained today - over 60 percent of respondents cite a ratio ranging from 70-90 percent than six months ago. At that time, two-thirds indicated a loan-to-value ratio Loan-to-value ratio (LTV) The ratio of money borrowed on a property to the property's fair market value. ranging from 6079 percent. Real Estate Product The survey showed the most favored property type remains suburban office properties, followed by apartments. Retail malls and central business district office properties are the least favored types. In the previous survey, non-mall retail was the least favored property type, followed by central business district office properties. Central business district office and non-mall retail properties are still the most undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. property type, while the most overvalued Overvalued A stock whose current price is not justified by the earnings outlook or price/earnings (P/E) ratio and thus, expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the market price of the stock or from a deterioration in a still are apartments. Geography Respondents said the most favorable real estate climates remain Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern and Seattle; Houston remains the least favorable. The most over-valued market is New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. ; the Midwest (other than Chicago) is most under-valued. Top areas targeted for development are Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , Chicago and Florida; at the bottom is the Southeast (other than Georgia, North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. and Florida, which were ranked separately). According to study author Bruce Kellogg, managing director of Cushman & Wakefield of Georgia, "While investors report strong activity, some cautionary flags have been raised, such as the increase in speculative building activity, which brings on the possibility of overdeveloping. Yet vacancy rates continue to decline. Subject to interest and pension funds will maintain their appetites for investment through securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. and other means." The Spring 1998 edition of Outlook also provides analysis on specific sectors of the investment real estate market. "In the nursing home industry, prices have been rising for the past six years, and there is an active mergers and acquisitions market," according to Courtney Lees, director, senior housing/health-care valuation group. "But changes in the industry affecting payment sources, such as Medicare and Medicaid Medicare and Medicaid U.S. government programs in effect since 1966. Medicare covers most people 65 or older and those with long-term disabilities. Part A, a hospital insurance plan, also pays for home health visits and hospice care. program changes, mean that lenders and appraisers will have more difficulty determining valuations. Lending decisions may be more complicated for this type of asset." "The U.S. hotel industry continues to maintain its strong performance, but has experienced some regional declines in occupancy due to additional supply entering the market, which has resulted in a decline in overall national occupancy in 1997 from 1996," said Daniel H. Lesser, senior director of the Hospitality Valuation Group. "However, the capital markets still perceive the hotel industry to be one of high promise. The transaction pace for individual properties, portfolios, mergers and acquisitions continues at a rapid clip." To obtain a copy of the Spring 1998 Real Estate Outlook contact Ann Scott Ann Scott (born on 3 November 1965, Paris, France) is a French fiction writer. The first tattooed fashion model to break through in prêt-à-porter and couture in the eighties, Ann Scott is now a novelist and the author of several novels including Superstars. at (212) 841-7795. |
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