Commercial Real Estate Investment Market Poised for Growth in 2014

Posted on January 15, 2014

CCIM Institute’s Quarterly Trends Report Shows Increased Deal Flow in 4Q13.

The last quarter of 2013 for the commercial real estate investment market set the pace and tone for 2014. Nearly 60 percent of CCIM Institute’s national membership indicated they experienced more transactions in 4Q13 than the same period the prior year, according to the organization’s 4Q13 Quarterly Market Trends report.

The report, which features data collected from CCIM members nationwide and is conducted in conjunction with the National Association of Realtors®, also shows that 61 percent of respondents received more serious inquiries related to buying commercial real estate. Property sectors that saw the most deal activity included:

Hospitality: 75 percent of CCIM’s saw an increase in deals with hospitality properties
Office: 64 percent of CCIM’s saw greater deal flow in the office sector
Industrial and Multifamily: 56 percent of members who work with industrial and apartment properties saw a rise in deals
Retail: 51 percent of CCIM’s in the retail sector saw an increased deal volume

“With triple-digit spreads between capitalization rates and Treasury notes providing a large cushion, investors’ risk appetite broadened, driving commercial investments to a strong finish in 2013,” according George Ratiu, director of quantitative and commercial research for NAR. “With a favorable economic outlook coupled with rising capital availability, commercial real estate markets are well-positioned for continued growth in 2014.”

Higher rents were also reported with 48 percent of CCIM’s indicating they are observing higher rental rates across all property types over the same period last year, and 35 percent of members experienced similar rents year over year. Almost half (45 percent) of respondents expect rents and prices to move together in the next one to three years with 23 percent predicting rent growth will outpace price growth and 32 percent indicating the opposite, with prices expected to outperform rents.

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