Real Capital Markets: Investors still sweet on commercial real estate

Posted on January 4, 2017

Investors still love commercial real estate. And they love multifamily properties most of all.

That’s the takeaway from a national investment survey published this January by Real Capital Markets. The company completed the survey in November of last year, finding that 70 percent of commercial real estate investors from around the United States were in a buying mode at the end of the year.

“RCM’s Investor Sentiment Survey showed that investors are still aggressively looking for acquisitions and intently focused on keeping the course with tried and true property sectors,” said Steve Shanahan, executive managing director with Real Capital Markets, in a statement. “Many investors remain optimistic in spite of economic conditions, potential interest-rate changes and domestic and international events that could impact short-term activity.”

Multifamily remains the preferred asset type for investors.

Not surprisingly, the multifamily sector is the top investment choice among survey respondents, with 49 percent of investors saying they prefer to sink their dollars into apartment properties.

Industrial was also a popular investment choice, with 34 percent of investors saying they prefer this asset class. Next came retail and office, both favored by 32 percent of investors.

A total of 20 percent of investors listed land as their favorite investment asset, while 15 percent cited hospitality assets as their preferred property type.
“The United States continues to be a safe haven for commercial real estate investment,” said Tina Lichens, chief operating officer of Real Capital Markets. “There is a lot of capital flowing through the United States from foreign and domestic sources, with many markets seeing a shortage of supply of quality assets.”

The survey also found that investors preferred properties priced from $30 million to $100 million.

The report isn’t all positive for the Midwest, though. Investors said that they prefer commercial real estate in the southern portion of the United States, with 58 percent of respondents saying they want to invest in properties here. An additional 47 percent said they preferred assets in the western portion of the country.

The survey found that the Midwest is losing favor with investors mostly because some major cities in the area are seeing too many job losses.
In better news, don’t expect mild hikes in interest rates to slow down commercial real estate investors during 2017. A total of 54 percent of survey respondents said that potential interest-rate hikes would not prevent them from investing in commercial real estate.

And the recent presidential election? It is not much of a factor for investors. Only 19 percent of respondents said that concerns over the election would impact their investing decisions this year.