ATLANTA, GA (Nov. 15, 2011) – Those looking for a solid commercial real estate investment bet in 2012 would do well to look to apartment properties in the nation’s secondary and even tertiary markets.
That was just one of the insights provided by this week’s “Commercial Real Estate Show,” which presented a wide-ranging look at the U.S. commercial real estate market and the state of real estate investment trusts (REITs) heading into next year.
Compressed capitalization rates in some of the larger, primary U.S. markets mean that “a best bet [in 2012] would be to look at secondary and tertiary markets,” said Mitch Roschelle (top right photo), the practice leader of PricewaterhouseCoopers’ Real Estate Advisory Practice. In conjunction with the Urban Land Institute, PricewaterhouseCoopers recently released the “Emerging Trends in Real Estate 2012” report.
Roschelle also noted that office properties located in secondary and tertiary markets and in need of some “TLC” represent good investment opportunities, as does land anywhere.
“Land is an incredible opportunity,” noted show host Michael Bull (middle left photo) of Bull Realty. “You see some prices, and it just blows your mind how low they are.”
Still, “2012 may very well be a good year to start placing some bets in the sector, but I don’t think-to use a poker term-that it’s a year to go ‘all in,’” Roschelle said. “The recovery is going to be gradual, and there will no doubt be opportunities in 2013 and maybe 2014 to still make some bets on the way up.”
As for REITs in 2012, Fitch Ratings has a “stable” outlook for multifamily, office, industrial and retail REITS, and a “positive” outlook for healthcare REITs, said Steven Marks (middle right photo), managing director of REITs for Fitch Ratings.
In the third quarter, multifamily REITs surprised by showing some slowing earnings, while REITs with suburban office properties demonstrated “a little bit of a positive upward trajectory,” Marks said.
Robert Lehman (lower left photo), a partner with Ernst & Young, noted that potential federal spending cuts could harm the commercial real estate sector in the short term by decreasing governmental demand for office space. However, consumer confidence could rise as a result of a “more fiscally responsible government,” which would boost the economy and the real estate sector, Lehman added.
The show is available for download here. The show airs on Saturdays in Atlanta on Biz 1190 at 10 a.m. ET and on Talk 920 on Sundays at 9 a.m. ET.
The next “Commercial Real Estate Show” airs November 19 and will provide an update and analysis of the U.S. self-storage industry.
America’s “Commercial Real Estate Show” is a national talk radio show about commercial real estate. New shows are available every Thursday at the show website, http://www.creshow.com/.
Shows are also broadcast on several AM stations, including Atlanta stations Biz 1190 on Saturday at 10 a.m. and Talk 920 on Sunday at 9 a.m. Show podcasts are available on-demand on iTunes and the show website.
The show host is 30-year commercial real estate veteran Michael Bull, CCIM. Michael is the founder of Bull Realty, Inc, a regional commercial brokerage firm with three offices headquartered in Atlanta, Georgia.
Contact: Stephen Ursery, Wilbert New Strategies, sursery@wnspr.com
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