Monday, October 21, 2013

Bidding Wars: Office Investment Sales Gain Popularity

  


ATLANTA, GA (Oct. 21, 2013) – Office investment sales are gaining traction as a new wave of buyers has emerged, bidding up pricing and driving investors to second-tier markets in their search for higher yields.

Michael Bull
Those were a few of the points made during the most recent episode of the “Commercial Real Estate Show” radio program, hosted by Michael Bull of Bull Realty. Bull and his guests discussed investor demand, financing and cap rates.

Year-to-date, office investment sales volume has totaled about $65 billion nationwide, said Dan Fasulo, managing director of Real Capital Analytics. Sales are expected to remain strong through the end of the year, given that the fourth quarter is historically the most active quarter for office transactions, he added.

Dan Fasulo
“In the past 12 months, we have seen about 700 new funds or buyers enter the market for $2.5 million-and-above office properties,” said Casey Keitchen, vice president of Bull Realty. “The number of active buyers is approaching an all-time high.”

Active buyers are as diverse as they were at the height of the market, Fasulo added. “Everyone, from institutional investors to private investors, [is] back with a vengeance,” he said. Additionally, both public and private REITs have re-entered the market.

Casey Keitchen
“Debt is really fanning the fire in the investment arena, particularly CMBS loans that are readily available, even for suburban or value-add properties,” Keitchen said.

Financing is even available for secondary markets and transitional assets that were starved for capital during the last few years, Fasulo said. “We have to figure out how to keep the CMBS channel open because it is really helping the market be as healthy as it can be,” he added.

With so many buyers chasing office properties, some investors have been forced to move away from Class A assets or primary markets.

John Davidson
“We are looking off the beaten path at some secondary markets and suburban markets,” said John Davidson, southeast regional director of Parmenter Realty Partners.

Distressed or value-add product has been popular with buyers as well, Davidson said. “I’m working on a number of deals for highly distressed assets that were purchased at the bottom of the market,” Keitchen added.

On average, cap rates are around 5.8 percent, but can vary depending on the market and asset, Davidson said. “At the bottom of the market in 2010, cap rates were about 8.8 percent, so there’s been incredible movement,” he added. “However, there’s still room for compression and income growth.”

The entire episode on the office investment market is available for download at www.CREshow.com. The next “Commercial Real Estate Show” will be available on Oct. 24 and will examine the U.S. retail market.

 For a complete copy of the company’s  news release, please contact:

Stephen Ursery
The Wilbert Group
404.405.2354


No comments:

Post a Comment