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.
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| 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.
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| 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.
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| 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.
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| 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
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