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| John Oharenko |
Chicago, IL, July 1, 2020 – The stock market rebound and rising COVID-19 cases, particularly in the Sunbelt and Western states, drive headlines, reports The Real Estate Capital Institute®
The commercial realty markets, too, regain momentum,
particularly in the multifamily, industrial sectors.
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Datacenters also attract higher investor demand, as demand for internet usage increases with more workers operating from home.
Two
key CRE trends emerge for mid-year, including:
Price
Discovery: Acquisition volume recovering, but price
discovery surfaces with sellers and buyers assessing the pandemic impact on
cash flow stability.
Retail
and hospitality properties witness the most stress, with office assets ranking
close beyond with prices dropping ten percent or more.
That
said, investors still attracted to CRE, as yield spreads remain attractive
compared to alternative assets such as similar-risk investment-grade bonds
(spreads of 75 basis points or more favor real estate).
Ample
Funds: Despite depressed market conditions in
specific product sectors and markets, abundant funds exist for purchasing
assets.
Numerous sources, including private funds,
public syndicates, and institutional investors, remain flush with cash in
search of yields.
For
example, mid-teen yields attract development capital and preferred equity
reaches mid-to-higher-single-digit returns.
John Oharenko, director of the Real
Estate Capital Institute, notes that "Investors search for bargains during
the pandemic, but deals are hard to come by as too much sidelined cash floods
the capital markets."
The
Real Estate Capital Institute® is a volunteer-based research organization that
tracks realty rates data for debt and equity yields. The Institute posts
daily and historical benchmark rates, including
treasuries, bank prime, and LIBOR.
CONTACT:
John Oharenko
The Real Estate Capital Institute®
Chicago, Illinois USA 60622
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