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| John Oharenko |
Chicago, IL, Jan. 5, 2021 – Real Estate Capital Institue reports the year 2020 closed as one of the most tumultuous in modern history, with health concerns driving the economy.
Few could have predicted the unforeseen
financial and social impacts on the real estate industry, in particular.
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| Office Space Suffering |
· Space needs almost instantly shifted with traditional lodging, office, and retail usage quickly vaporizing.
·
Meanwhile, industrial and multifamily assets
continued to thrive.
·
And realty capital markets forcefully responded
backed by flexible fed policy, as historically low-interest rates prevailed.
What
lies ahead for realty capital markets this year? The supply of
capital remains at peak levels. So investors need to turn to the
demand side, seeking income-property aligned to pandemic economics.
More
than ever, properties must offer competitive health and safety standards while
providing relevance of usage. Investors focus on
"essential" types of assets, such as personal living space (e.g.,
apartments).
Investors
gravitate to those property types linked to personal attention, mainly
properties offering direct distribution of goods and services to the
consumer. As such, this year's investors bypass
social-gathering facilities such as shopping centers, entertainment, and office
buildings.
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| Investors Bypass Shopping Centers |
·
As investor demand shifts, yields remain highly
competitive, fueled by favorable borrowing rates and the lack of desirable
assets.
·
Fewer opportunities exist in the financial
engineering of deals, unlike in the past decade.
·
Instead, the best routes to profitability focus
on repurposing existing brick-and-mortar and creating new developments tuned to
the pandemic's new realities.
The
Real Estate Capital Institute's Director, John Oharenko, predicts,
"Today's 'distressed' deals will be tomorrow's opportunities, as investors
learn how to reposition retail, office and lodging assets to function within
ever-changing health-safety space needs."
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, Executive Director
The Real Estate Capital Institute®
Chicago, Illinois USA 60622
