dence on job growth and other economic
factors. However, as illustrated in the fundamentals, total returns and income on this
asset class are slowly improving, and more
importantly, CCIM members expect this
trend to continue. CCIM members gave
commercial real estate an overall return
versus risk rating of 5.5 on a scale of 1 to
10, with 10 being high, in 3Q12, as this asset
class gained appeal (Table 3). When looking
at the individual property sectors, the safest
property types earned the highest return
versus risk ratings, such as the apartment
sector with a rating at 7.2. At 4.9, the ofce
sector has the lowest return versus risk rating, indicating that there is slightly more
risk involved with this sector.
As we have seen over the past few years,
commercial real estate can be the refuge investors need as they peer into the looking glass,
seeking relative safety and reasonable returns.
However, for investors to make the best use of
the real estate looking glass, close scrutiny of
Table 3: CCIM Historical Return vs. Risk Ratings
3Q 2012
RETURN VS. RISK
Overall
Office
Industrial
Retail
Apartment
Hotel
VALUE VS. PRICE
Overall
Office
Industrial
Retail
Apartment
Hotel
2Q 2012
1Q 2012
4Q 2011
3Q 2011
5.5
4.9
5.7
5.3
7.2
5.6
5.4
4.7
5.4
5.1
6.9
5.4
5.9
5.1
5.7
5.3
7.0
5.6
5.6
4.9
5.6
5.1
7.1
5.2
5.1
4.4
5.1
4.4
6.8
4.7
5.6
5.2
5.6
5.3
5.2
5.1
5.4
5.1
5.5
5.2
5.1
5.0
5.7
5.5
5.7
5.5
5.3
5.4
5.7
5.5
5.6
5.3
5.5
5.2
5.4
5.1
5.5
5.0
5.5
5.1
Ratings are based on a scale of 1 to 10, with 10 being high.
Source: RERC/CCIM Investment Trends Quarterly, 3Q12
the facts and fundamentals, proper illumination of the investment environment overall,
and an objective look at the refection peering
back are needed.
Kenneth P. Riggs Jr., CCIM, CRE, MAI, is chief
real estate economist for CCIM Institute and chairman and president of Real Estate Research Corp.
in Chicago. Contact him at riggs@rerc.com.
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