Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/306204
8 May | June | 2014 Commercial Investment Real Estate T RE N D S M A RK E T Top CRE Mortgage Holders 4Q13 (% of market) YOY Increase Holders Banks CMBS GSEs Life insurance cos. Others 8% 7 6 5 4 3 2 1 0 40% 30 20 10 0 7.4 35.5 22.4 15.4 13.3 13.6 0.1 3.1 4.4 Source: Mortgage Bankers Association Hospitality — Major-market hotel occupancy is forecast to grow by 4 percent this year, accord- ing to TravelClick, with smaller markets seeing larger increases, including Tampa, Fla., 14 per- cent; Denver close to 11 percent; and Atlanta, San Francisco, San Diego, at or near 9 percent growth. That outlook is boosting hotel prices, according to a Hotel News Now report: From 2012 to 2013, the number of U.S. hotels trans- acting at a price of $1 million per room grew from fi ve to more than 20. Industrial — Net absorption for this year could surpass 250 msf, according to the NAIOP Indus- trial Space Demand Forecast. The report projects a quarterly demand of 62.7 msf, due to pent-up demand and increased construction and retail spending from a strong housing rebound. Given an improving job market and economy, 2015 should follow the same trend with quarterly absorption averaging between 58.5 and 64.5 msf. Multifamily — While the outlook for all seniors housing sectors is positive, the independent living sector is attracting the most attention from multi- family investors, as transaction velocity increased more than 50 percent last year, according to Marcus & Millichap. Median sales price was $135,400 per unit with cap rates in the high 6 percent range. Offi ce — A 2.8 percent offi ce-using job growth and tightening space availability should push tenant demand for offi ce space to 135 msf this year, more than double the 56 msf scheduled to come online, says Marcus & Millichap. This sets up a strong scenario for a 120 bp drop in the national vacancy rate and a 3.5 percent rise in asking rents. Retail — The fl ight to quality is playing out in neighborhood strip centers where overall vacancy is around 10 percent but class A vacancy is closer to 6 percent, according to Cassidy Turley. Neigh- borhood centers will make the most gains this year, helped along somewhat by their tenant mix of grocery, drug, restaurant and retail services — retail categories least affected by ecommerce. Briefl y Noted Foreign Investment Grows Of shore investors, mostly from China, continue to f ood the U.S. real estate market with capital, according to speakers at the Akerman U.S. Real Estate Summit. Inbound investment is up 40 percent and doesn't appear to be slow- ing, said Tim Gif ord, senior vice president of international capital markets at CBRE. Global transaction volume for 2013 was $1.1 trillion, the highest volume since 2007, according to E&Y.; About 18 percent of that amount accounts for cross-border transactions, with the U.S. remaining the strongest market for international capital. Source: Hotel News Now Seniors Housing Outlook Sector Year-end Year-end occupancy (%) rent growth (%) Independent living 91.5 80bp 1.8 Assisted living 91.0 30bp 1.9 Skilled nursing 88.4 40bp 1.8 Continuing care 90.0 60bp NA Source: Marcus & Millichap 0 6 - 0 9 M a r k e t T r e n d s . i n d d 8 06-09 Market Trends.indd 8 4 / 2 9 / 1 4 2 : 3 8 P M 4/29/14 2:38 PM