NNN Lease Market News
Commercial real estate investors are optimistic that a U.S. industry recovery will continue even as the economy shows signs of slowing.
A lack of new supply and low interest rates are helping to drive investor interest in commercial properties. Capitalization rates, which decline when real estate prices increase, fell in 27 of 31 markets surveyed.
Office properties led cap-rate declines in the second quarter, the report showed. The average cap rate for office buildings in central business districts was 6.95 percent, down 1.2 percent from a year earlier. Cap rates, a measure of yield, are net income divided by the sales price
Buyers are pursuing deals as the market improves, and concern that that the economic recovery will falter has deterred “very few” investors from acquiring assets.
There will be “very few additions” to the commercial- property supply in the near term, which will help absorb existing space and drive up rents as tenant demand increases, according to the report. Lease rates remain below peak levels for most property types and increased in 25 of 31 markets surveyed.
The Northeast is the strongest office market, with nine out of 10 regions surveyed in recovery or expansion this year.
Two-thirds of investors view current market conditions as favorable to sellers, and all 81 multifamily markets surveyed are expected to be out of recession by the end of the year.
http://www.bloomberg.com/news
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