What’s Hot and What’s Not in Commercial Real Estate?

According to Real Capital Analytics, the top 10 most active markets for transactions of $10,000,000 and over for all types of commercial real estate during the last 12 months were New York City Metro; Los Angeles Metro; San Francisco Metro; Washington, D.C. Metro; Chicago; Seattle; Boston; Dallas; South Florida; and Atlanta. New York City Metro lead the way in each the following sectors: apartment, hotel, office, retail, and senior housing; and most of the industrial transactions were in the Los Angeles Metro area.

The top 10 most active buyers over the last 12 months were Lehman Brothers Holdings, Inc. with 276 apartment properties totaling $8.8 billion; Blackstone with 1,379 mostly hotel properties totaling $7.1 billion; Simon Property Group with 36 retail properties totaling $4.2 billion; Starwood Capital Group with 99 apartment, hotel and retail properties totaling $2.6 billion; Beacon Capital Partners with 21 mostly office properties totaling $2.5 billion; CPP Investment Board with 13 retail properties totaling $2.4 billion; Vornado Realty Trust with 11 mostly retail properties totaling $2.1 billion; SL Green with 46 mostly office properties totaling $2.1 billion; Invesco Real Estate with 24 properties totaling $2.1 billion; and HCP, Inc. with 149 mostly senior housing properties totaling $2.0 billion. See http://www.rcanalytics.com/Public/trends.aspx for further details.

So, what’s on the horizon for the next 12 months? Naturally, most commentators advise that a lot depends on the upcoming presidential and congressional elections and the global economic situation. At the end of the day, however, it all depends on jobs, jobs and jobs! Where there are jobs, there will be commercial real estate transactions. For example, jobs drive the need for office and industrial workplace properties, and jobs create a demand for retail properties for shopping and hotels for business and leisure travel.

Also, some demographic factors that are affecting commercial real estate transactions include a rise in the need for “multigenerational housing” units to house married adult children, who are struggling financially, along with their still-working “baby boomer” parents and their retired grandparents.  Another interesting trend is the strong desire of many 30-somethings to live in apartments in urban areas instead of in single-family houses in the suburbs in order to save on commuting and housing expenses.

For further information about what we can expect in 2013, please see 2013 Emerging Trends in Real Estate published by Price Waterhouse Coopers and the Urban Land Institute at http://www.uli.org/wp-content/uploads/ULI-Documents/ET_Americas_2013.pdf.

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