Market Data

Market Trends

2012 Niche Investment Prospects

1. Medical office

2. Urban mixed-use

3. Data centers

4. Self-storage

5. Mixed–use town centers

Source: Emerging Trends in Real Estate 2012 survey

Briefly Noted

Hospitality — Up to a 100-day wait for visas is keeping foreign tourists, especially those from China, Brazil, and India, the fastest-growing and highest-spending segment of overseas travelers, from visiting the U.S., according to HotelNewsNow.com. Based on the U.S. Travel Association statistics, from 2000 to 2010, the U.S. share of global travelers fell almost 5 percent.

Industrial — Weary of fighting for office trophies, institutional investors are looking more closely at plain-Jane warehouses, according to CoStar, which has tracked an uptick of 3Q11 big-box warehouse sales in major distribution hubs. Six quarters of positive absorption and a 70-basis-point drop in vacancy since 2009 may signal rent growth ahead.

Multifamily — Buy multifamily “any way you like it,” is the advice from Emerging Trends in Real Estate 2012. Every market and class was suggested by commercial real estate professionals interviewed, except one: Avoid markets with an oversupply of single-family homes to rent.

Office — While demand for medical office will certainly continue for the next decade, performance varies considerably by market, says Marcus & Millichap. Well-performing markets are found in Texas, the Midwest, and the Northeast. However the Southeast, the West, and Mountain states suffer from an oversupply of spec development built during the housing boom.

Retail — Tablets and smartphones will completely revolutionize the shopping experience at apparel and department stores in the next three years, according to Chainstoreage.com. Cash registers and checkout counters will disappear as sales associates armed with mobile devices will make sales wherever the customer happens to be. By 2015 more than 2.7 million tablets a year will be shipped for use in retail and hospitality locations.

Bank Failures Continue

As of November, 90 banks had failed in 2011, according to Trepp, which predicts bank closures to continue into 2012 and beyond. Of the 11 banks that failed in October and five in November, commercial real estate loans comprised 80.8 percent of the banks’ nonperforming loans.

“Commercial real estate has already demonstrated for a solid 18 months that it can perform reasonably well in the throes of a deleveraging recovery.” — Kevin J. Thorpe, chief economist, Cassidy Turley

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