Multifamily continues to lead investment ratings, according to CCIM Institute and RERC data.
Commercial real estate investors are expanding their search for quality office, industrial, and apartment properties into secondary markets such as Nashville, Tenn., Austin, Texas, and Charlotte, N.C., according to CCIM Institute and Real Estate Research Corp.’s 2Q12 RERC/CCIM Investment Trends Quarterly(PDF). Another positive trend is the extension of institutional investors beyond coastal hubs into large inland markets, such as Chicago and Denver, where some significant transactions are taking place, according to the survey.
Multifamily Leads Investment Conditions Ratings
Among the five major commercial property sectors, apartments received the highest investment conditions rating of 7.5 on a scale of 1 to 10, with 10 being highest, as well as the highest return-versus-risk rating among CCIMs who participated in the survey. “The apartment sector continues to be the most preferred property sector for those investors who are focusing on safety,” said Kenneth P. Riggs Jr., CCIM, CRE, MAI, chief real estate economist for the CCIM Institute and chairman and president of Real Estate Research Corp. Investment conditions for the hotel sector also showed improvement, with the rating increasing to 5.8, surpassing the industrial sector, which remained unchanged at 5.6. Ratings for the retail and office sectors remained the lowest at 5.3 and 4.9 respectively.
Confidence in Commercial Real Estate Continues
CCIM members remain generally confident about commercial real estate and the relative safety that commercial property offers as an investment in these tumultuous economic times, according to the report. “Much less volatile than stocks, with better returns than those available with cash or Treasurys, commercial real estate is still a good alternative for risk-averse investors,” Riggs said. “I believe that commercial real estate should be a part of most investment portfolios, to provide balance, a hedge against inflation, and reasonable returns. You can’t ask for much more than this, especially taking into consideration the uncertainty dominating the investment environment.”
About the Survey: Published quarterly, the RERC/CCIM Investment Trends Quarterly report provides timely insight into transaction volume, pricing, and capitalization rates for the core income-producing properties. The RERC/CCIM Investment Trends Quarterly is produced by Real Estate Research Corp. in association with and for members of the Chicago-based CCIM Institute.