Posted on Jan. 5, 2016
Members of the CCIM Institute, Commercial Real Estate's Global Standard for Professional Achievement, indicated strong investor interest in all property transactions, according to the organization's 4Q15 Quarterly Market Trends report. More than half of CCIM members who participated in an October/November 2015 market intelligence survey reported participation in more deals year over year, with 69 percent reporting that they closed a sales transaction during the previous quarter. In addition, 54 percent of CCIM member respondents reported clients showing a greater interest in buying properties, with only 6 percent indicating that clients were more interested in selling properties.
In leasing transactions, CCIM members reported a 100 percent closing rate for retail leases, with 48 percent reporting higher retail rental rates as well. Leasing conditions were strong for office and industrial properties as well, with closing rates of 95 percent and 83 percent respectively. Multifamily lagged behind with only 36 percent of CCIM members reporting closing an apartment lease in the previous quarter.
In terms of investment conditions, CCIM members rated multifamily as having the best investment conditions, giving it a 4.0 out of 5.0. Industrial received a 3.7 rating, followed by hospitality, retail, and office. However, in regards to investment value vs. price ratio, multifamily received a 2.8 out of 5 rating, indicating that many CCIM members feel that multifamily investments are overpriced at this point. Industrial fared best on value vs. price, receiving a 3.2 out of 5.0 rating.
With regard to the effect of increased interest rates, 47 percent of CCIM members expected Treasury yields to stay the same, and 25 percent believe Treasury yields will rise but only minimally affect capitalization rates. Only 8 percent expect rising rates that force cap rates upward as well.
For more information, download the complete 4Q 2015 Quarterly Market Trends Report (pdf).