Investors, brokers and analysts across the country are weighing in a debates whether we are in the CRE market cycle where there are still opportunities for finding yields on real estate investment at this time. Almost every discussion involved with the current market peak that resemble with the previous, just before it all collapsed after the bubble in housing values burst. As the final quarter of 2014 approach, it’s inevitable to forecast what is coming because of transaction volumes, values, and yields got too high. Elkins one of realty advisors from Virginia gave some advices on investing that off-shore/foreign investors attempting to park their money in the U.S. and stock investors possibly retreating from equities, cap rates could drop lower in the near term, but not forever. He also added that net leased properties still not a right moment to invest in, when the risk and reward doesn’t meet the requirement for the expected return underlying real estate.
Excerpts from the Article:The year 2007 still casts a long shadow over today’s commercial real estate market. Nearly every discussion among commercial real estate pros involving cap rates, investment sales volume, price/square foot, loan underwriting, vacancy, etc. ties today’s values back to the previous market peak, just before it all collapsed after the bubble in housing values burst. As we enter the final quarter of 2014, it’s inevitable that current stats, which now approach or exceed the 2006-2007 numbers, are placed side-by-side as a cautionary legend warning that the end of this run-up may be nigh. In Icarus fashion, it’s as if some believe transaction volumes, values and yields collapsed because they got too high. Citation and link:
Heschmeyer, Mark. “Seeing Similarities to 2007, CRE Industry Debates Whether We’re Early or Late in Current Upcycle.” CoStar News., 05 Nov. 2014. Web. 12 Nov. 2014.