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Equity Office Sale Drives Commercial Property Sales to Record Level
Commercial property sales continue to grow, according to a new report from Grubb & Ellis.
The first quarter set a record for commercial property sales at $119 billion, according to Bob Bach, Senior Vice President of Research & Client Services. That compares with property sales of $77 billion in all of 2001, $102 billion in 2002 and $120 billion in 2003.
While investor demand remains as hot as ever, the main reason for the blockbuster performance in the first quarter is the $39 billion sale of Equity Office Properties to Blackstone Group and the subsequent re-sale of some $25 billion of former EOP properties in a handful of U.S. cities to other investors, Bach says.
Real estate is in the grip of a global capital glut that is pushing up prices for property and for other asset classes as well.
However, the market is not without risks that include overbuilding, rising operating expenses, economic and interest rate risk, and the small but present risk of an "event" in the capital markets related to high levels of debt. For the most part, these risks are outweighed by the fortuitous combination ofsteady economic growth and low interest rates.