Commercial real estate remains a solid investment vehicle, with industrial property offering the most favorable investment conditions, according to a recent survey.
Escalating land costs and higher new construction prices are projected to put constraints on the current supply of industrial properties nationwide, paving the way for favorable investment conditions for warehouse and research/development facilities, according to data collected in a survey by the Real Estate Research Corporation (RERC).
Institutional survey respondents gave the warehouse sub-sector a 6.4 point out of 10 point rating for third quarter, one of the highest ratings for any property type this year, according to the report. The research/development sub-sector fared slightly lower at 5.7, an increase from the previous quarter's rating of 5.5.
When analyzing the sector's investment return potential, industrials netted an 8.5 percent pre-tax yield, just below the national RERC Portfolio Index of 8.6 percent.
According to the report, institutional quality properties are estimated at $4.2 trillion in 2006, an increase of around 16 percent over the past 12 months. There was no consensus on property sectors to avoid or seek out; however, retail continued to draw concern due to overpricing, decreases in consumer spending and tenant risk.
