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Survey: Retail, Hotel Transaction Volumes Increase Significantly
CHICAGO -— Transaction volume for properties valued over $5 million increased among all commercial real estate sectors, with retail and hotel transactions nearly doubling the previous quarter, according to CCIM Institute and Real Estate Research Corp.’s 3Q11 RERC/CCIM Investment Trends Quarterly. Deal volume also increased among all property types for transactions valued between $5 million and $2 million and closings under $2 million.
Investors continue to view commercial real estate as the highest-rated investment alternative, according to the report. The next highest-rated investment alternative is cash, indicating that investors are focused on the safety of their investments overall and find commercial real estate and cash most attractive for that purpose, explains Kenneth P. Riggs Jr., CCIM, chief economist of CCIM Institute and president of Real Estate Research Corp.
“With volatility in the U.S. stock markets, volatility in European economies, and lack of confidence in the political climate and capability in Washington, D.C., investors are looking for safety and stability wherever they can find it,” Riggs says. “Although there is plenty in the commercial real estate market to worry about, especially in markets hard-hit by high unemployment, real estate is tangible and transparent—it is real, and it is something you can actually see.”
CCIM members who were surveyed continue to rate apartments highest among the property types during 2Q11, followed by industrial properties. Investors are also looking for safety in their specific property holdings, says Riggs, adding that apartment properties provide security due to the depressed single-family home market, pent-up demand from first-time renters, and restrained new supply.
The search for safety is further demonstrated by CCIM members’ return vs. risk ratings, with the apartment sector achieving the highest rating of 6.7 (on a scale of 1 to 10, with 10 being highest), indicating members’ views that this sector offers higher return levels compared to investment risk levels. Industrial ranked second with a return vs. risk rating of 5.1.
The outlook for commercial real estate continues to hinge on the broader economy’s performance. “The commercial real estate market has been improving in the coastal areas, and we were starting to see some improvement in secondary and tertiary markets. Fundamentals are still not good, but they were starting to improve. The big concern now is whether the recovery will be delayed due to the recent economic downturn,” Riggs concludes.
Read the entire 3Q11 RERC/CCIM Investment Trends Quarterly report at http://www.ccim.com/resources/itq-third-quarter-2011-rercccim-investment-trends-quarterly
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 the Chicago-based Real Estate Research Corp. in association with and for members of the Chicago-based CCIM Institute.
About the CCIM Institute
Since 1969, the Chicago-based CCIM Institute has conferred the Certified Commercial Investment Member (CCIM) designation to commercial real estate and allied professionals through an extensive curriculum of 200 classroom hours and professional experiential requirements. The CCIM curriculum was redesigned in 2010 to reflect changing student demographics and real estate brokerage services, growth in international markets, new technologies, and new delivery models. The core curriculum addresses financial analysis, market analysis, user decision analysis, investment analysis, and negotiation—the cornerstones of commercial investment real estate.
An affiliate of the National Association of Realtors®, the CCIM Institute also offers powerful technology tools such as the Site To Do Business, an online site analysis and demographics resource, and CCIMREDEX, a single-entry listing and data exchange.
Currently, there are nearly 10,000 CCIMs in 1,000 markets in the U.S. and 31 additional countries, with another 6,000 practitioners pursuing the designation, making the institute the governing body of one of the largest commercial real estate networks in the world. Visit www.ccim.com, www.stdbonline.com, and www.ccimredex.com for more information.
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