CHICAGO (August 2009) - Investors seeking commercial real estate would best put their money into apartment complexes or industrial buildings, even though these key property sectors remain stressed by an economic climate that continues to batter an industry rocked by declining values, slumping demand and increasing vacancies.
Commercial real estate experts polled gave apartments a 5.1 investment conditions rating and industrial properties a 4.3 rating, rankings far above the three other major property types: office (3.5), retail (3.4) and hotels (3.4). Looking for a bright spot on the investment horizon? That’s cash.
These were key findings from the third quarter 2009 edition of the RERC/CCIM Investment Trends Quarterly, a national commercial real estate market report.
Findings covered the three-month period ending June 30, 2009 and were based on surveys provided by members of CCIM Institute, a leading commercial real estate association, and analyzed by Real Estate Research Corporation.
Ratings for apartments and industrials (based on a 1 to 10 scale, with 10 being the highest) dipped slightly from the previous quarter; but more importantly, their decline is indicative of a continued downward trend for commercial real estate as an investment option.
QUOTES: “Despite the increase in home foreclosures in the first half of the year, residential real estate appears to be stabilizing while the deterioration of the commercial real estate market is intensifying,” the report stated. “Demand remains weak, as leasing markets slow, sales volume and construction activity remain low, space market fundamentals continue to decline, and property prices and values fall.”
“Although we appreciate that for the most part, commercial real estate was not involved in a cycle of overbuilding like it has been in past recessions (although this was probably more likely due to the fact that credit dried up rather than any great foresight on our part), commercial real estate still has a long road ahead before we see much improvement. Instead, expect deteriorating fundamentals-increasing vacancy rates, declining rents, and lower values-to take their toll on returns in the near term.”
Cash rated 5.6 as an investment option, ahead of commercial real estate (5.3), bonds (4.7) and stocks (4.6) for second quarter. In first quarter of 2009, commercial real estate ranked a healthy 6.2 rating, and cash rated 5.8. Historically over the past four quarters, cash and commercial real estate have battled back and forth among survey members.
Contact Information: Edward M. Bury, APR, CCIM Institute Senior Director of Public Relations, 312-321-4481, pr@ccim.com
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Commercial real estate experts polled gave apartments a 5.1 investment conditions rating and industrial properties a 4.3 rating, rankings far above the three other major property types: office (3.5), retail (3.4) and hotels (3.4). Looking for a bright spot on the investment horizon? That’s cash.
These were key findings from the third quarter 2009 edition of the RERC/CCIM Investment Trends Quarterly, a national commercial real estate market report.
Findings covered the three-month period ending June 30, 2009 and were based on surveys provided by members of CCIM Institute, a leading commercial real estate association, and analyzed by Real Estate Research Corporation.
Ratings for apartments and industrials (based on a 1 to 10 scale, with 10 being the highest) dipped slightly from the previous quarter; but more importantly, their decline is indicative of a continued downward trend for commercial real estate as an investment option.
QUOTES: “Despite the increase in home foreclosures in the first half of the year, residential real estate appears to be stabilizing while the deterioration of the commercial real estate market is intensifying,” the report stated. “Demand remains weak, as leasing markets slow, sales volume and construction activity remain low, space market fundamentals continue to decline, and property prices and values fall.”
“Although we appreciate that for the most part, commercial real estate was not involved in a cycle of overbuilding like it has been in past recessions (although this was probably more likely due to the fact that credit dried up rather than any great foresight on our part), commercial real estate still has a long road ahead before we see much improvement. Instead, expect deteriorating fundamentals-increasing vacancy rates, declining rents, and lower values-to take their toll on returns in the near term.”
Cash rated 5.6 as an investment option, ahead of commercial real estate (5.3), bonds (4.7) and stocks (4.6) for second quarter. In first quarter of 2009, commercial real estate ranked a healthy 6.2 rating, and cash rated 5.8. Historically over the past four quarters, cash and commercial real estate have battled back and forth among survey members.
Contact Information: Edward M. Bury, APR, CCIM Institute Senior Director of Public Relations, 312-321-4481, pr@ccim.com
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