Buying In

Editorial Director Suzann D. Silverman

Investors started this year off slowly, exhibiting an 11 percent first-quarter drop in overall commercial real estate sales year-over-year, according to Real Capital Analytics Inc. The decline applied to all sectors except multifamily, and evidenced the concern investors felt entering the new year, as they asked themselves, “Is this the year the economy will finally take a turn for the worse?” The Federal Reserve’s December Indications of future interest rate hikes didn’t help.

By midyear, with the economy still steaming along and the Fed having changed its collective mind about interest rates, activity has picked up, with Yardi Matrix measuring office property sales for the first half at $38.8 billion. Investors would need to sustain that increased pace to match last year’s volume of $91.1 billion—never mind the decade’s 2015 high point of $107.2 billion—but investors have certainly grown more hungry as the anticipated approach of the inevitable downturn has held off.

READ THE 2019 GUIDE TO INVESTING

Lenders are likewise actively seeking opportunity, with even the first quarter showing an increase in mortgage debt outstanding, according to Federal Reserve data. Alternative capital sources such as debt funds have been particularly active, finding it easier to lend capital than to find direct investments of their own, Chris Moyer, managing director in Cushman & Wakefield’s Equity, Debt & Structured Finance Group told Alexandra Pacurar for our debt market article, “Borrowed Time.”

Indeed, with investment competition strong and sellers equally cautious, acceptable deals can be tough to find, and even foreign buyers, which traditionally preferred gateway markets, are expanding their purview in search of better prices and yields. They are also venturing into additional property sectors.

Given the challenges of navigating today’s investment waters, CPE and MHN have teamed to produce this Guide to Investing, which serves as both a mid-year outlook for the real estate market and a collection of information on and strategic insight into the different aspects of the investment process. From the debt market to institutional and foreign investment, Opportunity Zones to net lease, we provide data, details and analysis. We also review performance in each of the major property sectors, and you may enjoy our executive profile of longtime real estate financier Matt Galligan. The guide ends with a sizeable offering of market research from Yardi Matrix, featuring a selection of reports on the multifamily and office sectors in a number of major metropolitan statistical areas, plus the latest national self storage report.

We hope you find the Guide to Investing both useful and enjoyable.