Commercial Real Estate News Wrap Up From Liberty SBF: August 2 2016

August 3, 2016

New York Fed President William Dudley said in a recent conference that the Federal Reserve might hike interest rates faster than the market expects. Dudley is quoted as saying, “Market expectations, to my eye, derived from federal funds futures prices, which price in no more than 25 basis-point hike through the end of 2017… appear to be too complacent.” Just last week, the Federal Open Market Committee kept its overnight interest rate in the 0.25 to 0.5 percent range, but noted a strengthening labor market and other indicators that pointed to growth, which could lead to a rate hike sometime in the near future.

Cap rate compression in the self-storage industry may be slowing down, but sector popularity continues to grow. The average cap rate on transactions after the close of the first quarter of 2016 was 5.70 percent, down by as much as four basis points. However investors aren’t troubled by this change, looking instead to self-storage properties for their stable rent growth rate and minimal losses during downturns, especially when compared to other commercial real estate assets. According to NAREIT, self-storage has had the strongest average annual ROI performance, of around 18.0 percent, of any equity REIT sector between 1994 and 2014.

Foreign investors are looking to buy more apartment properties, and they are already on track to beat the record set in 2015. In an article for the National Real Estate Investor, James A. Fetgettar, chief executive of the Association of Foreign Investors in Real Estate (AFIRE) states, “In an environment that is regarded both as the safest and most secure in the world, with a strong currency and the best opportunity of capital appreciation, the U.S is the safest harbor.” In the first six months of 2016, foreign buyers have already bought apartment properties totaling $5.1 billion, a 7.1 percent share of all apartment asset transactions year to date.

8+1 (That’s 9) Things You Need To Know

  1. How the groundwork has already been laid for the next apartment cycle
  2. Why developers can’t build million-SF buildings fast enough
  3. Beyond walkability: what millennial renters value
  4. Traversing the private-money path
  5. Green battle royale- how to avoid pitfalls in environmental due diligence
  6. The pain and the gain of the sharing economy
  7. Food is ruling retail real estate, and the food trucks are moving in
  8. Fed survey: banks tightened lending standards for businesses in second quarter
  9. Self-storage keeps on keeping in Orange County