The Money Is Flowing Into Retail CRE And More News You Need To Know

March 5, 2015

Seems like the money is flowing into retail, according to a report in Shopping Centers Today. There are ten lenders for every deal, said one panelist at the ICSC Open Air Conference, in Dallas. The urban market dominates with rent increases every year but deals in secondary markets are not as quick to get funding, a market that is prime for Liberty SBF’s flexible loan programs. CMBS is leaning toward deals with 75% LTV and above.

Investors are seeing their returns boosted by investing in commercial real estate, according to an article in the WSJ. Some financial advisors see their clients putting 10% of their money into CRE and they expect that number to go up to as high as 15% of total investment over the next year or so. Returns on CRE with solid fundamentals yield returns “in the high-single to low-double digits.”

Looking ahead to 2015, the CRE machine will keep on rolling and even though the sector has benefited greatly from the Federal Reserve’s monetary policy since the end of the Great Recession, rising rates do not seem to stop the positive outlook for the marketplace. Economic fundamentals are improving, including a strong job market recovery. The bright outlook shines a light on the U.S. to lead the rest of the world in economic growth and CRE is a big part of that.

The industrial sector keeps booming, according to an article on NAIOP’s website. The story stated that net demand for industrial space could reach 242 million square feet in 2015, thanks in large part to the U.S economy’s accelerated growth through the end of 2014 and its positive outlook for 2015. “A great deal of the demand for industrial space to come from firms that produce and distribute consumer goods, and that’s why commercial real estate is seeing such a boom in e-commerce fulfillment and distribution facilities,” said NAIOP president and CEO Thomas Bisacquino.

In an article on Globe St., the Los Angeles market is seeing more competition for B and C class product than ever before. According to Rosano Partners founder and CEO Sagiv Rosano, “it is very interesting, there is a lot of movement right now toward B and C product. The A product has almost topped out, and the yields are better on lower-quality property types. More people want to take a chance on properties in neighborhoods like Highland Park, and deals like that never would have happened two or three years ago.”

On interest rates, Rosano says “in 2015, we don’t believe that interest rates will move much. There is going to be some movement, but it is going only to be like 20 to 30 basis points, and it is not going to happen any time before the election. Because of the supply and liquidity in the market, we should actually be in the negative interest rates, but because there is no such thing as a negative interest rate, the rates will remain low at least for 2015 and probably 2016.”

8+1 (That’s 9) Stories You Need To Read In CRE Right Now

• What it Takes to Get Something Built in NYC

• Fed’s Fischer: ‘It’s about time’ for rate hike

• Blackstone cashes out through Motel 6 CMBS

• Leverage on CMBS multifamily loans gets higher

• Delinquencies on CMBS continue to decline

• Norway fund bulks up on real estate

• International pension fund enters DC market with $100MM buy

• Why Chinese companies rush to buy CRE in NYC

• Cap rates, demand steady for auto parts