The U.S. stock markets have been charging along for much of this year, continuing a bull market that’s been in place for seven years. While financial analysts predict the market is in its later stages, commercial real estate remains an area of steady growth.
Jason Yablon, senior vice president and portfolio manager for Cohen & Steers, writes that “Investors ranging from pension plans to sovereign wealth funds are finding that even modest allocations to real estate can help them navigate toward their investment targets. (…) We expect the general trend to continue. According to recent research by Preqin, a leading source of alternative investment data, nearly 80 percent of surveyed investors expected to maintain or increase their capital allocations to real estate in the next 12 months.”
Michael Gerrity of World Property Journal reports similar findings. Executives in charge of more than $700 billion combined real estate assets recently were polled by Altus Group, in partnership with the National Association of Real Estate Investment Trusts (NAREIT) and the National Council of Real Estate Investment Fiduciaries (NCREIF) about financial topics.
“Faced with an environment of slow but steady recovery, commercial real estate investors appear to be more optimistic on the fundamentals of the economy than the broader markets would suggest,” Gerrity says. “Even as interest rates increase, rates remain low and opportunities will still exist for lower cost financing in the commercial real estate arena.”
The CRE market has been especially lucrative for foreign investors. In the first six months of 2016, “Foreign buyers have already bought apartment properties totaling $5.1 billion in the first six months of 2016. That’s a 7.1 percent share of the total $72.3 billion in apartment assets that investors of all types bought in the first half of the year,” writes Bendix Anderson for National Real Estate Investor.
Will a soaring stock market continue to spur commercial real estate development here in Madison? Share your thoughts below.
