Investment in commercial real estate in the first quarter
of 2000 rose 32.3 percent in the United States when compared to the same period
one year earlier, according to a national transaction data report released in
July. The report was compiled by the Commercial Investment Real Estate Institute
and Landauer Realty.
The report, a broad-based analysis of national transactions, cited three factors
behind the robust investment in commercial properties in early 2000:
- A strong perception of fundamental investment practices, especially when
compared to the volatile characteristics of the stock market.
- The nature of real estate income streams, which are largely derived from
commercial leases—contracts that are verifiable in terms of credit worthiness.
- The timing of cash flows, which yielded first year returns of 9.5 percent
or higher in more than half of the properties in the report.
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"Some of the capital now flowing to real estate comes from sources that a year ago were chasing the Wall Street bull market."
—Hugh Kelly |
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"Commercial real estate's vitality is, perhaps, all the more notable against
the backdrop of rising interest rates," noted Duncan Patterson, CIREI president.
Office properties topped all categories in the study with 22.7 percent of
the total deal count and 44.3 percent of the reported investment dollars. Sales
of multifamily properties totaled 15.6 percent of the investment volume while
open land sales achieved a new quarterly record with 14.4 percent.
"Some of the capital now flowing to real estate comes from sources that a
year ago were chasing the Wall Street bull market," said Hugh Kelly, executive
managing director at Landauer. REITs were among the active investment groups,
along with developers, pension funds, foreign entities and private investors,
he added.
