Investors report confidence in CRE fundamentals | Global markets respond to Spanish attacks | Suburban office markets with live-work environment appeal to investors
August 18, 2017
The daily source on REITs and real estate investment
Commercial real estate fundamentals remain healthy, according to a majority of investors questioned for the Marcus & Millichap/NREI Investor Sentiment Survey for the third quarter. While sentiment is still positive, there is "emerging investor caution because they are not sure what will happen with the range of policies on the table," said John Chang, a research vice president at Marcus & Millichap.
Main stock indexes in Britain, France, Germany, Hong Kong and Japan dropped today after Barcelona and Cambrils, Spain, experienced terrorist attacks. The situation contrasts with earlier in the year when investors seemed to shrug off political risk.
Suburban office markets that also have a vibrant live-work environment and access to transportation offer higher growth potential to investors and are better positioned to perform over the long term due to strong demand and demographics, according to a CBRE survey of the 25 largest suburban markets. "These submarkets contain institutional-quality product but have yet to record the same level of rent growth, and subsequently, the pricing levels seen in CBDs and secondary business districts," wrote CoStar Portfolio Strategy analysts Paul Leonard and Marcos Pareto in a white paper.
Stakeholders in REITs' sustainability projects agree that forward-looking investments are worthwhile even though returns are still being quantified. REITs are focusing their efforts on four areas as they take their green investments beyond the established methodologies: green leases, solar power, fuel cell savings and smaller footprint projects.
China has formalized rules on overseas investments, restricting activity in property, hotel, film, entertainment and sports categories. Instead it is encouraging companies to invest in the country's "Belt and Road" infrastructure initiative project.
Commercial real estate technology is moving away from its nascent stage and into a more mature phase. Areas where this article predicts future developments will occur include industry standard point solutions, leasing data services, communication and reporting platforms, auctions and crowdfunding and robo-advisors.
The White House has decided not to move forward with a planning council to advise on infrastructure investment. The Trump administration says it hopes to send principles to Congress for the creation of an infrastructure bill later this year.
Mark Gilbert writes that it may be simpler and less expensive to amend the structure of the London Interbank Offered Rate, which is due for termination in 2021, rather than replace it with a new interest-rate benchmark that has yet to be agreed upon. He suggests it could be adjusted to embrace data gathered from real-time daily transactions, such as bond clearing prices, credit default swaps and the commercial paper market.
