Indices Show Slow, Steady Recovery for Commercial Real Estate

February 15, 2013

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The indices have been released for 2012, and they show continued steady strength for commercial property investments.

“Real estate investment returns have a reputation for stability, and 2012 has reinforced that,” says Ron Kaiser, chairman of the National Council of Real Estate Investment Fiduciaries (NCREIF) Board. “Not only have quarterly total returns again come in at the 2.5 percent level, but all property types and nearly all geographic regions report similar numbers.”

 

The volume of sales surged in 2012, which helped to support these strong returns. Sales volume reached nearly $64 billion in 2012, the highest annual total since 2004, according to the Co-Star Group Inc. Since the crash, the volume of commercial real estate sale has risen steadily, and activity spiked upwards in December as investors rushed to close deals before the end of the year and improving market fundamentals and attractive yields drew investors to commercial real estate.

The recovery is also broadening to the lower end of the pricing market. CoStar’s equal-weighted composite index sped up its growth in the second half of 2012 and registered 8.1 percent for the year. Meanwhile, CoStar’s value-weighted composite index, which concentrates on more valuable properties, registered just 4.3 percent growth. That’s still fast than inflation, but less than its double-digit growth throughout 2011.

According to the CoStar indices, “Investors are moving beyond core properties and driving up pricing at… Read more…

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