| Commercial Real Estate Jumps in Chicago in 2007 |
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Für diesen Inhalt steht leider keine Übersetzungen zur Verfügung. Originaltext wird angezeigt. Commercial real estate sales jump in Chicago in 2007 From the Crain's Chicago Business Newsroom January 02, 2008 By Andrew Schroedter ‐‐‐‐‐ (Crain’s) — Sales of Chicago‐area commercial real estate spiraled up in 2007, but what a difference acredit crunch makes. “The most amazing thing about the investment market in 2007 was that it started out with so much investor confidence and ended in a near panic,” according to a report issued in December by New Yorkbased real estate research firm Real Capital Analytics Inc. The credit crunch that hit with full force in September was “one of the most abrupt disruptions to ever hit the commercial real estate capital markets,” the report says, “marking the end of an incredible fiveyear bull market.” Under such circumstances, it would be easy to offer dire predictions about the coming year. But Real Capital cautions against such knee‐jerk reactions, noting that nationwide rents are “solid” for the four largest commercial real estate sectors: apartment, industrial, office and retail. “Don’t forget to look at the positives in the new year,” the report says. Despite the turbulence, the total volume of Chicago‐area office building sales shot up nearly 40%, to nearly $11.9 billion, during the first 11 months of 2007 compared with the same period in 2006, according to the report, which summarizes investment activity in 53 markets nationwide, including Chicago.“I don’t sense any panic in the (Chicago) market,” says Gary Nussbaum, a managing director in the Chicago office of commercial real estate services firm Transwestern. Sales of Chicago‐area apartment developments nearly doubled, to more than $2.6 billion, while sales of retail developments soared nearly 60%, to more than $2.7 billion, in 2007 compared with 2006. The surge seemingly missed only industrial properties, where total sales increased just 4%, to nearly $2.2 billion, still a hefty total. That was then. The market for commercial mortgage‐backed securities (CMBS), which helped drive up prices and investment activity by allowing buyers to borrow cheaply, now faces a slow recovery that has not even begun, Real Capital says. The credit crunch has made it more difficult for investment banks to package commercial loans and sell them off as CMBS to investors, eliminating a key source of debt financing for most property buyers.In a sign that total investment activity will drop dramatically in 2008, total CMBS loans issued this year will be less than half of the more than $215 billion issued last year, according to the Real Capital report. “It is likely that 2007 vintage CMBS will stand out as among the worst‐performing issues of all time,” the report says.Mr. Nussbaum and other experts predict that a flurry of properties will go up for sale in the first quarter of 2008, with real estate assets going back on the market after having been pulled in the fall. Meanwhile, other investors who delayed plans to sell many assets because of the turbulence are expected to move forward. “There’s a sense that the financing markets are going to improve,” says George Good, an executive vicepresident with real estate firm CB Richard Ellis Inc. who specializes in retail investment properties. “And there is still a lot of equity capital out there to invest.” But Mr. Good says older or poorly located properties will attract few buyers, as investor sentiment focuses on top‐quality buildings. Prices of Chicago‐area retail properties rose more than 9%, to an average of $224 a square foot, duringthe first 11 months of 2007, compared with the same period in 2006. But first ‐year returns on such investments, also called capitalization rates, were virtually unchanged at an average of 6.7%, Real Capital says. Average “cap rates” on apartment buildings declined to 6.0% in 2007, from 6.3% in 2006, as investors bid up prices. Like bond yields, cap rates move down when prices rise. Average cap rates fell sharply for industrial properties, to 6.9% in 2007, compared to 7.4% in 2006, the report says. In 2008, foreign investors will continue to target the U.S. real estate market, in part because of favorable currency exchange rates, Real Capital says. Despite the more challenging commercial mortgage markets, private‐equity funds and opportunity funds will continue to be an important factor. Those funds accounted for about 40% of all the significant commercial real estate sales nationwide in 2007, the report says. The current logjam in lending is a reminder of the complexity of the capital markets and their influence over commercial real estate even at a time when the fundamentals of the property markets, such as absorption, or demand for space, remain strong. “Gone are the days when rents, absorption, and the construction pipeline were the primary determinants of value,” the report says. |
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