Light at End of
Real Estate Tunnel
The mood among commercial real es- tate investors is generally improving,
according to a report from Pricewater-houseCoopers (PwC).
PwC’s most recent quarterly “Korpacz
Real Estate Investor Survey” reveals that
investors are more bullish on a recovery
in the commercial real estate market
than they have been at any point in the
last two years. For example, PwC noted
that overall cap rates have “stabilized.”
From the market peak in 2007 to the
end of 2009, the aggregate average overall cap rate reported by survey participants had ballooned from 6.87 percent
to 8. 49 percent. In the first quarter of
2010, that figure actually ticked down
to 8. 42 percent, and respondents said
they expect cap rates to “hold steady” in
a majority of markets.
Stiff competition for premium assets
is having an impact in this regard, according to the report: “Helping to stabilize overall cap rates, and even compress
them a bit, is plentiful capital targeting
a very small pool of quality offerings.”
While the expected swell of distressed
assets coming to market hasn’t been as
quick as many had hoped, investors remain confident that dwindling income
streams and a difficult borrowing market
will bring attractive buying opportunities to the market before long, according
to the report.
WITH PHIL HAWKINS
President and CEO, DCT Industrial Trust (NYSE: DCT)
How are market fundamentals shaping up for the U.S.
industrial REIT sector?
Phil Hawkins: “They’re beginning to improve.
‘Stabilization’ is actually the word I would use. Net
absorption—or the change in occupancy—was decidedly
negative for the last 12 months and has been much less
so recently. Rents are beginning to bottom. As a result,
I’m much more optimistic about the fundamentals that
we’ll be operating in during the next 12 months.”
To watch a video interview with Hawkins, visit
WITH SKIP MCKENZIE
President and CEO, Washington Real Estate Investment Trust (NYSE: WRE)
How does a narrow geographic focus benefit your
Skip McKenzie:“We believe real estate is a local business. You need troops with boots on the deck in a region.
It allows us to respond to problems. It allows us to seek
out investment opportunities. It allows us to meet with
brokers and tenants on a moment’s notice to respond to
To watch a video interview with McKenzie, visit
WITH KEVIN RIORDAN
President and CEO, CreXus Investment Corp. (NYSE: CXS)
Why is this a good time for a company to start investing
in commercial mortgage debt?
Kevin Riordan: “We looked at the macro-environment
in terms of financial providers of capital. We saw that the
suppliers of capital were clearly going to be constrained.
In fact, some were going to be out of business. On the
other side of the equation was the demand for capital. If
you look at the mountain of debt and the supply of capital,
clearly there was a mismatch. We are attempting to fill that
void of capital required.”
To watch a video interview with Riordan, visit
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