The Wave of Recovery: Capital Flows and Spatial Ripples

摘要

Going into 2005, the commercial real estate market is at a crossroads, with moderately improving fundamentals meeting increasing investor demand. Current holders, who have been waiting for the inflexion point at which they can optimize sales prices, have heard enough collective wisdom to con- vince them this is the ideal time to divest of assets. Assuming the economic recovery stays on track and interest rate increases are modest, the real estate market is postured for a strong year in terms of transactions. The significant, pent-up investor demand that has been sidelined due to aggressive pricing can be expected to move back into the market in response to new product availability and the prospect that the spatial side of the market may improve. The supply side should remain relatively tempered, while abundant capital and the search for returns create some supply-side risk. On the other hand, income yields should begin to recover even though current pricing levels will come under added pressure. Given the continued influx of capital and investor optimism, this pressure is likely to take the form of flattening out of appreciation rates rather than a massive repricing. As such, 2005 should see an extremely active real estate market with the balance of power beginning to shift from sellers to buyers, although such an adjustment may be a prolonged process.