2000 real estate investment catapults bu 33.2 percent

Highlighted by an extremely active fourth quarter, capital invested in commercial real estate during 2000 eclipsed the previous year by 33.2 percent, according to a news release from Certified Commercial Investment Members. National transaction data compiled by CCIM Institute and Landauer Realty is detailed in the latest "CCIM/Landauer Investment Trends Quarterly." The data indicate that real estate investors capped off the year with an unprecedented level of spending during the period from September through December. Every region of the country exceeded previous long-term dollar volume averages. In addition, the $27.1 million mean price for all transactions established a new high-water mark since the ITQ was established as a gauge for marketplace measurement six years ago.

Two property types offices and industrials led the investment surge with an 11 percent increase and 4 percent increase, respectively, over the previous quarter. The Pacific states and Mid-Atlantic region led the nation, accounting for nearly 50 percent of investment dollars; however, the Mountain states registered record volume and the Southeast region ended the year with a flurry, up 27 percent over third quarter 2000 results.

"As the nation became suddenly more focused on risk, two things happened," said CCIM Institute President Darbin T. Skeans regarding fourth quarter market activity. "First, real estate was seen as a safer harbor in a period of financial market turmoil. Second, within the real estate sector, investors diversified as a risk-hedging strategy."

The best quality assets those commanding the lowest capitalization rates performed steadily, even with news reports of an economic slowdown. According to the report, the median capitalization rate in 4th Quarter 2000 hit 10 percent, its highest point since mid-1997. The average cap rate for all deals was 9.6 percent, down from 9.8 percent in the previous quarter.

"Investors demanded a greater premium for uncertainty and for the risk inherent in non-prime properties," said Hugh F. Kelly, principal writer and editor of the report. "Pension funds, REITS, large limited partnerships, real estate operating companies, foreign investors and joint ventures poured money into large properties from coast to coast. Momentum had been building throughout the year, and that came to a resounding conclusion at year-end."

The "CCIM/Landauer Investment Trends Quarterly" represents a broad-based sampling of fourth quarter 2000 transactions with a total value of $12.8 billion, the majority of which have been reported by (CCIMs). Since the survey was initiated in 1995, more than 9,500 transactions valued at $136.9 billion have been analyzed.