Commerical real estate spending decreases, lower market stays strong

|tab|

As institutional investors maintained a "wait-and-see" perspective following a slumping economy and the fallout from the Sept. 11 terrorist attacks, dollars spent on commercial real estate nationally dropped 25.7 percent, the lowest dollar volume since early 2000, according to the CCIM/Landauer Investment Trends Quarterly. The CCIM Landauer Invest-ment Trends Quarterly is a broad-based survey of national commercial real estate investment activity. |ret||ret||tab|

CCIM research indicates that the average or mean price per transaction fell 33 percent to $16.1 million, and the average price per deal for all major property types declined.|ret||ret||tab|

However, low interest rates, the availability of capital and steady capitalization rates in the 9.5 percent range provided opportunities for investors seeking lower-priced properties. More than 55 percent of all commercial sales completed were for deals at or below $5 million.|ret||ret||tab|

Analysts anticipated that commercial players would retrench in late 2001 due to the widespread economic uncertainty and the terrorist attacks. Yet, monetary and fiscal policy initiatives were initiated to combat a deep and lengthy downturn.|ret||ret||tab|

"It now looks like this recession will be one of the shortest and shallowest on record," said Cynthia Shelton, CCIM, president of CCIM Institute. "Confi-dence is already returning to the capital markets, and some economists maintain the nation will resume an expansionary path in the near future."|ret||ret||tab|

As noted, pension funds, real estate investment trusts and other institutional investors those who fuel transactions in the $20 million to $100 million and higher strata kept on the sidelines in the fourth quarter.|ret||ret||tab|

At the lower end of the commercial property scale, mortgage rates of just above 7 percent, coupled with available capital created opportunities for private investors, partnerships and owner-users.|ret||ret||tab|

"Lower interest rates provided commercial property investors with an exceptional opportunity to enhance yields through the use of mortgage debt," said Hugh F. Kelly, CRE, author of the Investment Trends Quarterly. "Buyers who took advantage of leverage could achieve double-digit cash returns on equity."|ret||ret||tab|

The report also found that compared to 2000, total dollars invested in commercial real estate increased nationally by 16 percent in 2001. Retail stores also made a strong showing, according to the report.[[In-content Ad]]