While December’s numbers are still being crunched while offices across the country groggily sweep up confetti from New Year celebrations, there’s already good news for CRE. November’s numbers say national sales volume is up sharply.
A Real Capital Analytics set of figures put the year-over-year increase in November 2012 at 40% against November 2011, with sales volume hitting $19.5 billion and the year-to-date total at $225 billion.
The technical term for this kind of increase is “a boatload”* And December’s present isn’t even open yet:
“With the expected surge in December, full-year 2012 volume should reach $260 billion,” the firm projected. All in all, it’s a good if not stellar way to kick into the new year.
But an anomaly remains, in that this will be the first year in more than a decade, according to RCA, when multifamily will replace office as the top investment sector. No surprise there, really, given the bulletproof stability of the apartment market and the office sector’s entrenched status as poster child for the recession. Multifamily logged $75 billion in sales volume this year.
“While apartments and CBD office** have greatly outpaced the other property types in their recovery,” the report states, “the evidence at year-end indicates that 2013 will be the year the rest of the property types start to catch up. The same holds true for geographic markets as even the hardest hit secondary and tertiary markets have recently started to rebound while transaction activity and price appreciation in many, but not all, major markets has moderated. Thus, 2013 may be characterized by broader, though probably not steeper, improvements across the property investment markets.”
In an era marked by our political system effectively playing chicken along the edge of the “fiscal cliff”, there’s much to like about the theory that hard assets — and they don’t come much harder than commercial property — is the preferred destination in the flight to quality investors are seeking. As more and more uncertainty over returns is being baked into the national economic cake, it’s certainly true that income production is a major feature of CRE as opposed to other places to park one’s capital. Whether participating in a cap rate-driven cashflow or pocketing a commercial REIT dividend, fans of commercial property find themselves in a growing crowd.
* May not be the actual technical term.
** Central Business District, aka “downtown”
(Photo credit: David Ashford)