Marktbericht USA Jul10

Coming so close to the last capital-markets driven bubble, the speed at which the market is pumping up values is remarkable.

Executive Summary

• The near-term path for the commercial real estate market is clouded amid “unusual uncertainty” in the U.S. economy. Concerns abound that nascent economic growth may be stalled by weak job creation, possible deflation, the winding down of government stimulus and the potential impact of a downturn in Europe and lower growth in China.
  
• Space market fundamentals are heavily dependent upon the direction of job growth. Some 600,000 jobs have been created this year, but the pace of growth has to pick up greatly before real estate fundamentals can improve significantly.
  
• Prospects for the sector remain bullish over the longer term. There is an accelerating inflow of capital coming from a wide variety of sources, including institutions, foreign investors, private equity and REITs. Investors are attracted by the sector’s improved outlook, signs that prices have bottomed and the foreclosure crisis will not be as widespread as feared, and prospects for more-attractive returns relative to other investment options.
  
• Availability of debt capital continues to increase. Most commercial banks remain hamstrung by bad loans, but many large institutions are looking to lend. Life companies are very eager to book loans, while the CMBS market is slowly reformulating. With loan spreads falling and Treasury rates rallying to historic lows, loan coupons in the 5-6% range are common, and lower for some high-quality properties, particularly apartments.
  
• Although transaction activity remains modest, and focused on the opposing ends of the spectrum (core and distressed), sales volume is slowly gaining steam. The escalating number of vehicles looking to buy assets and the falling cost of debt are helping to produce an increase in the price of core assets. Second-tier properties and locations are not in as much demand, although there are signs that investors are starting to branch out to secondary markets and second-tier assets.
  
• REITs have retreated in recent months after a strong run that presaged the rally in the private markets. The FTSE NAREIT Equity REIT Index fell 4.1% during the second quarter and was up 5.6% through June 30. The direction of share prices depends on earnings growth and fundamentals.
  
• The outlook varies by segment. Growth in the near term looks strongest in the apartment and hotel sectors because they react relatively quickly to economic growth. Meanwhile, the industrial, retail and suburban office sectors are likely to rebound much more slowly.