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Multifamily continues to lead recovery according to new CCIM Institute and RERC data.
CHICAGO, IL (Dec. 1, 2011)— In 3Q11, commercial real estate ranked highest among investment alternatives, followed by cash, in CCIM Institute and Real Estate Research Corp.’s 4Q11 RERC/CCIM Investment Trends Quarterly. “Despite the investment losses taken with commercial real estate during the past few years, it is still a relatively stable investment compared to the volatility of the stock market and the potential is there for reasonable returns,” said Ken Riggs, CCIM, CRE, MAI, chief real estate economist of the CCIM Institute and chairman and president of Real Estate Research Corp. “Unlike other investment alternatives, there is a transparency associated with commercial real estate that gives us some sense of security about our investment — we can actually see the tenants use the buildings and get a better sense of the actual value and risk with our investment.”
Multifamily continued to lead the industry in 3Q11 with CCIM members increasing their investment conditions rating for the apartment sector to 7.2 on a scale of 1 to 10, with 10 being high. “The apartment sector is still strong. The positive returns on this property type compared to the risk are likely to continue for the near term,” Riggs added. “However, we are seeing increasing pressure on some of the other property types. And, as demonstrated by CCIM members’ ratings, the returns compared to the risk for all the other property sectors are flat or declining.”
On a 12-month trailing basis, total transaction volume for all sectors increased during 3Q11. In addition, volume increased for each property type in each of the transaction volume categories. On a quarterly basis, total transaction volume for the office, industrial, apartment, and hotel sectors also increased during 3Q11.Total transaction volume, as well as volume for each of the transaction volume categories, declined significantly for the retail sector from 2Q11.
The 12-month trailing overall size-weighted average price per square foot increased for the office and retail sectors and the overall size-weighted average price per square foot/unit for the office, apartment, and retail sectors also rose in 3Q11. “Commercial real estate’s saving grace is that it was not overbuilt when the recession began,” Riggs explains. “As a result, property fundamentals continue to improve — vacancy rates are declining and rents are increasing slightly. This is what needs to continue for property prices to inch up.”
Read the entire 4Q11 RERC/CCIM Investment Trends Quarterly report at http://www.ccim.com/resources/itqonline.
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About the Survey
Published quarterly, the RERC/CCIM Investment Trends Quarterly report provides timely insight into transaction volume, pricing, and capitalization rates for the core income-producing properties. The RERC/CCIM Investment Trends Quarterly is produced by the Chicago-based Real Estate Research Corp. in association with and for members of the Chicago-based CCIM Institute.
About the CCIM Institute
Since 1969, the Chicago-based CCIM Institute has conferred the Certified Commercial Investment Member (CCIM) designation to commercial real estate and allied professionals through an extensive curriculum of 200 classroom hours and professional experiential requirements. The CCIM curriculum was redesigned in 2010 to reflect changing student demographics and real estate brokerage services, growth in international markets, new technologies, and new delivery models. The core curriculum addresses financial analysis, market analysis, user decision analysis, investment analysis, and negotiation—the cornerstones of commercial investment real estate.
An affiliate of the National Association of Realtors®, the CCIM Institute also offers powerful technology tools such as the Site To Do Business, an online site analysis and demographics resource, and CCIMREDEX, a single-entry listing and data exchange.
Currently, there are nearly 10,000 CCIMs in 1,000 markets in the U.S. and 31 additional countries, with another 6,000 practitioners pursuing the designation, making the institute the governing body of one of the largest commercial real estate networks in the world. Visit www.ccim.com, www.stdbonline.com, and www.ccimredex.com for more
