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National Trend of Investment Sales Increases

Posted on | September 2, 2010 | No Comments

Here’s some interesting information since we’re always talking about doom and gloom considering things like Dayton OH homes for sale or Dayton commercial property.

Sales of multifamily and commercial real estate nationally have spiked in June touching 9.7 billion dollars according to a report from real Capital Analytics. This has been the highest volume of sales of commercial property in significant capacity since September of 2008. The closings at their latest mark have pushed 2010 first half sales to 36.2 billion dollars which marks a 67% rise from the cyclical bottom around the same time a year ago.

The constant increase in the activity throughout the year from the first to the second and then over the second quarter shows that investors remain unaffected by the downward corrections of the outlook towards the economy and impact on stability due to the debt markets in Europe. The existing levels and tally of contracts seems to indicate that the activity level will continue to remain high in the third quarter as well.

The activity in real estate coincides well with pricing trends too. The commercial property price index of Moody is showing a 3.6 % rise for all property types in the index of May (similar to completed sale increases of Mason OH homes for sale and West Chester OH homes for sale). After touching the bottom of the valley in October 2009, the prices have risen by as much as 8.6 percent. However, the cap rates were lower consistently when compared to the highs of 2009 across all transactions and sectors. The average cap rates for the office sector for closed sales during the month of June were below the 8% mark which is a whole 1% below the mark in January of this year.

Interestingly another emerging trend is that the growth in volume of sales and the steady decrease in cap rates are both seen consistently in those markets that have a lot of appeal for the large institutional investors. During the first and the second quarters, the greatest cap rate declines have been in the top tier of markets where price premium and attention of the investor goes to the assets of highest quality. However, the feature of this nothing to buy market has been highlighted by a very small supply of the high quality assets that are indeed available for sale. An average office cap rate of 6.4% was posted by Washington D.C. in the first half of 2010. The cap rate though has been much higher in the Baltimore area which is just north of the capital city. A handful of large assets have been closed or in contact in New York City as well.

Although the information in this article takes into effect national numbers, Realtors such as myself remain hopeful that increases will trend in the Cincinnati commercial market and also for completed sales of Cincinnati OH homes for sale.