CBRE report: Commercial real estate investors upbeat at start of 2018
A prolonged period of
The 2018 survey results reveal that the largest share (45 percent) of investors plan to increase their level of acquisitions in the
Investors see a "global economic shock" that undermines occupier demand (30 percent) as the greatest potential threat in 2018, slightly more than last year (22 percent). In contrast, investors are less worried about interest rates rising more quickly than expected this year (16 percent in 2018 versus 21 percent in 2017).
"Despite the possibility of escalating interest rates, the vast majority of investors intend to acquire assets in the
"Investors anticipate that the occupier trends with the greatest impact on real estate investments are last-mile logistics, flexible space, and less reliance on traditional office and retail. Investors are assessing the risk of high proportions of coworking space within a property on its long-term liquidity and residual value. Sustainability continues to factor into decision-making but is not a top priority for investors," said McAuliffe.
Among the five different asset strategies - core, good secondary, value-add, opportunistic and distressed - value-add remains the preferred strategy (34 percent), but is down from 2017's level (41 percent). Investor appetite for good secondary assets increased for the fourth consecutive year, as the supply of core assets diminishes and investors broaden their search for yield. Institutional investors - comprising sovereign wealth funds, insurance companies and pension funds - are more interested in core assets than are other types of investors, with 33 percent indicating core as their preferred strategy versus 20 percent of overall investors.
"Given the declining return environment, it is no surprise that investors are racing to find the next
Industrial is increasingly the preferred property type, cited by 50 percent of investors as the most attractive for investment in 2018, up from 38 percent in 2017. Multifamily (20 percent) and office (14 percent) are the next attractive property types, though their shares decreased from last year. Despite competition from e-commerce, the retail sector improved modestly from last year, attracting 10 percent of investors compared to 8 percent in 2017.
Investor interest in "alternatives" strengthened significantly across most sectors. Real estate debt (37 percent) is the No. 1 alternative currently held by most investors and will be targeted most actively this year. Student housing, senior housing and healthcare are the next most common alternatives, each held by roughly 20 percent of investors.
The breakdown of anticipated capital deployment amounts is roughly comparable to 2017, although expectations for larger purchases in the
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