Commercial property buyers who had shifted their focus from prime coastal city properties such as in New York and San Francisco to secondary markets like Las Vegas, Dallas and Minneapolis, may be rethinking their strategies as a result of recent financial market volatility, Bloomberg News reported.
Investors had been showing interest in secondary markets amid growing confidence in the recovery and soaring prices in prime cities, Bloomberg said, with transactions increasing sixfold in Las Vegas in the first half of 2011 from the same period in 2010, by about 253 percent in Phoenix, 204 percent in Atlanta and 267 percent in Pittsburgh, according to data from Real Capital Analytics.
Concern, however, that the U.S. property market may only experience sluggish growth in the next few years could stymie this trend before it takes off, sources said.
“In this market volatility, it’s no surprise that investors, commercial real estate investors, are rotating toward less risky types of investments, which are core properties in primary markets,” Asieh Mansour, head of Americas research for CB Richard Ellis in Los Angeles, said. “Investors across all asset classes do become more risk averse.” [Bloomberg]