Investors believe U.S. office market is best bet

New York /
Dec.December 20, 2011 12:56 PM

alternate
text
Credit: PwC
Real estate investors believe the office market is a smart investment play, as they project high tenant retention and rent growth in 2012, according to a fourth-quarter survey of investors released today by PricewaterhouseCoopers.

Investors like the capitalization rates offered by office properties, as they remain “favorably priced” in many markets, according to Mitch Roschelle, a partner of PwC’s U.S. real estate advisory practice. “The bullishness on the part of investors in the office sector comes as more office tenants are staying put and prospects for rent growth are improving,” he said.

Tenants tend not to move during periods of rent increases, the report notes, making office properties stable assets. Rent growth is projected to be most significant in cities with strong technology and energy sectors such as New York, San Francisco and the Pacific Northwest. At the same time, investors have turned bearish on government-dependent Washington, D.C., as the public sector is expected to shrink.

As cap rates begin to decrease, which they are expected to do in 22 of the 31 surveyed markets, investors will begin turning to secondary office markets to increase yields, the survey predicts.

Additionally, the surveyed investors expressed a belief that apartment development would boom in 2012, as vacancy rates and homeownership rates decrease and rents skyrocket. Financing for construction in the extremely hot rental sector is becoming easier to secure, according to Susan Smith, editor-in-chief of the survey. — Adam Fusfeld


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
RXR's Scott Rechler (Getty)
RXR in talks to surrender two office buildings to lenders
RXR in talks to surrender two office buildings to lenders
Investment Sales, Federal Reserve, Interest Rates, Real Estate Finance, Jay Powell
What the Fed’s latest rate hike means for commercial real estate
What the Fed’s latest rate hike means for commercial real estate
(Photo Illustration by The Real Deal with Getty)
Office attendance finally reaches 50%
Office attendance finally reaches 50%
Vornado's Steve Roth with 1540 Broadway
Vornado writes down portfolio by $600M
Vornado writes down portfolio by $600M
Boston Properties' Owen Thomas (Boston Properties, Getty)
The commercial real estate recession is here: Boston Properties
The commercial real estate recession is here: Boston Properties
From left: Joseph Chetrit, Barry Sternlicht, David Rubenstein, Michael Dell, and Marc Holliday, along with 305 East 86th Street and 1540 Broadway (Getty, Carlyle, Google Maps)
New York City’s biggest borrowers of 2022
New York City’s biggest borrowers of 2022
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...