Improving U.S. housing boosts commercial sales

TRD New York /
Aug.August 02, 2012 09:30 AM

Though the city’s commercial property slump was barely a blip on the radar, the investment sales market has lagged behind the residential one throughout most of the U.S. But according to Bloomberg News, the latest residential surge — led by two consecutive months of positive Case-Shiller reports — has begun lifting investors’ outlook towards commercial properties.

Demand for bonds tied to offices and shopping malls is higher than at any point in the last four years as late payments on securitized mortgages decreased in July, by 11 basis points to 9.34 percent, for the first time in 2012. Simultaneously, property values in the largest cities are up nearly 41 percent since January 2010. Even subprime mortgages bonds issued at the height of the bubble have climbed by 25 percent this year.

The improving fundamentals, combined with the rare opportunity for higher yields, is driving demand on Wall Street and making it easier for landlords to refinance loans. Investment firms, including Angelo, Gordon & Co., are increasingly launching new commercial mortgage-backed security funds.

“The rally is just beginning and it’s still cheap so people aren’t being shy,” said Anthony Barkan, a principal at investment firm Seer Capital Management. “The fundamentals are really good. Revenues are up in all sectors over the last year.” [Bloomberg] —Adam Fusfeld

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