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The Real Deal Miami

Most U.S. real investors looking to expand their portfolios: report

October 03, 2011 01:51PM

A majority of U.S. real estate investors are planning to expand their
real estate portfolio in the next six months, according to the 2011
Colliers International Global Investor Sentiment Survey released today, according to statement.

About 70.7 percent of investors suggested they were “most likely” and
15.9 percent of investors “somewhat likely” to expand their portfolios
in the next six months. In the 2010 survey, only 60 percent of
investors said they planned to expand their portfolio in the coming
year.

The overwhelming determinant of whether U.S. investors would be able
to grow their portfolios was the supply of properties for sale, with
62 percent citing it as their primary concern. Raising new equity and
access to debt were the second and third most cited determinant at 20
and 11 percent, respectively. Despite these concerns, 60 percent of
U.S. investors said they are willing to take on more risk.

“Most U.S. investors say they are moving further out on the risk curve
relative to six months ago,” said Warren Dahlstrom, president of
Colliers International’s U.S. Investment Services Group. “This most
likely reflects the dearth of low-risk, fully-leased prime real estate
currently on the market, and investors being forced into secondary
markets and accepting a degree of vacancy.”

According to the survey, U.S. investors’ expectations for return on
investment were split evenly across the board. About one-third of
respondents sought returns in the 5 to 10 percent range, one-third
was looking for returns above 15 percent and just less than a third
(32 percent) was in the middle, seeking returns of 10 to 15 percent.

While U.S. investors did not specify a single city, state or region as
the target of their investment dollars, many remained focused on
primary markets in New York/New Jersey, California, Texas, Washington
and Boston. Industrial and multi-family were the market segments
respondents said were most desirable, followed by office and retail.

On a global basis, the majority of investors surveyed believe tenant
demand is rising, availability and vacancy are falling — a confidence absent in 2008 and
2009, when investment sales dwindled to a fraction of their usual
volume, according to the statement.

In the first half of 2011, about 9,250 investment properties worth
$350 billion changed hands, an increase of 30 percent in volume over
the same period in 2010. The U.S. was the most significant driver of
this global figure, with a 124 percent increase in its investment
transaction volume.

But despite a willingness to buy, a common complaint among investors
was the lack of property for sale — nearly half of investors said
this was an impediment to their expansion plans. Additionally, 7
percent of investors said the prices of commercial real estate assets
have risen too swiftly. — Miranda Neubauer