If you’re in commercial real estate, it is a common practice to talk about where we are in the cycle. Most of the time it is a lot like talking about the weather. There’s usually no concise universal answer and it depends on which corner you are standing on. It is sunny and clear today, but are there clouds gathering on the horizon? Rather than guessing, here are a few quotes from some articles that should help you form an opinion.
Commercial property prices rose in June despite fears of cyclically low cap rates
“Each property type index rose month-over-month in June. Apartments grew the most, at 1.9%, followed by retail, which grew 0.7%. Both sectors’ gains reverse the monthly declines posted earlier in the year. Office registered the most sluggish growth of 0.3%.”
Investment Sales Report Card… Are You Sitting Down?
Note: This article is specific to Manhattan.
“In the first half of 2017, the dollar volume of sales was approximately $16.9 billion. If annualized, the $32.9 billion pace that we are on would finish the year 43 percent below the $57.8 billion of sales volume we had last year — moreover, the 2016 total was 25 percent below 2015’s all-time record of $77.1 billion. So in 2017, the market is on pace to be 57 percent below the 2015 record. It should be noted that this $32.9 billion pace is right about what we had in 2005.”
US Capital Trends | The Big Picture
“A disconnect between pricing and deal volume colors much of the activity in 2017 so far. Sales volume fell again for both the quarter and year to date even as prices climbed. This relationship does not necessarily signal a pending collapse in pricing. “
Record Apartment Building-Boom Meets Reality
“This is big business. And it is now doing something it hasn’t done since the Great Recession. The Commercial Property Price Index (CPPI) by Green Street, which tracks the “prices at which commercial real estate transactions are currently being negotiated and contracted,” plateaued briefly in December through February and then started to decline. By June, it was below where it had been in June 2016 — the first year-over-year decline since the Great Recession”
What do you think? Get in touch with us and let’s discuss how the current market affects your portfolio.