Almost 200 countries dot planet earth, yet just three will dominate real estate construction through the year 2025: China, India and the United States.
From the Current Issue
New York City is not only the largest global real estate market for the third consecutive year, but it also experienced the highest degree of growth, with volumes rising 39 percent to $49.2 billion.
At first glance, U.S. malls appear headed for trouble. The retail sales growth seen after the 2009 trough has slowed to low single digits and, according to Green Street Advisors, roughly 10 percent of the more than 1,000 U.S. malls the company tracks will either close or be repurposed in the next decade.
One year ago, Superstorm Sandy bludgeoned the Northeast and reminded all in its path that even the most fortified edifices and infrastructure facilities are no match for Mother Nature scorned.
The home is apparently open for business again. September marked 36 consecutive months that U.S. foreclosure activity declined when compared to the same month the year before, according to numbers released by RealtyTrac. The company’s latest U.S. Foreclosure Market Report notes 131,232 homes were foreclosed during September, a 2 percent increase from August, but a 27 percent decrease from September 2012.
Co-investments, broadly speaking, have been around for about as long as business people have been shaking hands. But co-investments of the institutional variety — joint ventures and “clubs” — were usually limited to the biggest players with the deepest pockets and the most analytical horsepower. More recently, though, the sidecar rolled onto the scene and things began to change.
Green is the new black.
Just consult the income statements at real estate investment and operating companies with sustainability programs. Buildings are shifting into more efficient structures.
There were two overriding — and seemingly contradictory — sentiments at the fall Editorial Advisory Board meeting produced by Institutional Real Estate, Inc. (IREI). On the one hand, participants in the Sept. 3–5 gathering in Southern California exuded optimism about the global fiscal situation and its near-term outlook. On the other hand, there was clear concern about the Federal Reserve’s quantitative easing program, interest rates and cap rates. In particular, how the inevitable rise in interest rates will affect cap rates.
Of the four major food groups of investment-grade, income-producing real estate (apartments, retail, industrial and office), apartments have been the poster child — with good reason. The sector experienced well below trend addition to supply for five years, and it has good demand drivers.
Members of the IREI staff and I have just finished a grand tour of the globe, consulting our Editorial Advisory Boards in the Americas, Asia Pacific and Europe, as we always do at this time of year. In the process, we heard from 75 investors collectively controlling $3.5 trillion in total assets under management, $326 billion of which represented their collective investments in real property holdings around the globe.
In the September issue of The Institutional Real Estate Letter – Americas, Nori Gerardo Lietz wrote a column challenging our good friend Geoffrey Dohrmann over the question of which managers were better: Big or small? Local or global? It was a fun read, and I admit that I tend to side with Nori on most of the issues discussed.
What really matters in the real estate business is location.
That is the three-pronged conclusion of a new investment strategy advisory from TIAA-CREF.