As the global commercial real estate market continues to show signs of a sustained – though uneven – recovery, participants in the U.S. market may be best-positioned to take advantage of early opportunities.
The increased issuance of commercial mortgage-backed securities (CMBS), higher property demand and favorable property valuations are a few of the reasons why the U.S. commercial real estate market is in a good position, researchers with Credit Suisse's Customized Funds Investment Group (CFIG) wrote in a new published report titled ‘Commercial Real Estate: Has the Tide Turned?’
Authored by Kelly Williams, head of CFIG; Nadim Barakat, chief investment officer of CFIG; and Peter Braffman, a partner on the CFIG Real Estate team, the paper notes that sovereign debt concerns could delay the commercial real estate sector's recovery in Europe, while inflation concerns could constrain activity in the Asia Pacific and Latin American markets.
‘[T]he U.S. market may be less risky in comparison to other global regions, since the U.S. economic recovery is expected to be more pronounced and more likely to occur before most other developed economy turnarounds,’ the paper explains.
The authors say U.S. investors can take advantage of domestic market conditions by acquiring distressed property; investing in income-generating, value-added real estate (e.g., multifamily and office properties); and concentrating on private real estate investments.
The white paper further observes that credit access will be critical to a commercial real estate revival.
‘With interest rates at historically low levels and banks lending more, the favorable reversal for debt conditions, which started in 2010, is likely to continue,’ the paper says, cautioning that the road to a complete recovery still appears ‘somewhat volatile.’
