RCA (Real Capital Analytics) U.S. Capital Trends
RCA’s U.S. Capital Trends First Quarter 2013 reports were just published. Here are some of my takeaways:
- Sales of significant hotel properties are up 84% from a year ago
- The hotel sector is increasingly becoming dependent on CMBS (Commercial Mortgage Backed Securities) as its primary source of debt capital
- Sales volumes rose significantly in secondary and tertiary markets
- Sales of significant apartment properties totaled $31.7Bn, a new record high although this included the sale of Archstone properties in two portfolios sold to Equity Residential and Avalon Bay
- Senior housing is also off to a strong start in 2013 with transaction volumes doubled from a year ago
- Sales of significant retail properties were down 30% versus last year
- Positive trend in strip center transactions
- Sales of significant industrial properties were up 16% compared to the same period in 2012
- Sales volumes in tertiary markets rose significantly
- Sales of significant office buildings up only 2% from a year earlier
- Acquisitions in secondary markets posted positive trends with volume in tertiary markets up the most
RCA’s data mirrors what several industry friends mentioned to me just this week. They and their partners are seeing prices starting to over-heat, even on ‘so-so’ properties in secondary and tertiary markets. They have been out-bid by as much as 33% and don’t understand how the winning bidders can underwrite to those prices. While sellers are benefiting, this is another indication of the next real estate bubble starting to inflate.
Park Avenue Sculpture Tours
Last week I wrote about Alexandre Arrchea’s “No Limits” exhibition along Park Avenue. Two OTR readers took me up on my offer to view the abstract real estate artwork together. It was such a nice experience to stroll the streets and hear different perspectives. The weather was beautiful and sharing with others is what made this special for me.
The real estate person in each of us chose to notice how the artist dealt with the scale of each building and the sense of animation attached to inanimate objects. There is no right or wrong way in which to experience the arts: it’s all our individual appreciation. The exhibit is located on Park Avenue between 54 and 67 Streets and runs through Sunday, June 10. My offer to join you on the tour is still open!
Outdoor Public Art in New York
On a similar note, a friend forwarded me this link which is a terrific roadmap to ‘discovering NYC’s range of al fresco art…from expansive graffiti murals and obscure 19 century statues to iconic public artworks and secret New York treasures.’ Looks like a great spring / summer adventure is unfolding!
You never know….
(Note: An apology to those of you who think baseball is boring!)
On Thursday a long-time real estate friend took me to Yankee Stadium to watch the Yanks play the Toronto Blue Jays. There had been some excitement early on but nothing like what happened in the seventh inning. Yankee Ben Francisco was called out on a close play at first base. There was no dispute of the call yet a few minutes later the umpires gathered for a conference. The outcome of the pow-wow was a reversal of the call! No one seated around us had ever seen such a thing. The crowd cheered wildly. The Toronto manager argued with the umpires to such a degree that he got tossed out of the game. You can read all about it here.
Why do I mention this?? Simply to suggest that we never know when something totally unexpected and unusual will happen. Perhaps the unexpected should be something we actually expect from time to time… Hopefully the unexpected occurrence will be a good one but that’s not always the case. When something bad happens we need to choose how to manage the situation. It’s all about our attitude. We can argue, like the Toronto manager and get ‘tossed out of the game,’ or just accept what has happened and deal with it in a positive way. I think that embracing the unexpected and making the best out of the situation is often the healthiest response for us. Don’t you think?
- Jaap van der Bijl, Director Investor Relations, Syntrus Achmea Real Estate and Finance.
- John Bottomley, Executive Vice President - Capital Markets, Berkshire Group.
- Drew Butler forming Butler Global Partners.
On The Road…
May 16: Annual meeting of The Hoyt Fellows, North Palm Beach, FL
May 29 – 30: IMN (Information Management Network) U.S. Real Estate Opportunity Fund and Private Fund Investing Forum, New York, NY
June 4 – 5: PERE Summit (Private Equity Real Estate Magazine), London, UK
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