Marktbericht USA Juli 2011

Despite a noticeable slowdown in the US economy in 2Q11 and heightened uncertainty surrounding the debt ceiling, the US commercial real estate has moved firmly into the recovery phase of the cycle.

Executive Summary

Macro Themes

• The US economy continues to expand, albeit at a slower pace than in previous quarters. We expect GDP and job growth will accelerate in the second half of the year.
• Low interest rates and strong demand for stable, secure cash flows have caused cap rates for core assets in prime markets to further compress.
• Demand for space is uneven across property types –strong for apartments and hotels, weaker for most everything else.
• With the exception of apartments, new construction will be very limited and should remain so for 2-3 years. Implications & Outlook for Commercial Real Estate

Implications & Outlook for Commercial Real Estate

• Core real estate is expensive, which is causing investors to consider investing beyond gateway markets and alternatives that may offer better risk adjusted returns.
• Strong recovery in demand and rich pricing for existing apartment assets make development attractive.
• Office fundamentals remain weak, but the high-beta nature of the sector should reward investors as job growth resumes. CBD markets are healthier and are recovering more quickly than suburban markets.
• As real estate values recover and lenders are less willing to extend underwater loans, recapitalizations will provide opportunities for high-yield debt and equity investments.
• In the absence of a broad-based recovery in demand, some niche or sector specific strategies are attractive.
• Appreciation returns for the NCREIF Fund Index (ODCE) will likely average 2% to 3% per quarter over the balance of the year.

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  Marktbericht USA Juli 2011
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