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Research

Preliminary Numbers for First Quarter of 2017 Indicate Opportunities in Commercial Real Estate

By CommLoan Admin,
Opportunities in Commercial Real Estate

CommLoan examines deal-activity vs. transaction volume trends

First-quarter of 2017 saw an 18% decrease in transaction volume, which
came in at a grand total of $94.8 billion, according to data from Real
Capital Analytics (RCA), a New York City-based research firm. According to
that same report, portfolio deals fell by 38 percent year-over-year, while
single-asset transactions fell by 10 percent.

However transaction levels are still slightly above average, from a
historical perspective. Deal activity for the quarter was 41 percent higher
than the average pace of sales tracked for first-quarter periods, RCA
found. First-quarter uncertainty regarding the direction of interest rates
and the details of the promised tax reform caused buyers to pull back from
acquisitions.

“Commercial real estate investors are operating in an environment of
uncertainty in so many realms—there’s uncertainty regarding tax policy,
regulatory policy, fiscal policy. Until you get clarity on where things are
going, we should see muted activity continue into the second half,” says
Jim Costello, senior vice president with RCA in a recent interview with
Real Estate Investor Magazine.

According the Costello: “The most significant pullback in acquisitions
came in the apartment sector, where deal volume fell 35 percent
year-over-year, according to RCA. The report noted that the positive run
for transaction volume has simply run its course.” Industrial was the big
winner, with sector activity growing 3 percent year-over-year. The numbers
lend credence to reports of high demand seen in the sector over the last
six months.

Mitch Ginsberg, CommLoan’s CEO remains optimistic about the overall
commercial real estate outlook. “The U.S. property market so far this year
is characterized increased investment flows and high transaction levels.
At CommLoan we see an increase across several sectors: from student
housing to multifamily to mixed-use office and retail.”

According to Ginsberg as the U.S. economy grows, the employment gains will
continue adding to demand for commercial real estate.

“Every day I talk to people who are surprised that the economy has not yet
reached the end of the current growth cycle,” added Ginsberg. “But when you
look at how slow the growth had been over the past seven years and compare
it with the positive changes this year, we have to remain optimistic about
the future.”

CommLoan has revolutionized commercial real estate lending with its
digital platform which connects borrowers with unprecedented access to
capital.