Majority of Real Estate Investors in the Americas to Increase Acquisitions in 2016

 

The 2016 survey results reveal that investment sentiment regarding commercial real estate purchasing activity remains positive, even in a more uncertain economic and capital markets environment. The survey reveals  65 percent of investors intend to be net buyers—up from 60 percent in 2015—with the vast majority (81%) intending to maintain or increase their purchasing activity in 2016.
 
Los Angeles ranked as the top metro for property investment this year, edging out New York City in second position. All other U.S. “gateway” markets ranked high among investors. The preferred “non-gateway” markets for investors include Dallas/Ft. Worth, Atlanta, Seattle and Denver. Toronto (5th) is the top ranking non-U.S. market.

Among the five different investment types—core, secondary, value-add, opportunistic and distressed—value-add remains the preferred strategy (40%). The preference for value-add declined in the 2016 survey, while the preference for core (second highest) rose, indicating some reversion to a more conservative strategy. Similarly, investors’ risk for secondary (non-core) assets edged down.

 

Multifamily (28%) is the most attractive property type to investors in 2016, replacing the industrial sector, which was last year’s favorite. Office (24%) and industrial (23%) came in almost tied for second. Retail (17%) still lags behind the other sectors, but this percentage reflects a slight strengthening in preference from 2015.

 

Weak domestic economic performance (27%) is considered the number one threat to the property markets in the Americas in 2016—approximately the same as in the 2015 survey. Weakness in the global economy (25%), particularly as related to China, is perceived as the second largest threat to Americas’ property markets in 2016.

“We expect investment in U.S. real estate will increase in the year ahead, driven by the relative strength and stability of the U.S. economy and good property fundamentals,” said Brian McAuliffe, President, Institutional Properties, Capital Markets, CBRE.

 

“Multifamily, office and industrial will continue to be the products of preference; however we anticipate more capital will pivot in the year ahead towards retail than compared to 2015. Core and top-tier value-add will be best positioned to maintain high pricing and low yields, while second-tier assets and markets will feel some downward pricing pressure.”

Survey methodology and composition of respondents
The 22-question “Americas Investor Intentions Survey 2016” was conducted among CBRE clients between January 11th and February 3rd, 2016. The “Americas” survey is part of the larger global survey for which more than 1200 responses were received representing investors from across the globe.

 

Nearly 500 survey respondents indicated that the Americas is the global region which they are most responsible for investment in their current position. This report covers the responses of these 491 investors.

 

The Americas survey respondents represent a wide cross-section of real estate companies and investor types. The largest category is fund or asset manager at 29% followed by private property companies at 18% of the total. Private equity firms and REITs were also well represented by the survey.

 

The survey respondents invest in a wide variety of investment modes. Most investors use multiple types of investment vehicles (and chose multiple types in the survey).

 
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.