Commercial Real Estate Investment

Investors acquired office, industrial, retail and apartment properties valued at a record $268 billion during 2005, up 44 percent from 2004 according to Real Capital Analytics. However, transactions declined in the fourth quarter, normally the strongest time of the year. This coincides with anecdotal reports that investors are being more discriminating, especially with the large volume of properties offered for sale. Expect transaction volume and cap rates to level out in 2006. Prices per square foot may rise along with net operating income because landlords will have more leverage to raise rents.

Courtesy Bob Bach, National Director, Market Analysis for Grubb & Ellis.