Other People’s Good News
Real Capital Analytics just came out with its 2012 predictions, and the news is… (drum roll, please)… good!
· RCA expects the dollar volume of transactions to reach $300 billion in 2012, a 50 percent increase from last year’s $200 billion. Maturing loans and a gradual improvement in leasing market fundamentals will drive deal volume. (Grubb & Ellis forecasts a more modest gain of 25 percent in 2012.)
· New instances of distressed commercial assets totaled $56 billion in 2011, down from $92 billion in 2010 and $140 billion in 2009. Despite the pattern of decline, RCA notes that new instances of defaults and delinquencies will remain “material” in 2012.
· Cap rates are expected to decline modestly in 2012 as growing debt and equity capital drives deal volume, leasing markets improve and interest rates stay low.
· Equity capital is deep and diverse with REITs expected to lead in 2012. Foreign investors doubled their volume in 2011 and could double it again this year.
· On the debt side, RCA expects CMBS issuance to reach $50 billion this year, up from about $33 billion in 2011. Bank lending will increase as more regional and local banks return to the sector, following the lead of the big national institutions. (Other sources expect insurance companies to post strong lending totals again this year, too.)
Have a great weekend.
SVP, Chief Economist
Grubb & Ellis
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