Real Estate: Commercial Interest
During the past couple of weeks, analysts at Brighton House Associates have noticed increased interest in commercial real estate funds. More than half of real estate investors interviewed were interested in funds focused on this property sector. Investors and fund managers alike are aware of the opportunities that exist in this sector, which are partly due to the Fed’s bailout of the mortgage market. The bailout has mortgage rates reaching their lowest in decades and has stimulated an increase in real estate purchases, which should continue to increase as the second quarter progresses.
One example of this trend comes from a large consultant based in Switzerland. The firm is currently looking for core, value add, and opportunistic real estate funds, specifically in the commercial and residential sectors. The firm is looking globally for opportunities with an interest in property funds focused on Switzerland, the U.S., Asia, and Europe.
Another good example comes from a consultant based in Ohio that works primarily with institutional clients. This consultant advises its clients on investments in real estate funds that focus on U.S. and European commercial property. The research process is ongoing and the firm is opportunistic in hearing from managers. The firm will consider all property sectors, but commercial property is of special interest right now as it feels this sector poses the best opportunities.
During the past year, the commercial real estate market has been tough, with many small businesses unable to obtain capital due to the credit crunch. Many small businesses have been forced to close their doors. Now that credit is expected to become more available to smaller firms, the commercial space should see a boost in purchases going forward.
The current interest in commercial real estate remains strong. In the last two weeks, 50 percent of real estate investors were interested in commercial real estate funds, which is up 10 percent from the week before. Investors are jumping at the chance to ride the upswing in the real estate market and feel the commercial space poses the greatest opportunity.