Shanahan: At Real Capital Markets, we have seen volume and market share increasing for reasons that are driven by both external market factors and our own service offerings. Last year was a strong year because there continued to be a great appetite for real estate investments for so many different reasons, including interest rates and the opportunity to create value.

An interesting element to this is the natural progression that takes place. With so many value-added properties acquired over the last several years, that supply is dwindling. There are still plenty of investment opportunities out there, but now the opportunities are shifting back to core properties.

Additionally, we have seen what we call the “internationalization” of real estate investments. The pool of potential investors is significantly broader because of the global economy we live in and the ease in which investment opportunities can be marketed across the world.

GlobeSt.com: What do you see for 2017 in terms of volume?

Shanahan: In general, we expect activity to be largely stable or unchanged for 2017 when compared to 2016, in spite of any short-term hesitations about the market. One of the reasons why we feel this way is, when you look at the market in context, interest rates, though almost 75 basis points higher than six months ago, are still extremely low. There are investors who are targeting acquisitions to take advantage of these low rates and lock in five-to-seven-to-10-year money. This is especially true for those with the belief that interest rates could go to 6% over the course of the next two years.

Other factors that will continue to drive investment activity include:

• Certain investors, pension funds and other institutional investors, may need to recalibrate overall investment portfolios by reaching targeted allocations of their investment choices.
• There is a significant amount of capital that has been raised but not yet deployed—an industry benchmark known as “dry powder.” At the end of 2016, the volume of dry powder was at a record level. Because there are guidelines and timelines for investing capital that has been raised, there is significant need for private-equity firms, and others, to place this money—a good sign for investment activity.
• In contrast to the last several years, we're hearing more and more discussion about increased activity targeting 1031 exchanges. If this talk plays out, it too will help to infuse activity in an area that has been relatively stagnant.
• Over the last several years we have seen an incredible amount of new development activity in various market sectors, most notably multifamily and industrial properties and, in select market areas, office buildings. A common exit strategy for many developers is to sell off well-leased, recently completed assets in order to move on to the next project.

GlobeSt.com: What else should our readers know about RCM and your deal volume for this year?

Shanahan: As a company, we continue to see greater levels of activity because of our service offerings that allowed investors, and those who represent them, to be more efficient and productive. This includes the launch of RCM inSIGHT, the business-intelligence platform for CRE capital-markets professionals that enhances transparency and portfolio performance. We've also expanded the firm's Deal Center platform that connects tens of thousands of investors with hundreds of new commercial real estate investment opportunities each week.

SAN DIEGO—While there has been a leveling off of activity due to macro factors, there are still plenty of investment opportunities out there; however, now the opportunities are shifting back to core properties, Real Capital Markets' executive managing director Steve Shanahan tells GlobeSt.com. In 2016, the firm facilitated the disposition of 8,508 commercial properties, bank REO and loans, connecting buyers and sellers across more than 70 countries. We spoke with Shanahan about the trends he is noticing in CRE deal volume and what he predicts for the year ahead.

GlobeSt.com: What trends are you noticing in terms of deal volume for the commercial real estate industry in general?

Shanahan: What we're seeing—and hearing from Real Capital Markets clients—is that this is a period where, because of a confluence of events, there has been a leveling off of activity. The combination of the presidential election, the transitioning to the new administration and the gradual increase in interest rates have temporarily pushed some investors—both buyers and sellers—to move toward the sidelines. Our recent Investor Sentiment Study showed that this period is probably best characterized as a reset, a chance for investors and prospective buyers to gauge conditions and interpret the new landscape before executing what could be modified and/or slightly adjusted investment strategies.

GlobeSt.com: Why do you believe volume is increasing?

Shanahan: At Real Capital Markets, we have seen volume and market share increasing for reasons that are driven by both external market factors and our own service offerings. Last year was a strong year because there continued to be a great appetite for real estate investments for so many different reasons, including interest rates and the opportunity to create value.

An interesting element to this is the natural progression that takes place. With so many value-added properties acquired over the last several years, that supply is dwindling. There are still plenty of investment opportunities out there, but now the opportunities are shifting back to core properties.

Additionally, we have seen what we call the “internationalization” of real estate investments. The pool of potential investors is significantly broader because of the global economy we live in and the ease in which investment opportunities can be marketed across the world.

GlobeSt.com: What do you see for 2017 in terms of volume?

Shanahan: In general, we expect activity to be largely stable or unchanged for 2017 when compared to 2016, in spite of any short-term hesitations about the market. One of the reasons why we feel this way is, when you look at the market in context, interest rates, though almost 75 basis points higher than six months ago, are still extremely low. There are investors who are targeting acquisitions to take advantage of these low rates and lock in five-to-seven-to-10-year money. This is especially true for those with the belief that interest rates could go to 6% over the course of the next two years.

Other factors that will continue to drive investment activity include:

• Certain investors, pension funds and other institutional investors, may need to recalibrate overall investment portfolios by reaching targeted allocations of their investment choices.
• There is a significant amount of capital that has been raised but not yet deployed—an industry benchmark known as “dry powder.” At the end of 2016, the volume of dry powder was at a record level. Because there are guidelines and timelines for investing capital that has been raised, there is significant need for private-equity firms, and others, to place this money—a good sign for investment activity.
• In contrast to the last several years, we're hearing more and more discussion about increased activity targeting 1031 exchanges. If this talk plays out, it too will help to infuse activity in an area that has been relatively stagnant.
• Over the last several years we have seen an incredible amount of new development activity in various market sectors, most notably multifamily and industrial properties and, in select market areas, office buildings. A common exit strategy for many developers is to sell off well-leased, recently completed assets in order to move on to the next project.

GlobeSt.com: What else should our readers know about RCM and your deal volume for this year?

Shanahan: As a company, we continue to see greater levels of activity because of our service offerings that allowed investors, and those who represent them, to be more efficient and productive. This includes the launch of RCM inSIGHT, the business-intelligence platform for CRE capital-markets professionals that enhances transparency and portfolio performance. We've also expanded the firm's Deal Center platform that connects tens of thousands of investors with hundreds of new commercial real estate investment opportunities each week.