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Competitive High-Grade Market Signals Industry Recovery

NEW YORK CITY-Corporate spending for new space is soft as the economy struggles to break out of its extended slump, but PricewaterhouseCoopers' Peter Korpacz tells GlobeSt.com that the highly-competitive market now for top-tier properties should drive a full industry recovery as the national forecast brightens.

By Michael Gilliard | Updated on June 21, 2002

NEW YORK CITY-PricewaterhouseCoopers’ Peter Korpacz sees the recent flurry of investors scampering for “cream of the crop” properties nationwide as indicative of an industry rebound. Institutional capital is in stiff competition for high-end properties as investors hedge their bets on a strong national recovery, and this inertia is expected to drive real estate out of its slump.

“The flight to quality has already happened,” Peter Korpacz, director of the global strategic real-estate research group at PricewaterhouseCoopers tells GlobeSt.com. “What is pushing activity now is institutions like pension funds that need to pay dividends and use low-risk investments to do so. Overall, there are a lot of institutional-type players out there looking for the best assets and all are going after the same top-grade properties.

“There are 10 to 15 buyers looking at each one of these properties. It’s gotten so competitive that you’re seeing pre-emptive strikes, where investors are knocking on doors to try and buy properties before they hit market.” According a recently released PricewaterhouseCoopers investor survey, some of the best performing class A properties during Q1 2002 include Houston, Manhattan, Midtown & Midtown South, Washington, DC and Seattle.

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