DALLAS-In its inaugural capital markets report, the DFW capital markets team at Colliers International points out that the sales market resembled a tale of two cities in 2013. While core and value-add office buildings traded briskly, the stabilized class B office assets were largely untouched.
The report divvied up the in-demand assets into two categories: Core (mainly infill, high-quality, trophy assets) and crap (buildings with low occupancies, suburban locations and major deferred maintenance issues).
Thanks to low interest rates and investors consistently chasing yield, core asset pricing is aggressive, the report notes – to the point that core is selling for prices that rival what was seen in 2007. Furthermore, the "crap" "normally has multiple bidders pushing the prices where everything will have to go perfectly to make the returns needed," the report observes.
But why is the in-between stuff so slow? Much of it has to do with yield (there doesn't seem to be as much when it comes to the class B, stabilized assets) and the fact that lenders are a little skittish when it comes to financing such transactions.
Read more about the Colliers' capital team's "core versus crap" discussion here.
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