NEW YORK CITY—This week's focus of GlobeSt.com's 15th Anniversary program is on investment trends. Today, specifically, the focus is on hotels. In the Spotlight story this morning executive editor Natalie Dolce takes a look at the lodging sector's performance since GlobeSt started covering it in 2000.
Lodging has certainly traversed a long course since then, having gone from being considered one of the weakest asset classes in commercial real estate to being one of the most sought-after places to pot capital—twice in the past decade and a half. Breaking down the numbers for the sector, these trends become clear, as do the players behind the most action in the marketplace.
Using data from Real Capital Analytics, we present below the trends that hotel volume and pricing has taken since 2002, the latest figures available from the locally based research and analytics firm. We also look at the top 15 buyers of hotel properties filtered by the total number of properties acquired, total number of guestrooms acquired and total dollar volume of acquisitions since 2001.
At the end of this week, we will bring together all the data and examine which firms have been the most active since 2001, and which, if any, continue to dominate the commercial real estate scene.
All information in the charts below was obtained from Real Capital Analytics.
After rising to $44.9 billion in the second quarter of 2006, hotel investment volume dipped 4.2% to $38.3 billion in the first quarter of 2007 before peaking at $80.8 billion at the end of 2007, representing a 600% year-over-year change in activity. Sales fell 72.3% at the end of 2009 to the trough of $3.2 billion, but have been steadily rising since then. Still, with volume at $45.4 billion as of midyear 2015, most would agree that the sector still has some runway yet.
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Cap rates have plummeted and per-unit pricing has skyrocketed for hotel assets in the US. Caps rose to 9.4% in the third quarter of 2009 from the previous low of 8.8% at the beginning of 2008, as pricing fell from $115,000 per unit to $76,000 in the same time frame. That trend drastically reversed in the years that followed, as cap rates plummeted to 7.9% at year-end 2011 after prices escalated to $147,000 per guestroom.
Per-unit pricing declined again in third-quarter 2012 to $112,000, but picked up steadily since then, reaching $158,000 by midyear 2015. Thanks to improved performance, however, caps have yet to reach a record low again. ending this year's second half at 8.2%,
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It's of little surprise that when it comes to hotel investment, Blackstone topped the list of most active investors across all three fields.
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Sule Aygoren
Aygoren oversees the editorial direction and content for ALM’s Real Estate Media Group, including Real Estate Forum and GlobeSt.com. In her tenure with ALM, she’s held roles of increasing responsibility, including Managing Editor. Aygoren has received several awards for her coverage including Best Trade Magazine Report from the National Association of Real Estate Editors and the James D. Carper Award for Young Journalists. Under her direction, Forum has received four national NAREE awards for Best Commercial Real Estate Trade Magazine.
