ORLANDO—How have commercial real estate investor appetites shifted in the past year? What drove the shift and what can we expect in 2016?
GlobeSt.com caught up with Kurt Westfield, managing director of WC Companies, to get some answers. He told us he's seen a shift from class A to class B and from urban core to tertiary markets as inventory has been absorbed.
"Investors are still able to procure strong opportunities with effective caps in outside markets and this is a major shift from 12 to 24 months ago where major markets and top-class assets were readily available with strong leverage," Westfield says. He noted that absorption is one of the factors driving the shift, along with increased lending capacity coupled with new construction.
"Class A caps were driven down to 3% to 6% in most markets leaving investors seeking stronger returns in outlying markets where there had previously been less competition," Westfield says. As for 2016, he expects just as much investment if not more.
"Major economic drivers have maintained a strong presence from leveraged and financed investors and cash sales still make up an above-average chunk of the investment-class assets being purchased," Westfield says. "Property values have risen, dramatically in our local market, amongst most major metro regions nationwide and rental rates continue to rise, promoting strong investment opportunities across the board in the multifamily sector."
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