Transaction Volumes Will Suffer This Year

As we enter the new year, many investors are making predictions on market activity in 2020, and most agree that the upcoming and likely tumultuous presidential election will have an impact on investment next year. As a result, transaction volumes will likely decline in 2020, but that doesn’t mean appetite for commercial real estate assets will follow. In fact, it is just the opposite. Commercial real estate continues to offer advantages over other investments, and investors will continue to seek out opportunities in the coming year.

“Transaction volume invariably suffers during a hotly contested election year.  That said, private commercial real estate offers too many advantages to be ignored when compared with its public investment peers,” Robert Lindner, co-founder and managing principal at Integrated Capital Management, tells GlobeSt.com. “The industry is also highly fragmented as an alternative asset class, and there will always be willing buyers and sellers, perhaps even more so in an uncertain or distressed environment.”

For Integrated, that will mean a continued appetite for transactions, but likely lower volumes in 2020 compared to 2019. “Integrated anticipates that transactions will continue to execute, though potentially at a slower pace, and that we’ll be able to maintain a robust pipeline of attractive opportunities, each with a unique “story” and supported by best of class sponsors,” says Lindner.

That doesn’t mean the firm doesn’t have lofty goals. Earlier this year, the firm launched its debut private equity fund, which should be fully allocated early next year. “Integrated expects to have fully allocated its debut investment fund by the end of the first quarter in 2020,” says Lindner. “Given our robust pipeline, we were able to successfully reach this milestone only 14 months immediately following the fund’s final close and well within our three-year commitment period.”

The fund closed in April, oversubscribed at $30 million, and with a focus on value-add investments, the fund fits the bill for a lot of investors’ goals in 2020. “Investors will benefit from a diversified portfolio of value-add investments representing multifamily, retail, student housing, office, residential condominiums and hospitality product,” says Lindner. “Many of our original investors have already indicated a willingness to upsize their commitment to our next offering, and, as a result, we have commenced drafting our second fund documents and expect to be in the market during early 2020 with a much larger fundraising goal.”