NAIOP panel predicts another strong year for commercial real estate sales
By Mark Anderson/F&C Finance Writer
April 21, 2005
The love affair that investors had with commercial real estate last year drove the torrid pace of local property sales, and that trend should continue in 2005, according to a panel of experts at Tuesday’s meeting of the Minnesota chapter of the National Association of Industrial and Office Properties.
Panel members cited a well-known list of reasons for the rush of capital into real estate investment. Long-term interest rates remain at historical lows, giving private investors expanded access to the market. Real estate continues to gain standing as an asset allocation. And real property still looks safer than stocks.
But the panelists also pointed to local factors that are giving Twin Cities properties new appeal among national investors.
Aside from foreign investors, “all buyer types are investing in this market now,” said Lori Larson, a CB Richard Ellis senior vice president who outlined market trends in the industrial and single-tenant markets.
They’re coming here in part because cap rates — a key profit measure for the real estate industry — are higher on Twin Cities properties than on comparable properties in larger markets, where intense bidding over the last two years have driven cap rates 50 to 150 basis points below local levels.
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