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Q2 CRE Transaction Activity Rebounds, Ten-X Research Reveals
Commercial real estate investment activity expanded in Q2 2017, after suffering a sharp contraction in the previous quarter. That overarching finding is revealed in Ten-X’s “Commercial Real Estate Volume & Pricing Trends” report.
CRE has benefited from a trifecta of factors: the abatement of policy uncertainty, the stabilization of interest rates and the resilience of the labor market. However, policy risk has not disappeared completely, given that a single political party controls both the legislative and executive branches of government.
Ten-X Chief Economist Peter Muoio says, “After hitting a post-election pause button, the industry seems to have digested and even shrugged off a flurry of policy announcements, concluding that many of the previously touted reforms will not be implemented. Instead, commercial real estate investors are assuming the U.S. economy will continue to slowly and steadily expand in coming quarters. Even the expectation that the Fed will continue to raise interest rates has been accepted without significant upsetting of the apple cart.”
Key Ten-X report findings:
-Deal volume marked a return above the $100 billion level
-Quarter’s total was still 4.5% below total in Q2 2016
-All five main property categories except retail showed improvement in deal volume from the previous quarter
-Apartment, office, and industrial sectors outperformed their 10-year total dollar volume averages during the quarter
-Risk premiums rose across four out of five CRE sectors
-Cap rates fell in three of the five sectors, office, industrial and apartment
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