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Bloomberg: CRE Sales Market Coming Back to Life
With pricing down 19% from its 2022 peak, the U.S. commercial real estate sales market is starting to come back to life, Bloomberg News reported. One reason is that lenders and owners want to cut their losses and make new investments now that the Federal Reserve’s first rate cut in four years is bringing some clarity on where valuations stand.
“There’s going to be definitely more activity in 2025 and it’s going to be a mix of drivers that’s going to lead to significant instability for some, with some significant opportunity for others,” David Aviram, co-founder of Maverick Real Estate Partners, told Bloomberg. Struggling properties that took on too much debt at much lower rates will drive many of the transactions, he said.
Bloomberg reported that sellers often have had to offload properties at steep discounts in recent months, notably in the office sector. Earlier this year, Empire Capital Holdings and Namdar Realty Group struck a deal to buy the office property at 321 W. 44th St. at a 67% discount from its 2018 purchase price. The former Chicago headquarters of Cboe Global Markets Inc. (pictured) sold this summer for about half its pre-pandemic value.
“Data this year through July underscores just how tough a market it’s been,” reported Bloomberg. “Transactions were down 5% from a year earlier to $203.8 billion, according to MSCI Inc. But lately, transaction volumes are showing ‘steady’ improvements, the data provider said in a report.”
Additionally, there are signs that more bidders are eyeing property and loan sales. Recently, Parkview Financial marketed about $300 million of loans tied to apartments and offices in New York, New Jersey, and Connecticut. Each loan received multiple offers with bids averaging about 95% of face value, CEO Paul Rahimian told Bloomberg.
The distressed property market is just beginning to unfold, with significant challenges still ahead. On October 22, hear experts from Trimont, Greystone, Transwestern and more discuss the rising tide of distressed assets, upcoming CMBS maturities, and stricter underwriting practices. Gain insights into what lies ahead as we transition into 2025 at Connect Distressed Investment & Finance at the Luxe on Sunset in LA.
