January 17, 2019
Any doubts that 2018 would be anything but a banner year for commercial real estate investors faded when Real Capital Analytics (RCA) unveiled its summation of the market. It found the biggest global investors increased their exposure to CRE in 2018, collectively adding commercial properties priced at $63.2 billion to portfolios.
Investors steered towards the industrial, retail and apartment sectors and away from offices. Yet, RCA points out the biggest investors worldwide are not necessarily the most active buyers and sellers.
RCA’s Jim Costello writes, “The pace of what the top 50 investors have been selling has slowed since 2015. These investors were involved in dispositions totaling $142.9 billion in 2015, but into 2018 sold only $118.0 billion.”
The CRE economist notes, except for a pullback in 2016, the pace of acquisitions pursued by these investors has grown more quickly than dispositions since the 2015 high water-mark. Acquisitions reached $181.1 billion in 2018, and on a net basis, investors increased their exposure to commercial real estate by $63.2 billion for the year.
Costello says, the story of 2018’s growth is really one about changing appetites for different property sectors. “Looking back to the pace of net acquisitions in 2017, only the apartment sector stood out strongly in favor,” he says. “Moving into 2018, these top global investors made significant industrial and retail additions to their portfolios, as well as apartment acquisitions.”
RCA’s numbers show global industrial portfolios and U.S. mall operating companies were on the menu, with net investment activity for industrial at $24.8 billion and for retail at $23.1 billion. But, top global investors were not as enamored with the office sector in 2018, shrinking holdings by $4.9 billion. Net investment activity was down for the hotel sector as well, but by only $0.5 billion, according to RCA.
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