PricewaterhouseCoopers’ second-quarter 2013 Real Estate Investor Survey finds U.S. commercial real estate remains very attractive to both domestic and international investors “despite a drawn-out recovery.”
The “Cap Rates Fall Despite Uneven CRE Recovery” report lists among the main reasons low interest rates “and a lack of alternative investment options that offer comparable risk-adjusted returns.”
Strong demand from various types of investors, including foreign investors, has also led to “aggressive cap rates and continued compression,” analysts write, but low interest rates are by far the main catalyst.
The survey is one of the market research findings indicating the U.S. commercial real estate market is going through the same fragile recovery process as the larger U.S. economy.
As a result, some investors “express concern about overpricing,” the survey finds, especially in the office sector.
In certain areas, “technology trends are generating less demand for office space.”
Overall investors are worried that “cap rate compression instead of market recovery” appears to be boosting up office property prices in some of the higher-demand locations.
