Some have decided to dig in for what they fear is the new norm for the U.S. economy, while global commercial real estate trends signal a boost in the works that will drive up the Massachusetts market.
While the pessimists may be bunkering down in case the sluggish economic growth trudges on and national debt continues to balloon , experts are predicting a growing amount of global investment in the U.S. commercial real estate market that will boost value and revive America.
This recent period of stagnation will be broken as new data shows just how many foreign dollars are flowing in and reveal the impact it is having on the street.
The National Association of Realtors Commercial Report ranks “commercial real estate profitable compared to other investment alternatives”, and there is no question that individual investors and large funds alike are having an incredibly tough time finding any other investment options that measure up to the combination of yields, growth prospects and shelter for capital as witnessed in U.S. markets like Worcester, Massachusetts.
Those that sit on the fence too long and wait until the market has fully recovered will obviously miss the boat and best returns both for the short and long term. President of Real Estate Research Corp. told the press “It is time to stop waiting for the economy and the environment to get better” and “we need to turn the page on the past and make adjustments needed to be successful”.
Private equity, giant pension funds and endowments are already ramping up their shift to commercial real estate, dedicating 7-10% of their capital to these types of investments, which is 2% more than normal.
According to several reports published by the CCIM institute global investment in U.S. real estate is rising and a good portion of that is direct investment, not just sizzling hot REITs. Commenting on this surge one of the nation’s leading commercial real estate analysts points out that this fresh round of foreign investment capital is also boosting lender confidence, resulting in healthy LTVs being loaned and new commercial mortgage lenders popping up to fill in the gaps, with a huge appetite for loaning to those acquiring and leasing multifamily properties being seen.
With lenders getting aggressive about deploying capital, rates so attractive and a large wave of new money coming in it is certainly an appetizing time to buy office and multifamily apartments in Massachusetts.
Chinese investors have reportedly dropped $4.5 billion in the U.S. in the last 12 months, but this pales in comparison to the almost $55 billion invested by Canadians in 2012.
The resale market is improving, values are headed up, rents and yields are increasing and even borrowing is becoming easier and more attractive. So the only real question left is whether you are moving enough of your portfolio into commercial real estate fast enough to enjoy the maximum growth and cash flow spreads, and who you will hire as full service property management company to help you make the most out of the opportunities on the market?