NEW YORK CITY-If multifamily and industrial got into a fight, who would win? Sure, apartments have been the go-to investment since it seems the beginning of time. But industrial stands the best bet of all sectors of toppling that record.
Or, at least, so says a recent poll of lenders, mortgage bankers and institutional investors conducted by Integra Realty Resources and presented on Wednesday at the firm's Viewpoints briefing.
The choice of industrial, or specifically warehouse distribution, as the prime contender is no surprise, says Raymond T. Cirz, IRR's chairman and managing director, especially since retail scored a 26.8% vote. “Retail demand goes up, and so does warehouse demand,” he tells GlobeSt.com. CBD office ranked third at 23.7%; office/warehouse pulled in 13.4% of the vote and suburban office barely moved the needle at 1%.
So it's no surprise that industrial got the second highest vote among best performing property types for total returns in 2013, pulling 15.5%, compared to multifamily's 54.6%. Hotels fared pretty well in the poll, coming in at 12.4%. Office and retail brought up the rear, at 9.3% and 8.2% respectively.
As GlobeSt.com reported on Thursday, New York City was the city most likely to see a value increase in 2013 (with 35.1%). But what is surprising, says Cirz, is how poorly Washington, DC performed.
“If you told me a year ago that DC and Philadelphia would tie [at 5.2% of the vote] I wouldn't have believed you.” The poor showing is due, obviously, to participant awareness of governmental cutbacks. Miami placed second at 18.6%, followed by San Francisco at 16.5%. Chicago pulled in a 10.3% and Los Angeles came in at 9.3%.
Finally, Suburban office and retail tied for votes as the property sector most likely to generate the largest net change in cap rate. But that's probably not for the same reason. “Retail is likely to improve,” says Cirz. Not so much suburban office. Warehouse distribution pulled in 18.6% of the vote, not surprising given the results of the other question, and CBD office got 11.3% of the vote. Office/warehouse and urban multifamily tied at 9.3%. Suburban multifamily squeezed out its citified counterpart at 10.3%
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John Salustri
John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.
